The Trade Practices Act of 1974 - Essay Example

? Introduction: In modern world every nation has enacted some forms of legislations to safeguard the interests of consumers since consumers are central to running a corporation and it is the responsibility of the government to protect the consumers from any forms of malpractices of corporation. The Trade Practices Act of 1974 was framed keeping in mind that there should be some legislation to ensure that consumer welfare is not exploited by any corporations. The main idea behind the formation of the Trade Practices Act was to ascertain that the Parliament, be it Federal or State, can use some tools to guarantee the individual rights as consumers. The Trade Practices Act of 1974 has always been an integral component of Constitution of Australia as a guarantor of purchaser. Background & Evolution: The need for the formation of a business law was felt during the British rule in Australia in the first half of the 19th century however, at that time all the companies were governed by “English Company Act of 1862”. In the first half of the 20th century Federal Parliament of Australia formed "foreign corporations, and trading or financial corporation’s formed within the limits of the Commonwealth" and the Small Business activities were left within the domain of the state and the particular territories in a geographical location. In the year 1961-62 for the first time in the history of Australian Business Law State Legislation and Commonwealth Legislation formed “A Uniform Companies Act”. The year 1965 Trade Practices Act crafted a “Commissioner of Trade Practices and a Trade Practices Tribunal” to scan trade accords and performances. However, this act was ephemeral and finally the High Court in Australia had to annul the aforesaid act due to “Constitutional Difficulties” and replaced the same with Restrictive Practices Act in 1971. The Trade Practices Act of 1974 was endorsed to deal with issues relating to Consumer protection was exclusively in charge of looking after the interests of the consumers at all levels however, the Legislation regarding fair trading and other issues external to Trading Corporation remained within the realm of respective states and territories. Thus, The Trade Practices Act 1974 became the decisive Legal entity governing the trade policies to ensure the welfare of the consumers. Finally the Trade Practices Act 1974 was replaced by “Competition and Consumer Act of 2010.”(History of Business Law, 2010) The Trade Practices Act 1974 Hence the primary task of the Trade Practices Act was to ensure healthy competition without compromising the interests of the consumers. Fair Trading was the benchmark to analyze the role of big companies concerning the protection of consumers. From patrons, merchants, contractor and traders they all fall within the ambit of the Act. In short it included every facets of market place. Regulation of trade through Price monitoring is one of the key ingredients for accomplishing the consumer protection. Other means for safeguarding the interests of the consumers could be ensuring product security, labeling of products and finally restricting “unjust marketplace practices”. The Competition & Consumer Act of 2010 January 2010 marked the New Year with a new set of laws and legislations that was passed for safeguarding and protecting the rights of the Consumers as well as business groups. If one has to carefully analyze and understand the special benefit of this new law that has replaced the former Trade Practices Act, one can draw two main benefits which are evident. Special Significance of the Act: First it accommodates and accepts the nationwide agreed sets of protections on a consumer known as Australian Consumer Law (ACL). According to this new Act there would be a single uniform Consumer Law all over the country. Hence it would relieve the burden on the business enterprise to abide by the various inter–states rulings. The consumer on the other hand would feel less discriminated against as there would be a uniform law safeguarding and protecting their rights. The second special characteristic of this new Act is that there would be certain specific rules that would safeguard the customers against the annoying and sometimes quite disturbing nuances of forceful marketing campaigns like door to door selling , telemarketing calls at odd hours as well as ‘warranty –rip-offs. If one has to analyze the significance of the various ingredients for the New Australian Consumer Protection Laws, one can decipher the main areas wherein the new elements of the law have been more effective. The first key sector is guarantee and protection. This means that the law provides a well defined statutory guaranteed right to consumers that cover all products and services that would be sold in Australia. The key ruling to this is that the material should be accepted by the consumer at an agreed price at the point of sale. After sales service like parts replacement, return delivery, order