The Nature of Consumer Law Flashcards
Outline the developing need for consumer protection
Early markets were characterised by caveat emptor - a Latin term meaning ‘let the buyer beware’
It implied that consumers should use their own care and knowledge to protect themselves against exploitation
However, the wealth and power imbalance of the laissez faire economy led governments to create laws that addressed the need for consumer protection
Safeguards are more relevant than ever, as the 21st century marketplace requires a highly specialised level of product knowledge
What is the definition of a consumer?
“A person who acquires goods and services priced less than $40,000” - Part 1 section 4B of the Competition and Consumer Act 2010 (Cth)
An individual or company is also considered to be a ‘consumer’ if they purchase goods or services that cost more than $40,000 for domestic purposes
What are consumer laws, and what are their objectives?
Consumer laws relate to the interactions between consumers, manufacturers/suppliers of goods and services & and the state
The primary objective of consumer law is to protect the legal rights of consumers while purchasing products, while supporting an effective marketplace
What is a contract?
A contract is a voluntary agreement made between two or more people that is recognised by the courts as being legally binding on the parties
The basis of a contract is an offer of a agreement, an acceptance and a consideration
What are the characteristics of a written contract?
a clear identification of the parties to the contract
contractual terms that are in writing for all to see
precise language which describes the terms of the contract in such a manner as to avoid the need to rely upon memory
What are the elements of a contract?
Offer
A firm proposal to form a binding contract, made with a willingness to be bound by its terms
Prices on marked articles in shop windows are invitations to treat - an initial invitation to others to make an offer
Acceptance
The unconditional consent to all terms of an offer
For a binding contract to exist between the parties, acceptance must be communicated to the offeror, and it is open to them to state how it shall be accepted
Consideration
Something given or done by the promisee in return for a contract promise
This is what turns a promise into a contract which the law will enforce, and is based on something of value being exchanged for something else of value
What is the difference between conditions and warranties in a contract?
Condition - a term of fundamental and essential importance
If breached by a party, the other party is entitled to terminate the contract and can sue for damages
Warranty - a minor term of a contract
Breaching a warranty entitles the aggrieved party to sue for damages but not to end the contract
What is the difference between express and implied terms of a contract?
Express Terms - a contractual term that has been specifically stated and agreed to by both parties at the time the contract is made, either in writing or orally
They clearly set out the legal rights of both parties
Implied Terms - a contractual term not stated in the formal agreement
Australian Consumer Law (Schedule 2 of C&C 2010) defines implied terms as a guarantee of acceptable quality and that the product will be fit for service
What is an exclusion clause?
Limitations on a party’s liability for conduct otherwise breaching the contract
They are used to limit/take away the other party’s power to claim damages
Almost always contained within a written document
When is the law of unconscionable contracts applied?
Generally, courts will not grant relief to a party just because the contract operates against them
However, a contract can be rescinded if it was on the basis of unconscionable conduct - one party’s exploitation of the vulnerability of another party to a contract
This includes the victim being impaired or deceived/threatened by the stronger party
An example of this was the case of Commercial Bank of Australia Ltd v Amadio (1983)
What are the remedies that can be sought for unjust contracts in common law?
A party may seek relief due to undue influence; exploiting a relationship to induce another party to enter into a contract
In Johnson v Buttress 1936, a will was successfully challenged on the ground that an illiterate widower had been influenced by a relative, whom he relied on for advice, into leaving them his only asset
The product purchased must be of merchantable (acceptable) quality
Australian Knitting Mills Ltd v Grant 1933 - underwear purchased by Dr Grant caused a severe skin reaction; the Privy Council of the UK found that the manufacturer & retail shop had been negligent and in breach of the implied term of the contract of sale
Products must be fit for the purpose for which they are acquired
Gwam Investments Pty Ltd v Outback Health Screenings Pty Ltd 2010 - builders were advised that a unit could be fitted to the back of a particular vehicle but the resulting rig was too heavy for use on public roads; the SA Supreme Court deemed that it was unfit for the purpose for which it was ordered, and the seller was ordered to pay for a larger replacement vehicle
What are the remedies that can be sought for unjust contracts in statutory law?
The ACL established uniform consumer laws in all states and territories in Australia and commenced on 1 January 2011
The ACL also introduced new protections for consumers dealing with standard form (consumer) contracts, where the contract is prepared by one party and then presented to the consumer who is required to either accept or reject the terms
A term of a standard form contract is considered unfair if it would cause;
a significant imbalance in the parties’ rights and obligations
is not reasonably necessary to protect the legitimate interests of the party who would be advantaged by the term
would cause detriment to a party if it were applied or relied on
The case of ACCC v ByteCard Pty Ltd (2013) was the first time the ACCC commenced legal proceedings under there terms, where the Federal Court found that ByteCard (an internet provider) policy of varying the price under an existing contract without offering the consumer the opportunity to terminate it was unfair & thus void
In Australia, how does the government attempt to prevent unsafe products from reaching consumers?
In Australia, governments seek to keep unsafe products from the market by:
safety warning notices for products are published regularly
products may only be provided if comply with compulsory safety standards
suppliers notify the Commonwealth Minister within 48 hours of becoming aware of a serious injury/death associated with the product
Suppliers may also be required to recall the product, under the Competition and Consumer Act 2010
This included Takata Airbags, which were found to be faulty on deployment, having caused both a serious injury and a death in 2017; installed in over 2.3 million cars in Australia they were subject to the largest vehicle recall in history
What is the role of statutory protection in regulating marketing and advertising?
Deceptive or Misleading Conduct - section 18 of the ACL contains provisions
Conduct is considered misleading if it has the capacity to lead to, or cause error
Exaggerated statements about a product or failure to disclose all relevant information are included, but not puffery
ACCC vs Jetstar Airways Pty Ltd (2015) - Jetstar were found to be using ‘drip pricing’, which drew consumers into an online process to purchase tickets with a headline price, but failed to provide adequate disclosure of additional fees and charges likely to apply; both Jetstar & Virgin were subsequently fined for this behaviour
False or Misleading Representations (Statements/Assertions) - section 29 of the ACL
A person contravenes this provision by making false or misleading representations to consumers about their products, often relating to the quality/value of the product
ACCC vs Reckitt Benckiser Pty Ltd (2016) - Neurofen producer fined $6 million after being found to have claimed that their products could each treat a specific type of pain, where in reality the products were actually identical
Bait Advertising - contravenes section 35 of the ACL
Advertising goods or services for sale at a specified price with the knowledge the company will not be able to offer them at that price for a reasonable period
ACCC vs Harvey Norman Holdings Ltd (2011) - six Harvey Norman franchises were fined for bait advertising; they had advertised the Kodak ‘playsport’ pocket camera but were unable to supply it to consumers as they did not stock it
What is the role of non-statutory controls on advertising?
System is administered by Ad Standards through the Advertising Standards & Claims Board, operating on the principle that advertisers have a shared interest in promoting consumer respect for advertising standards
The primary purpose of the Advertising Claims Board is to resolve disputes between competitors through ADR rather than expensive litigation
Ad Standards provides a free complaint resolution service to the public, as well as making decisions on complaints regarding most forms of advertising and marketing
In 2017, Ad Standards upheld a complaint that a Bakers Delight billboard was advertising lollies on bread for school lunches
