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Chapter 13 - Consumer protection legislation. At the end of this chapter you should understand: the main principles of consumer protection legislation, how the Australian Consumer Law (ACL) was enacted, the significant role the ACL plays in providing protection to consumers,...
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Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev 2-1 CONSUMER PROTECTION LEGISLATION CHAPTER 13 Copyright â 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev • 13-2 •2-2 Learning objectives At the end of this chapter you should understand: • the main principles of consumer protection legislation • how the Australian Consumer Law (ACL) was enacted • the significant role the ACL plays in providing protection to consumers • the provisions of the ACL that deal with: – unfair trade practices – misleading or deceptive conduct – unconscionable conduct – product safety and product information – consumer guarantees – manufacturers’ and importers’ liability Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev •2-3 Learning objectives (cont.) • the civil remedies, criminal penalties and defences available to aggrieved consumers • the criminal penalties imposed for a breach of the Australian Consumer Law the defences that can be claimed • the functions of the Australian Competition and Consumer Commission • the functions of small claims tribunals and agencies Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev •2-4 Introduction • Legislation to protect consumers in Australia has recently been significantly reformed • This reform has taken place with the cooperation of the federal government together with all state and territory governments • This has resulted for the first time in a national approach and application to the regulation of traders (no matter what their structure) and the protection of consumers across Australia Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev •2-5 Consequences of national reform • January 2011, the Trade Practices Act 1974 (Cwlth) became the Competition and Consumer Act 2010 (Cwlth), (CCA) • January 2011, the Australian Consumer Law, (ACL), Schedule of the CCA, became fully operative • The ACL has overcome the constitutional difficulties confronted by the TPA, replaced all state and territory fair trading legislation and applies to all consumer transactions across Australia • The ACL is jointly administered and enforced by the ACCC and state and territory authorities Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev •2-6 Who is a consumer under the ACL? ACL section provides that: • A person is regarded as a consumer of goods and services: – If the goods or services are priced at $40 000 or less – If goods or services of any price are of a kind ordinarily acquired for personal, domestic or household use or consumption – For commercial road vehicles – And that goods must not be acquired for resupply or manufacturing Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev •2-7 ACL Chapter Part 2.1 Unfair practices—Section 18 • Section 18: Prohibition on misleading and deceptive conduct A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or likely to mislead or deceive • Concept of conduct very broad, may include advertising, contractual negotiations, even silence • Commonly used not only by consumers but by business against business Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev •2-8 Section 18—misleading and deceptive conduct • Remedies: – Civil action for damages – Injunction to stop misleading or deceptive conduct – Community services orders – Corrective advertising orders – Adverse publicity orders – Substantiation orders – Undertakings Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev •2-9 Chapter Part 2.2 Unfair practices— unconscionable conduct Part 2.2 prohibits unconscionable conduct where a stronger party takes advantage of another party’s weakness or ignorance •Section 20: general duty on persons in trade and commerce to trade fairly—specifically embraces common law principles of unconscionability already established by the courts •Section 21: deals with unconscionable conduct by a person in trade and commerce in connection with the supply of goods and services to consumers •Remedies: orders directed towards the contract itself contract void contract varied refusing to enforce contract directing refund of money/return of property ordering repair or provision of parts for goods Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev •2-10 Remedies for breach of consumer guarantees • A consumer has the right to take action against the supplier of goods or services if the supplier fails to comply with a consumer guarantee • Remedy will vary depending on whether the breach is a major or minor failure to comply with a guarantee • If the failure is minor, the supplier may be required to remedy the failure within a reasonable time or pay for it to be remedied elsewhere • If the failure is major remedies include rejection of the goods by the consumer, compensation and damages for foreseeable loss Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev •2-29 Manufacturer’s and importer’s liability—ACL Part 5.4 Div • ACL allows consumers to sue the manufacturer if the goods are defective and the goods have been supplied through sale, exchange, lease or hire • The effect of the ACL is to make manufacturers concurrently liable with the immediate supplier of defective goods (goods in breach of the consumer guarantees) to the consumer in certain situations • The ACL provides that a manufacturer must indemnify any supplier