for spare parts could also be utilized within the ‘reasonable time of agreement’ of the after –sale service. Another useful input to this act is that the service that is provided to the customer should suit its purpose. For example, if a carpenter who is sent from store to repair furniture, should ensure that the furniture is fixed properly. (Kidman, 2011). Exceptions: Those products that are under some sales contract like mobile phones or some electronic items should remain ‘serviceable’ within that specified duration. Obviously the product category is an important factor. For example factory second stores and outlets would have different rules and regulations of product liability than those that are sold directly from other manufacturers and retailers and first grade products. A customer cannot complain about a particular stitching flaw or cutting pattern for a pair of trousers that are brought from factory second outlets. However, if the product tears apart and cannot be worn, the customer would have the right to recourse and ask for a replacement since the product would not serve the basic purpose for which it is bought. Advantages of the New Act, 2010. One of the great reliefs that the new legislation that brought in is the limitation imposed on telemarketing and other marketing activities that sometimes becomes very disturbing and tormenting. For instance, one could be a victim of telemarketing campaigns at such odd hours when one is not ready to face it. It may be while one is in a company meeting, clients meet, sleeping, boarding a train or flight or any other professional and personal ventures and one receives a telemarketing call. Timings for door to door sale have been fixed. For instance, it has been clearly stated that no sales person could show up near our door or make telemarketing sales call before 9 am in the morning and after 6 pm in the evening. Not only it would respect privacy for the individual, but it would also support fair trade practices between buyer and seller. Sometimes when we get calls at early hours we might misinterpret the selling information out of sleep or relaxation and give our confirmation without realizing that we have actually confirmed to buy the particular product or services. Normally the telesales have some basic data about the target customers and they just ask few questions related to product information and need a verbal confirmation to sale a product and service. Sometimes a customer gets calls from credit card companies and customer service of their existing bank and the telesales sell insurance and other services as an add-on. Typically in these situations it becomes very dangerous and the executive possesses all the financial data and might require a verbal consent to make a sale. In order to safeguard and protect customers the new law enforces the seller to have a written agreement for a particular deal to avoid miss selling. Hence the price information including warranty period, cooling period, after sales service, replacement policy and termination conditions and so on, are clearly articulated. Therefore this law ensures a clearly written documentation of contract in sale transactions between the buyer and seller. Product Safety: Another important factor that Australian Consumer Protection law has ensured is that all products would be covered under a national register. This means that in case a product is found defective or inconsumable which has some safety issue the product should be reported as unsafe with two days by the sellers once identified. The consumer has the right to report the product to be ‘defective’ and ‘unsafe’ through the authentic Australian site for Product safety. Certain mandatory safety standards has been fixed from January ,2011 this year in order to make sure that the hazardous products could be easily identified and stopped from being circulated amongst the sales distributions. This is yet another good example to state how the new law strives to protect the rights of the consumers and ensure fair selling practices. Certain health hazardous products like dangerous tobacco and smoking accessories are banned by Australian government. Products like toy like cigarette lighters, cigarettes, tobacco, smokeless cigarettes are labeled with risks and warnings that are mandatory these days. These mandatory labeling had actually come to effect since Oct, 2005 and in the current law it has been specially enforced with graphic images and health statistics. Mandatory Standards on Products and Case Study: Before formulating the mandatory standards, the government has taken help from industry experts and conducted various surveys to understand its significance and impacts to the consumers as well as businessmen. The impact of the new regulations has been analyzed in the light of market forces and the potential dangers in Trade and business as well as its significance on the part of the consumers to achieve an unbiased and accepted set of laws. For Example the mandatory