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Lecture 7

Business Law – Lecture 7.docx

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Kate Curnow

Business Law – Lecture 7 – 02/09/2013 Dealing With Consumers Consumers are seen to be entitled to additional protection under Australian law because when dealing with a business they are usually at a disadvantage. Consumer protection legislation seeks to address the fundamental imbalance in bargaining power between business and consumers. Caveat Emptor – Let the buyer beware The Australian Consumer Law (ACL) protects consumers by prohibiting: - Misleading and deceptive conduct - Unconscionable conduct - Unfair terms, and - Various specific practices The ACL is administered and enforced by the Australian Competition and Consumer Commission (ACCC) A business must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive: ACL s.18 In establishing a breach of the section, the intention of the business is irrelevant. Three requirements to establish whether or not a person/business has breached s.18 of the ACL: - Person has engaged in conduct (makes a statement/claim/promise/perform an action) - The conduct was in trade or commerce - The conduct was misleading or deceptive A statement that is literally true can still be misleading or deceptive A business will engage in unconscionable conduct if it unfairly takes advantage of a person’s special weakness or disability, there are two types of unconscionable conduct prohibited by the ACL: - Unconscionable conduct generally: s.20, and - Unconscionable conduct when supplying goods or services to, or acquiring goods or services from, a person other than a listed public company s.21 Unfair Terms A term of a contract will be unfair in contravention of ACL s.23 and therefore void if: - The contract is a consumer contract - The contract is a standard from contract, and - The term is unfair According to ACL s.24 (1), a term of a consumer contract is unfair if: - It causes a significant imbalance in the parties’ rights and obligations arising under the contract - It is not reasonably necessary to protect the legitimate interests of the business; and - It would case detriment to the consumer SPECIFIC PROHIBITIONS A business must not engage in bait advertising s.35: A business engages in bait advertising when it advertises a product at a price that is likely to attract buyers to its premises when it knows or should know that it is likely to run out of stock very quickly A business must not accept payment when it either does not intend to supply the product or it knows or should know that it will be unable to provide the product within a specific time or a reasonable time s.36 Inertia selling is sending an unsolicited product to a person and then pressuring the person to pay for that product. A business must not claim a right to payment unless it reasonably believes that it in fact has a right to payment s.40 A pyramid scheme is a type of product distribution scheme whereby a participant makes a profit or receives a commission for the sale of each product to a buyer; the participant is also rewarded for the introduction of other participants to the scheme, usually by receiving a commission for each new participant. A business is prohibited from participating in, or inducing others to participate in, a pyramid scheme s.44 The ACL implies into contracts for the sale of goods to consumers guarantees that: - The seller has title s.51 - The consumer will have undisturbed possession s.52 - There are no undisclosed securities s.53 - The goods are of acceptable quality s.54 - The goods are fit for any d
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