who may be required to pay damages to a consumer as a result of a liability of a manufacturer under a consumer guarantee Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev •2-30 Manufacturer’s liability (cont.) • Section 58: consumer guarantee that provides a manufacturer must ensure there is a reasonable availability of repair facilities and spare parts • Section 59: consumer guarantee that provides a manufacturer is liable to compensate a consumer or a person who acquires goods from a consumer for any loss or damage they suffer as result of the manufacturer's failure to comply with an express warranty made about the goods • Section 138: strict liability is imposed on manufacturers and importers of defective goods that cause personal injury or property damage Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev •2-31 Defences to manufacturer’s liability • The defect in the goods did not exist at the time the goods left the manufacturer, but occurred elsewhere in the distribution chain • The goods had the defect only because they complied with a mandatory standard • The product is someone else’s component • The defect could not have been discovered at the time of supply because of the state of existing scientific and technical knowledge Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev •2-32 Enforcement and remedies for breach of the ACL Civil remedies • Section 224: civil pecuniary penalties— maximum of $220 000 for an individual and $1.1 million for a corporation • Section 232: injunctions—may be sought by a regulator or an affected person • Section 236: damages • Section 243: compensation orders, may include; – an order for specific performance of a contract – rescission of a contract – variation of a contract – refund of money – return of property Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev •2-33 Enforcement and remedies for breach of the ACL (cont.) • Section 239: orders for non-party consumers—if a breach of the ACL has occurred, a regulator may apply to the court for an order providing redress to a person not named in the proceedings but who may have suffered some injury Non-punitive orders—Section 246 • Community service orders • Order to ensure conduct does not occur for a period of time • Disclosure order • Order requiring a person to publish an advertisement in terms specified in the order (e.g corrective advertising) Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev •2-34 Enforcement and remedies for breach of the ACL (cont.) Disqualification order—Section 248 • Regulator may apply to the court for an order banning a person from managing a corporation Criminal penalties (except s.18): • Offence must be proven beyond reasonable doubt and criminal proceedings must be brought within three years of the offence • Maximum fines which can be imposed are $220 000 in the case of a natural person and $1.1 million in the case of a corporation Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev •2-35 ACL Sections 207–209: defences to breaches • Breach was due to a reasonable mistake of fact, including reliance on information given by another person • Breach was caused by the fault of another person that the accused took reasonable care to avoid • Publication of advertisement where the publisher did not know and had no reason to suspect the advertisements were in breach of the ACL Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev •2-36 Australian Competition and Consumer Commission (ACCC) • Administers ACL • Investigates and prosecutes breaches of the ACL • Hears disputes arising under the ACL • Conducts research and provides consumers and traders with information on their respective rights • Has powers to obtain evidence, including documentary evidence • Has powers to establish and administer standards relevant to product safety Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev •2-37 Consumer complaint ACCC dispute Settle before court action Court action Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev •2-38 Settlement before court • Pay restitution to consumers who have been affected by illegal conduct • Promise ACCC that steps will be taken to ensure CCA and ACL are complied with and future breaches avoided Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev •2-39 Court action • Depends on the following considerations: – Educative or deterrent effect – Blatant disregard of law – Significant public detriment – Need to test the limits of the CCA or ACL Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev •2-40 Australian Competition Tribunal This is the appeal body from the ACCC Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev •2-41 Small claims tribunal • Has authority to hear consumer claims • Operates through hearings • Limits imposed on its operation • Generally no right of appeal and no costs orders (except SA) • Claims made by filing prescribed form Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev •2-42 Consumer protection agencies • Educate the community about their rights as consumers • Handle complaints made by consumers against providers of goods and services • Provide information to consumers Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev •2-43 ... LEGISLATION CHAPTER 13 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev • 1 3- 2 • 2-2 Learning objectives At the end of this chapter. .. statements about the profits of home-run businesses Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev • 2-1 8 Unfair conduct specifically... repair or provision of parts for goods Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev • 2-1 0 Meaning of unconscionable conduct