standards for Aquatic toys came into effect on April 1, 2011 wherein these toys were considered as not safety devices and could only be played under the supervision of an adult. Hence one of the key labeling for the particular product is warning in bold with color contrast regarding the usability. (ACCC, web, 2001). No undue Advantage to be taken: Nevertheless it should never be misinterpreted that consumer protection right is biased against the right of the seller or manufacturer. One cannot ask for a replacement of a product simply if one changes one’s mind or feels that one has already got bored with it. This law exists to prevent fraudulent trade practices and ensure safe deal protecting the rights of the businessmen as well as the consumers. If we carefully check out the Australian Product Safety site, we would find that it clearly says “make safe-buy safe and use safe”. For example there has been a recent issue with the use of formaldehyde in consumer products and the Australian Competition & Consumer Commission has imposed limitations and restrictions on the use of this product in specified proportions like infants clothing and garments marketed for people with sensitive skin. Research and Case Studies: In this regard it is worth to mention that Australia Competition & Consumer Commission, (ACCC) had conducted extensive research before initiating the new law this year. Several researches were undertaken. One such case was Sony Trading Pty Ltd conducted on February 18, 2010.This Australian importer was found guilty to import banned jelly cups that could cause choking. The product was banned and the company had to sign an undertaking and withdraw the products from sale. Another instance was Link sea Pty Ltd case in 2010 where in the manufacturer and importer of household furniture and bunk beds failed to comply with the mandatory standards that were required to sell the particular product. The ACCC had conducted test and informed Link Sea to immediately recall the ‘snow bunk bed’ that had failed the required standard. Product Liability: In this regard it is imperative to mention in what ways does the new law helps to ensure product liability in Trade practices. The Australian Consumer Law part 3-5 gives full information about product liability. To be specific the provisions for the new law gives complete freedom to the consumer to complain against a particular product brought if proved ‘unsafe’ and seek for a compensation for the damage and danger that it could cause to use the product. On the other hand the manufacturers and suppliers are guided to follow certain ‘sensible business practices’ that would help them to protect themselves to face such instances. Also voluntary recall is a very effective way wherein the manufacturer can immediately recall its products within two days of identifying the defect to safeguard against guilty of product liability. The consumers are the real buyers for the products or services who pay the price for it. When we buy a product we expect certain usability for the goods and services. First, the quality of the product or service play an important role. The customer has to be satisfied with the quality of the product or service as promised at the point of sale. Next, it should meet the requirements that the product is brought for. Lastly the product should invariably match with the description provided with it. If it does not meet these criterions the customers have the right to recourse. Of course these rights come with certain obligations as well as the particular item. The seller or a trader may be a manufacturer as well as a dealer selling the goods and services. They are the real owners of the product before it is sold. They are the one who knows best about the particular product and service that they plan to trade with. Hence the product liability is something that falls in its domain. Above all they are the ones who would make good business out of it and get the profit. U.S and Australia Legislation: If one has to draw a comparative study of the consumer Acts and legislations in the United States and Australia, the first thing one has to realize that the two countries come from different cultures and way of life. The Australian culture is filled with populism as a cultural thought; whereas the U.S. has a modernist approach. Not only this , several research have revealed that people in the United States are more time driven and try to really get worried to get things done by time. On the other hand a typical Australian has a “no worries” and laid back attitude which is often misunderstood and misinterpreted. This two varying ideologies find its reflections in the consumer behaviors and consequently in their legislations. (Dewhirst, 1989; Lattes, 1992). For instance if we compare the shopping habits of an American and an Australian we would notice that for a typical American shopping is a cake-walk and an essential part of life which one would really look forward to accomplish. On the other hand shopping