BUSINESS LAW OF CONSUMER ACT

QUESTION

Discuss the effectiveness of the legal system  in protecting the rights of consumers. In your answer you should refer to the Australian Consumer Law (cth) and Sale of Goods Act (NSW) along with any rights under general contract law.

SOLUTION

Legal system has an obligation to recognize and provide protection to the varied interests of the consumers. Some of these interests of the consumers which require legal protection are (i) to promote openness and honesty while dealing with the suppliers to enable consumers to make informed and reasonable decisions; (ii)  to create an atmosphere where consumer is not intimidated while taking a decision because of an coercion or pressure on him; (iii)  consumers are required to be provided protection from any form of exploitation or any practice wherein suppliers can take advantage of the consumers who are weak and vulnerable; (iv)  all dealings are required to be fair and suppliers should be prevented and stopped from exploiting the rules to their advantage; (v) consumers are required to be protected from any goods and services  which are defective,  not safe and not even suitable; (vi) the risks that are connected with any unsafe service or goods are required to be properly allocated; (vii) goods and services which are available in the market are required to be properly assessed; (viii) it is also required that quality of the goods and services be raised and prices of the goods and services are required to be reduced; (ix) ancillary goods and services should be good quality like services after the sale of the product need to be of high quality; and (x) methods to be devised to simplify and reducing the expense on the process of supply.  Other than these interests there are other interests of the consumers that are also need to be addressed by the legal structure of the country like the impact of the product and service that is being consumed by the consumer (i) whether the excessive use of that product and service has an adverse impact on the environment which may lead to the scarcity of resources; (ii) whether the place where goods are manufactured has labour friendly conditions or there is exploitation of the workers; (iii) whether those goods and services posing any threat to the interest of the nation or not; (iv) whether the consumption of the goods or services poses any threat to the culture of the country.  The consumer law basically addresses the first individual interests of the consumer and not the secondary interest relating to the environment, culture and interests of the nation. The Australian Consumer law is the main law that protects the rights of the consumers in Australia and it commenced on January 1, 2011. It is a very elaborate law and is applicable nationally and as well in all states and territories in Australia. The Trade Practices Act 1974 is now known by the name of the Competition and Consumer Act 2010 and with this the consumer related part of the Trade Practices Act was removed and replaced with Australian Consumer Law which is Schedule 2 of the Competition and Consumer Act of the year 2010.

Australian Consumer Law contains in Part 3-2 under division 1 the rights of the consumer to guarantee. Section 54 and 55 provides the guarantee of quality and fitness for purpose. Acceptable quality of goods means that the goods are fit for that particular purpose for which it is meant to be used, the look is fine and free from defects, safe to be used and it is durable that is will last long. It is important for a supplier to fix the problems in the goods if the goods are not able to fulfil the guarantee provided to the consumers even in those situation when there is no extension of warranty or warranty has expired and the supplier should also respect any other promise that he made to the consumer while selling the product or services. It is a right of the consumer to insist that the supplier fulfil all consumer guarantees even in cases where additional warranties are covering the goods.  It should also be made very clear to the consumers at the outset only about offers provided by the extended warranties, other than the rights of the consumers under normal consumer guarantees. Sometimes the suppliers and the manufacturer gives an express warranty which is an extra promise about the quality, the condition of the goods and in those express warranties it is required for the supplier of the manufacturer to meet that express warranty. There is another warranty called the warranty against any and it means that goods or services that are being provided to the consumers will not have any defects for certain duration of time and if there is any defect then in that case the supplier or the manufacturer is supposed to either repair the goods or replacement them. Refund of the money can be asked for by the consumers and also any other compensation which is deemed to cover the loss suffered by the consumers. The Australian Consumer Law along with the Australian Competition and Consumer Commission and the ACL regulators makes sure that there is proper compliance of the Section 102 of the Australian Consumer Law.  In the matter of Donoghue v Stevenson (1932) UKHL 100 a bottle of ginger bear was brought by the plaintiff from a retailer. The bottle had a snail in it that entered into it while the manufacturing process. It was held that the plaintiff can sue the manufacturer as it was due to his negligence that the snail entered onto it. The bottle reached to the retailer in the closed condition and in that way only it was sold to the ultimate consumer. Before the judgement in this case the position was that a consumer can bring in case against the party with whom he has entered into the contract.

If the manufacturer or the supplier fails to fulfil the guarantees as laid in the law then there can be civil penalties to the tune of $50,000 for the company and $10,000 in case of an individual. (Clarke,2011)There is a provision that criminal penalties of the same amount can also apply. The remedies provided by law to the consumers are provided in Part 5-4 of the Australian Consumer law and the graveness of the breach determines the remedy.  Rejection of the goods is one of the remedy provided to the consumers in case the manufacturer or supplier fails to fulfil the guarantees.

