Section 18 of the Australian Consumer Law - Essay Example

Asssignment on the Topic of Section 18 of the Australian Consumer Law Introduction. The Competition and Consumer Act 2010 (previously known as the Trade Practices Act 1974) is an Act of the Parliament of Australia. It seeks to promote competition, fair trading as well as providing protection for consumers (Miller, 2012). It is administered by the Australian Competition and Consumer Commission (Cth) (CCA). It is the second schedule of this act that sets out the Australian Consumer Law (ACL). The Australian Consumer Law commenced on 1 January 2011. It is a single national law covering consumer protection and fair trading which applies in the same way nationally and in each State and Territory. The law was developed by agreement of the Council of Australian Governments. The ACL applies as a law of the Commonwealth within limits prescribed by the CCA (Part XI) and also as a law of each of the States and Territories by reason of legislation applying the Consumer Law (Corones, 2011). Application of the ACL. The ACL applies as a law of the Commonwealth in much the same way as the consumer protection provisions of the Trade Practices Act have previously applied as a law of the Commonwealth (CCA s.131) to regulate the conduct of constitutional corporations or the trade/commerce between Australia and places outside Australia, between the States, within a Territory or between a Territory and a State or by way of supply of goods or services to the Commonwealth (CCA s.6(2)) or the conduct which involves the use of postal, telegraphic or telephonic services (CCA s.6(3)). The ACL is also applied as a law of each respective State and Territory by the following Acts: The Fair Trading Act 1987 (Part 3), Fair Trading Act 1999 (Part 2), Fair Trading Act 1989 (Part 3), Fair Trading Act 1987 (Part 3), Fair Trading Act 2010), Australian Consumer Law (Tasmania) Act 2010, Fair Trading (Australian Consumer Law) Act 1992, Consumer Affairs and Fair Trading Act (NT) (Part 4) In each case the ACL applies to and in relation to: (a) persons carrying on business within the particular jurisdiction; (b) bodies corporate, incorporated or registered under the law of a particular jurisdiction; (c) persons ordinarily resident in the particular jurisdiction; and (d) persons otherwise connected with the jurisdiction. The ACL as applied by each jurisdiction extends to conduct, and other acts, matters and things occurring or existing outside or partly outside the particular jurisdiction. As applied in each of the States and Territories the ACL is cited as “Australian Consumer Law” followed by the name of the relevant State or Territory in brackets. So, for example, when applied as the law of Tasmania the ACL is known as the Australian Consumer Law (Tas). Importantly when construing the ACL, whether applied as a law of the Commonwealth or the States, regard is had first to the dictionary of terms found within the ACL (at s.2) and then to the Acts Interpretation Act 1901 (Cth) without regard to the relevant State Interpretation Act. Each of the State application laws has a provision to that effect. Importance of the introduction of the ACL. The introduction of this new legislation was important to the whole of Australia in a number of ways: a.) A single national law. Undoubtedly the most significant change introduced by the ACL is the uniformity of consumer regulation across the country. The ACL replaced 20 different State, Territory and Commonwealth laws with one law. The same text applies whether as a law of the Commonwealth or of one or more States or Territories (Corones, 2011). b.) Easy to understand. The ACL is simpler and clearer than the equivalent provisions of the former Trade Practices Act and the earlier State and Territory Fair Trading Acts. A law that is easy to understand will result in fewer disputes, as businesses and consumers can have a common understanding of the ACL. c.) Better enforcement. Courts and tribunals across Australia will apply the same law to any disputes arising, allowing for clearer avenues of redress and greater consistency in outcomes irrespective of where the dispute occurs or where the court or tribunal is located. d.) Consumer guarantees. The consumer guarantees contained in the ACL are a major change from the Trade Practices Act provisions. These are statutory guarantees whose breach gives rise to statutory rights and statutory causes of action. Comparative analysis. The ACL continues to cover much of the same conduct that was previously prohibited under the TPA. In very broad terms, this encompasses: – misleading or deceptive conduct in trade or commerce, – unconscionable conduct, – specific unfair practices, including making particular kinds of false or misleading representations, conduct related to unspecified supplies, participating in pyramid schemes and the requirement to state a single price for goods or services in certain circumstances, – statutory warranties, which are now called ‘consumer guarantees’, – product safety, bans, recalls and warning notices, – information standards, – liability for manufacturers for goods with safety defects. In addition, the ACL retains parallel provisions creating offences in respect of many of the civil contraventions. The ACL covers a much broader range of conduct than was previously covered under the TPA, incorporating provisions that were previously found in State and Territory legislation and some entirely new provisions. Some examples are: – new provisions dealing with unfair contract terms, pursuant to which a term of a consumer contract will be void if it meets the statutory test for unfairness – a new provision extending the protection against liability for unsolicited goods to unsolicited services – a new prohibition on supplying goods, where multiple prices are displayed for those goods, at a price other than the lower or lowest of the prices displayed (s 47) – new provisions to regulate unsolicited consumer agreements (Pt 3-2, Div 2) – new provisions to regulate lay-by agreements (Pt 3-2, Div 3) – requirements that suppliers provide receipts for transactions over $75 (excluding GST) and itemised bills for services if requested to do so within 30 days of the services being provided (Miller, 2009). Misleading and deceptive conduct under the ACL (section 18). A broad prohibition against misleading and deceptive conduct in trade and commerce has been a fundamental part of Australian law since 1974, and this is unchanged under the ACL. The prohibition against misleading or deceptive conduct is contained in section 18 of the ACL. Section 18(1) mirrors section 5 of the TPA, except that it now refers to “a person” rather than a corporation. This makes clear