Consumer Law

Question 1

What are the aims of consumer law?

Answer 1

To prevent businesses from harming consumers
and promoting fair competition between businesses by preventing businesses from gaining an unfair advantage in the market at the expense of customers and competitors

Question 2

What Act applies to consumer law?

Answer 2

Competition and Consumer Act 2010 (cth) CCA

Replaced the Trade Practices Act 1974

Question 3

What section is the ACL in?

Answer 3

Schedule 2 of the CCA

Question 4

What are the key types of conduct legislated against in the CCA?

Answer 4

Unconscionable Conduct ss20-22
Misleading and deceptive conduct s18
False representations s29

Question 5

What is a consumer?

Answer 5

A person (or business) will be defined as a consumer if they acquire goods or services for:
	Up to $40K: s3(1)(a)
	More than $40K and the products or services are normally used for personal, domestic or household purposes: s3(1)(b)

Question 6

Who is not a consumer

Answer 6

A person who purchases products for resupply or for use in the manufacture or repair of other items

Question 7

What are a number of other types of business conduct that the ACL legislates against?

Answer 7

Misleading conduct as to employment
Offering rebates, gifts, prizes, or other free items with the intention of not providing them as offered
Misleading conduct re nature or manufacturing process of goods
Misleading conduct re services
Bait advertising
Accepting payment without being able to supply as ordered
Sending unsolicited credit /debit cards
Assertion of right to payment for unsolicited goods or services
Recipient not liable to pay for unsolicited goods or services
Assertion of right to payment for unauthorised entries or advertisements
Pyramid selling
Multiple pricing
Referral selling
Harassment and coercion

Question 8

What are four defences for breaching the ACL?

Answer 8

a. reasonable mistake of fact
b. breach caused by a third party or due to some cause beyond the control of the defendant
c. defendant took reasonable precautions and exercised due diligence to avoid contravention
d. publisher’s defence: reliance on information supplied by another person, information/advertisement received in the ordinary course of business and publisher had no reason to suspect that publication would breach the ACL

Question 9

The ACL contains a number of consumer guarantees afforded to all consumers, what are these?

Answer 9

a. Regarding title and right to dispose of the goods: s 51, ACL
b. Undisturbed possession: s 52, ACL
c. Freedom from undisclosed securities: s 53, ACL
d. Goods are of acceptable quality: s 54, ACL
e. Goods are fit for purpose: s 55, ACL
f. Goods match their description: s 56, ACL
g. Goods match the sample (or the demonstration model): s 57, ACL
h. Repairs and spare parts will be available: s 58, ACL
i. Guarantees and supply of services: person who supplies services to a consumer in trade or commerce must do so in due care and skill: s 60, ACL

Question 10

What remedies are available for breaches of the ACL?

Answer 10

Penalties (except for s18):
	Up to $1 100 000 per offence in case of a corporation
	Up to $220 000 per offence in case of a natural person
Undertakings
Substantiation notices
Public warning notices
Infringement notices
Injunctions
Damages

Question 11

What is a guarantee contract?

Answer 11

A promise by the guarantor, to pay the creditor, should the principal debtor fail to uphold their obligation to the creditor, the guarantor takes on the debt

Question 12

Difference between indemnity & guarantee

Answer 12

The person giving indemnity give primariliy liable for debt whereas the guarantor is secondary to libaility

Question 13

What are the ways to avoid a guarantee

Answer 13

If the guarantor can show that they would not have entered into the contract knowing the full situation, the the contract can be avoided.
If the guarantor was induced into the contract, it can be set aside as well if the contract is harsh or unconscioble

Question 14

What are the liabilities of a guarantor?

Answer 14

A guarantor is only liable to the creditor when:

1. the debtor defaulted; or
2. fails to perform his/her promise;  or
3. fails to discharge his/her liability

Question 15

Under what circumstances is a guarantor discharged?

Answer 15

· When the creditor discharges the principal debtor either upon payment or otherwise: Hancock v Williams

· When the creditor varies the original agreement in any way without the approval of the surety: Egbert v National Crown Bank

· Where guarantee not properly executed by all intended co-sureties, unless the co-sureties have consented to non-execution by the particular co-surety: Gattellaro v Westpac Banking Corporation

· Where guarantee given on condition a specific security be obtained, any failure to do so will discharge the surety: Williams v Frayne

· Creditor relinquishes or loses the benefit of any security held by the creditor: Buckeridge v Mercantile Credits Ltd
Creditor extends the time allowed to the principal debtor to pay or perform any act: Croydon Gas Co v Dickinson

Question 16

What is the legislation regarding Consumer Credit Laws?

Answer 16

National Regulation of Consumer Credit:

National Consumer Credit Protection Act 2009 (Cth)

National Credit Code (Sch 1 of the National Consumer Credit Protection Act 2009 (Cth))

Personal Properties Securities Legislation

Question 17

Define “consumer credit”

Answer 17

Money loaned to individuals under a contract for domestic or personal purposes

Question 18

What section of the National Consumer Credit Protection Act 2009 (Cth) forces creditors who engage in “credit activities” to get a licence from ASIC?

Answer 18

Section 29

Question 19

What is ASIC?

Answer 19

Australian Securites and Investments Commision

Question 20

What actions are defined by “credit activities”?

Answer 20

· credit provider under a credit contract
· lessor under a consumer lease
· mortgagee under a mortgage
· beneficiary under a guarantee
· provider of “credit assistance” or a person who “acts as an intermediary”

Question 21

What scope does the national credit code have?

Answer 21

all personal (ie non-business) credit with certain limited exceptions
all forms of consumer credit (including loans of money, the acquisition of goods on credit terms, credit cards and housing loans) and covers all credit providers (including banks, credit unions, building societies, retail stores and all others who provide credit to consumers in the course of a business)

Question 22

Under what circumstances will the national credit laws not apply?

Answer 22

· the debtor is a natural person; and
· credit is provided “wholly or predominantly” for personal, domestic or household purposes or to purchase, renovate, improve or refinance a residential property for investment purposes; and
· charge is made for providing the credit, if there is no interest charge or other fee, then the credit provided is not regulated by the Code; and
· credit is provided in the course of a business

s5(1)

Question 23

What form must a credit contract undertake?

Answer 23

• must be in writing;
• signed by the debtor and the credit provider; OR
• comprise a written contract document signed by the credit provider and constituting an offer to the debtor that is accepted by the debtor in accordance with the terms of the offer: s 14