Section 18 of the Australian Consumer Law deals with the conduct which can be misleading and deceptive (Schedule 2 of the Consumer and Competition Act). Conduct can be by way of advertising, promotions, quotations or any statement or representation made by the supplier or the manufacturer to the consumers. The law can be broken if there is issuance of any misleading information to the public by way of the means mentioned above and because of that the public has wrong information with respect to the prices, the value or the quality of the goods or services that are to be provided to the consumers as provided in Section 151 of the Australian Consumer Law 2010. By not providing information which is required for the customer in order to enable him to make reasonable decisions can lead to deceptive and misleading conduct. (http://www.consumerlaw.gov.au,2012) For example when a restaurateur wants to sell the restaurant and upon being asked the reason for the sale of the restaurant she intentionally fails to disclose that the reason for sale is the opening of a similar type of restaurant in the nearby area is a deceptive and misleading conduct. Information hidden in small prints cannot be a reason to excuse any misleading or deceptive conduct but in case of any prediction or opinion expressed by the supplier or the manufacture with respect to a future happening is not compulsorily a misleading or a deceptive statement. Such predictions and opinions can lead to misleading and deceptive conduct of the maker of the statement knows that it is an untrue statement and or made it without even caring whether the statement was true or not or made that statement without any reasonable backing in support of it. The conduct which is misleading and deceptive can lead to civil remedies like injunctions can be placed, damages can be sought, and compensatory orders can be given. In cases of misleading and deceptive conduct there is no criminal sanction unless that misleading or deceptive conduct further leads to violation of any other provisions of the Australian Consumer Law. This means a person needs to be prohibited who is in any trade or business from engaging in any conduct that may mislead or is deceptive.(Paul,2011)

The provisions with respect to unconscionable conduct are contained in Section 20 to 22 of the Australian Consumer Law. Unconscionable deals with those transactions which takes place between a stronger and a weaker party and it in a way includes any duress and the undue influence. Unconscionable conduct is against the law of equity and now even against the statutory law. The law of equity comes into picture wherein strong party takes advantage of any weaker party to the transaction and this weakness can be because of several factors like age, language barriers, illiteracy etc. The transaction that takes place between these two parties is usually harsh on the weaker party and advantageous to the stronger party, if it is established then the weaker party can choose and not enter it such transactions. In the matter of Commercial Bank of Australia LM v Amadio (1983) 151 CLR 447 the home of the parents of the customer of the bank was kept as a security. It was known to the bank that customer has sought help from his parents but has not actually told them the consequences of keeping the house as a security to the bank. Moreover the bank was aware the parents of the customer were not good in understanding English. T was held by the court of law that the bank cannot enforce the legal rights levied on it because of the security as it is an unconscionable conduct and against good conscience. An act can be termed as unconscionable in the following situations (i) when the terms of the contract are not properly explained to the other party even after knowing that the party has problem in reading and understanding English, (ii) reasonable time is not provided to the party to read through the terms of the contract and to seek any clarification; (iii) when party to contract s asked to sign a contract which is blank or is one sided; (iv) when false statements are made to a person of low income group with respect to the price of the product; (v) when a party to a contract fails to disclose the important and crucial terms of the contract to the other party; and (vi) it is also an unconscionable conduct when pressure is put on the person. The Australian Consumer Law provides that such an unconscionable conduct if proved can lead to civil penalty of maximum $220,000 in case of an individual and if he guilty party is a corporation then $1.1 million.

There are several provisions that have been created by the Consumer laws to protect and recognize the rights of the consumers but there is no point of having so many rights if there is not proper enforcement of those rights.  One of the main problem that comes before the consumer is lack of information and misinformation (http://www.accc.gov.au,2012). If consumers are aware of their rights then suppliers and in fact nobody will be in a position to mislead them. There are serious efforts made by the Australian Consumer and Competition Commission to impart information about the rights and remedies available to the consumers with respect to their rights as the consumers. The Australian Consumer law along with the Sale of Goods Act are very effective laws to protect the right of the consumers; there are several rights and remedies provided to the consumers by way of these laws.

References

Legislations

1. 1.               Competition and Consumer Act 2010
2. Sale of Goods Act 1923 (NSW)
3. Trade Practices Act 1974 (Cth)

Legal authorities

1. Australia LM v Amadio (1983) 151 CLR 447
2. Donoghue v Stevenson (1932) UKHL 100

Others

1. Common Wealth of Australia 2010, Australian Consumer Law, viewed on 2^nd june 2012, http://www.consumerlaw.gov.au
2. Common Wealth of Australia 2012, Welcome To ACCC, viewed on 3^rd june 2012, http://www.accc.gov.au
3. Julie Clarke 2011, Australian contract and Consumer Law, viewed on 3^rd june 2012,http://www.australiancontractlaw.com
4. Latimer Paul 2011,Australian Business Law, 30^th edition, CCH Australia Ltd.

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