that employees can be the primary defendant in any litigation, which is important if the company is insolvent. It still applies, only to conduct in “trade and commerce”. Section 18 of the ACL is a comprehensive provision with a wide impact. It does not create liability. Instead, it establishes a norm of conduct from which a person deviates at their peril. Importantly, the operation of the provision is not limited to consumer protection; it applies to all aspects of “trade or commerce”. A person can contravene section 18 by either act or omission. For example, a claim that a product does or does not have certain attributes in advertising, marketing or product specifications may give rise to a contravention if the statement is incorrect. Further, if a person makes a representation with respect to a future matter – for example a representation as to a product’s performance – and the person does not have reasonable grounds for making that representation, then the representation will be taken to be misleading. An omission, or silence, can also be held to be misleading or deceptive conduct. In some cases it might not be necessary to invoke non-disclosure at all where a statement which is literally true, but incomplete in some material respect, conveys a false representation that it is complete. Until the enactment of civil liability reforms, claims based on misleading and deceptive conduct were frequently pleaded in product liability claims involving an alleged failure to warn, or where the instructions for use were said to be inadequate (Healey, 2008).. This cause of action was abolished in personal injury claims as part of the civil liability reforms in 2006 (with a limited exception provided in relation to smoking or other use of tobacco products). While a plaintiff can no longer recover damages for personal injury following a contravention of this section, proof of misleading and deceptive conduct or false representations will be relevant in determining whether there has been a breach of a statutory warranty, and/or whether a product is defective under other provisions of the ACL. Further, the prohibition against misleading or deceptive conduct remains relevant in relation to property damage claims and claims for economic loss (Corones, 2011). Section 18 of the Australian Consumer Law provides that ‘a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive’. The terms “misleading” and “deceptive” are not defined in the Act, and the courts have not given a precise definition of misleading and deceptive conduct. The overall impression created by the alleged conduct determines whether it is likely to lead a significant number of people into error or has the tendency to deceive such persons. In general, misleading someone may include conduct ranging from lying to them, to making false or inaccurate claims, to creating a false impression, to leading them to a wrong conclusion, to omitting important information. It is not necessary to establish that the trader intended to mislead or deceive. A person or corporation may have engaged in conduct that was misleading or deceptive even if they have acted honestly and reasonably. In some instances silence may even constitute misleading and deceptive conduct but this will depend on the circumstances of the case. For example, the courts have held that a failure to disclose information was not misleading where it was not deliberately withheld. The courts have also held that mere “puffery” (enthusiastic or exaggerated claims used by advertisers to promote products and services when it is obvious that the claims should not be taken seriously) will not constitute misleading or deceptive conduct (Corones, 2011). Remedies for breach of Section 18 of the ACL. Remedies for breach of Section 18 of the ACL may be available if it can be shown that the misleading or deceptive conduct took place and the aggrieved party relied upon the conduct, or was induced by the conduct to do something, and as a result suffered loss. Potential remedies include: a.) Injunctions A regulator or an affected person may seek an injunction to stop a business from engaging in conduct in breach of the ACL, or to require the business to do certain things. b.) Damages A person may apply to a court for damages, to compensate for their loss or damage resulting from a contravention of the ACL. c.) Fines There are no pecuniary penalties available for a breach of section 18. However, for a breach of many of the related provisions in the Australian Consumer Law, the Australian Competition and Consumer Commission (ACCC) can seek pecuniary penalties of up to $1.1 million from corporations and $220,000 from individuals (Miller, 2012). d.) Compensation orders A person may apply to a court for a compensation order to compensate for loss or damage suffered, or likely to be suffered, as a result of a contravention of the ACL. Conclusion. Consumers are often in a relatively weak position and lack the ability to protect themselves against dishonesty or exploitative terms (Healey, 2007). To address this imbalance, the common law still applies under the ACL to give consumers additional legal protection. Consumer protection laws supplement contract law and in some circumstances override contract law rules (Miller, 2012). Although there is substantial overlap between the conduct regulated by the previous consumer protection provisions that were in the TPA and the new provisions in the ACL, there will besome uncertainty as to how the ACL operates until there is some case law on the new provisions. A number of provisions that are intended to operate in the same way as earlier provisions have been redrafted for a variety of reasons, including clarity; to accommodate the structure of the ACL; to incorporate previous interpretations of the provisions by the courts; or because of changes in drafting style since the provisions were originally enacted. One example is the partial exemption from prohibitions on misleading or deceptive conduct and various kinds of misrepresentations that existed in s 65A of the TPA. This is now found in two separate provisions of the ACL: s 19 and s 38. Bibliography Corones, S. G. (2011). The Australian consumer law. Australia: Thomson Reuters (Professional). Healey, D. (2007). Guidebook to Australian trade practices law (5th ed.). North Ryde, N.S.W.: CCH Australia. Healey, D. (2008). Australian trade practices law. North Ryde, N.S.W.: CCH Australia. Miller, R. V. (2009). Miller's annotated Trade Practices Act: Australian competition and consumer law (30th ed.). Pyrmont, N.S.W.: Thomson Reuters (Professional) Australia. Miller, R. V. (2012). Miller's Australian Competition and Consumer Law annotated. Australia: Thomson Reuters (Professional). Read More