Introduction to the Australian Consumer Law
Competition & Consumer Law in Australia Small Businesses------------------------------------------
- Introduction to the Australian Consumer Law
Unfair contract terms
Avoiding Unfair Business Practices
Misleading or Deceptive Conduct
False or Misleading Representations
Representations About Country of Origin
- Replaces previous Federal and State legislation to create uniform law – standard terms and definitions
Introduces new law on unfair contracts
New national consumer guarantee provisions
New national lay-by provisions
Structure of the ACL
The Act renamed the Trade Practices Act (Cth) 1974 as the Competition and Consumer Act 2010 (Cth)(CCA).
Uniformity under the ACL across Australia:
Consumers have the same protections
Businesses have the same responsibilities and obligations
Which goods are covered?
- Previously implied warranties had to be enforced as breach of contract – now a breach of the ACL
Guarantees now automatically provided regardless of any warranty
Manufactures guarantee goods:
Spare parts and repair facilities
Service providers guarantee services
What goods are not covered?
- All goods purchased for less than $40,000
If goods cost more than $40,000 but are used for household or domestic purposes
Vehicles and trailers
Applies to second hand and ‘seconds’
What are the guarantees?
- Bought before 1 January 2011
One off sales (garage sales)
Auction sales (where the auctioneer is agent for supplier)
Business purchases costing more than $40k
Goods you buy to on-sell
What if the product fails?
- The goods will be of an acceptable quality
The goods will be fit for their purpose
The description of the goods in any catalogue is accurate
The goods will match any sample or demonstration model
Suppliers and manufacturers will honour any express warranties
The goods will have clear title and be free of hidden securities
Manufacturers or importers will provide spare parts and repair facilities.
- If a product fails to meet a consumer guarantee, consumer may be entitled to a replacement, repair, refund or other remedy
But not if consumer changes their mind, damages the goods or were told about any defects before purchase
Remedy depends on whether major or minor issue
- Problems that can normally be fixed or resolved (eg repairing stitching on clothing)
Supplier can choose refund, repair or replacement
Supplier must have a chance to fix the problem
- If there is a major failure with the goods, the consumer can:
reject the goods and get a refund
reject the goods and get replacement, or one of similar value if reasonably available, or
keep the goods and get compensation for the drop in value caused by the problem
- Major problem with a product when:
you would not have purchased the product if you had known about the problem.
the product is significantly different from the description, sample or demonstration model you were shown.
the product is substantially unfit for its normal purpose or for the purpose told to supplier (eg ski jacket is not waterproof)
the product is unsafe (eg electric blanket with faulty wiring)
Guarantees for services
- Only applies if major problem
Must reject within a reasonable time
Consumer must return unless cost is significant – if so supplier must collect
Consumer must show proof of purchase
Original packaging not required
with due care and skill
- Services costing less than $40,000
Services costing more than $40,000 but used for household or domestic purposes
A supplier must supply services;
which are fit for their purpose
within a reasonable time
Services - dealing with problems
- Minor - supplier can choose to refund or repair (free of charge and in reasonable time)
Major – consumer can cancel the services and get refund or seek compensation for difference in value
- replacing or repairing
- Suppliers can limit liability where not for household or domestic purposes to:
- reimbursing for replacement or repair
- re-supplying services
- reimbursing for re-supply
Avoiding Unfair Business Practices:
- A 'lay-by' is essentially a contract where you pay for a product over a period of time rather than upfront.
A lay-by agreement must be in writing and specify all the terms and conditions, including any termination charge.
The trader may charge a termination fee (if a lay-by agreement cancelled) of not more the trader’s ‘reasonable costs’ relating to the agreement.
If cancelled all amounts paid must be refunded except for the termination charge.
Trader can only terminate for breach of the agreement
Unfair Contract Terms (ACL ss 23-28)
- Unfair contract terms in standard form contracts are void.
Consumer contracts entered into on or after 1 July 2010 and to the terms of existing contracts that are renewed or changed on or after 1 July 2010.
3 part test of unfairness
Must look at contract as a whole
A term is unfair if:
Would cause significant imbalance between the parties;
Not reasonably necessary to protect legitimate business interest; AND
Would cause detriment if used