may be a sort of compulsive act involving some very complex decision making process for an Australian. This is because of the diverse culture. In the United States we have the Federal Trade Commission that protects and uphold the basic rights of Consumers in the Unites States. Although Australia’s legal procedures and redress channels seeking consumer rights had been quite restricted when compared to United States, however things have changed for the better over a period of time and today we find an active support of law to ensure fair trade practices and consumer protection act in the recent years. In the Australia we have the Australian Consumer Law (ACL) that has been making a relentless effort in order to make sure that both consumers and traders are not exploited and frauds are checked. The following table mentioned below would further help to draw the implications and trends of the Competition & Consumer Act of 2010.It shows that awareness among the Australians regarding the rights of the consumers is prevalent across varied age groups and sectors. The survey that was conducted by Australian State as well as Territory government in June 2011 revealed a positive awareness and trend amongst the people to seek for consumer protection redressed through legal measures. However it also disclosed the fact that not many people are actually aware of the various means of grievance redress. Conclusions: Thus it could be concluded from the above inferences that the onset of “Competition and Consumer Act of 2010” and the replacement of “Trade Practices Act of 1974” with the newly formulated law could be considered as ultimate Legislation for the benefits of the consumer as well as traders. The legislation has wider areas of trade practices in its jurisdiction to ascertain those consumers are not marginalized. There is a uniform environment across the country, for, growth driven completion for the traders and advantageous ambience for the buyers. Not only that this could be considered as a new chapter in the history of Australian Business laws wherein a reliable legislation was introduced and enforced at the national level as the custodian for the protection of interests of both traders and of course buyers. It is simply amazing how both the Consumer and the trader are well guided and governed by the new policy. The consumer gets the right to recourse under product liability and the trader could also look forward to voluntary recall of products if they consider that the product is not safe to use. In this way the trader could also benefit to do away with penalty charges. Works Cited: 1) “Parliament of Australia”, Parliamentary Library, History of Business Law, web, n.p http://www.aph.gov.au/library/intguide/law/buslaw.htm#consumer 2) “Overview of Trade Practices Act”, Australian Competition & Consumer Commission. http://www.accc.gov.au/content/index.phtml/itemId/788579, (2011). 3) The Productivity Commission Submission to the Review of the Trade Practices Act 1974 http://www.pc.gov.au/research/submission/tpa, (July, 2002). 4) A History of company law in colonial Australia: economic development and legal evolution (Phillip Lipton, Melbourne University Law Review, vol. 31, 2007, p. 805) 5) International Liner Cargo Shipping: A Review of Part X of the Trade Practices Act 1974 Enquiry Report (Dec 1999) released by Common Wealth Government 6) “Super System Review”, Review to the Governance, Efficiency Structure of Australia’s Superannuation System. (June 30, 2010) http://www.supersystemreview.gov.au/ 7) Australian public affairs information service: APAIS (Page 254). (updated 2010-11) By National Library of Australia, Commonwealth National Library (Australia) 8) A Guide to The New Australian Consumer Protection Laws By Angus Kidman on January 6, 2011 http://www.lifehacker.com.au/2011/01/a-guide-to-the-new-australian-consumer-protection-laws/ 9) “Mandatory Reporting Guidelines”-Australian Consumer Law, Jan 5, 2011.Bans Standards and Recalls, web, n.p. 10) Product Safety Australia (Updated 2011), web, n p http://www.productsafety.gov.au/content/index.phtml/itemId/970225 11) Product Recalls Australia, www. Recalls.gov.au; web, n.p. (June 2011). http://www.recalls.gov.au/content/index.phtml/itemId/952401 12) “Product Safety - a guide for businesses and legal practitioners” (December 2010) http://www.productsafety.gov.au/content/index.phtml/itemId/973455 13) Corporate law bulletin (University of Melbourne) archived issues, Journal, web, http://cclsr.law.unimelb.edu.au/go/corporate-law-bulletin/index.cfm, (April-June 2009) 14) “Journal of law and financial management” http://www.mgsm.edu.au/wps/wcm/connect/Internet/Root/research/publications/journals/jlfm/ 15) Macquarie Journal of Business Law (August, 2004), Macquarie University (Sydney-Australia), Faculty of Business and Economics. http://www.buslaw.mq.edu.au/2010/MqJBL 16) Australian Consumer Law-“Australian Consumer Survey, 2011” http://www.consumerlaw.gov.au/content/Content.aspx?doc=survey_2011.htm Read More