Legal Aspects - Australian Consumer Law - Coursework Example

LEGAL ASPECTS Legal aspects Question 16 Finn bought a software from Computer limited for the machine that he was using in his workplace. He did not have an idea about the software and he explained the same to the sales manager. As an accountant, he wanted a software that would allow him to have access to various databases through the internet to enable him to complete reports and accounts in a format that is acceptable to the regulatory bodies, especially the Tax Office’s electronic lodgement service, as well as, maintain his own internal office accounts and records. The sales representative of the company understood that Finn did not have knowledge of the software that he wanted for his work but he went ahead to mislead him with information telling him that the software was widely used by accountant. Finn asked again about the software before signing the purchase contract and its suitability for the purpose of his work, but the sales representative insisted that it was suitable for his purpose. According to section 18 of the ACL, it provides that a person should not in trade or commerce engage in behaviour that is deceptive or misleading to other party (Beale, 2012, P. 90). Parties who use deceptive statements are held to be in breach in case the consumer relied on the information given by the sales person or the supplier. There are some exceptions in trade or commerce where misleading or deceptive conduct cannot arise. They include to private or one-off sales, political statement and regulatory activity by government bodies. It had been established that it is not possible for a person to draft a document or contract that removes potential liability for misleading conduct. In the purchase contract that was signed by Finn, there was no mention of the suitability of the software for the purposes of the contract. The exclusion has that been inserted in the contract to ensure that suppliers do not take advantage of the consumers in their business dealing similarly to what happened to Finn. Therefore, when there is an exclusion clause in the contract that do not impose liability on the supplier of the products then the court will rule in favour of the consumer, as the consumer is not aware of the conduct of the supplier. Section 4(2) (a) of the CCA further defines conduct indicating that in order to determine whether a statement made was deceptive or misleading the conduct of the person who made the statement must be clearly defined. In the case of Finn, he trusted that the supplier would give him products of acceptable quality as to his description and purpose of work. However, the salesperson after taking into account that Fin did not have knowledge of the product he decided to use mislead him into buying the software where else he knew that the good was not fir for the purpose, which it was intended for by the consumer. Goods that are sold to the consumer must be of acceptable quality in the sense that they should fit the purpose for which the goods are intended for (Campbell, 2010, Pg. 98). The goods should be acceptable in appearance and in finish, free from defects, durable and safe. Therefore, the person selling the goods should have guarantee that the goods are of acceptable quality. However, the sale person in Computer Limited understood that the software he sold to the consumer did not fit all the qualities provided for under sec 54 (2) of the ACL. By so doing, he was in breach of the contract as he deceived the consumer into buying goods that were not of acceptable quality. Additionally, the salesperson had informed Finn that the software he had bought was fit for the purposes of his work, which turned out to be untrue. This is because when Finn installed the software it did not serve the purpose that is was intended for because he wanted a software that would manage to do some accounts, as he was an accountant. The reports and returns that the software made did not conform to the Australian Securities and Investment Commission or Australian Tax Office. If the reports do not conform to the Australian securities then it means that the company or the organization would be going contrary to the laws that govern the taxation law. According to section 206 (c) and (d) of the ACL which deals with products that are unfit for their purpose it states that failure of a product to be fit for its purpose will institute a major failure if it cannot be corrected easily or within reasonable time (Reynolds, 2011, Pg. 109). However, in the case of Finn the product that was provided did not fit the purpose; hence, there was an opportunity to replace the software and take the one that conformed to the desired needs. Suppliers understand that if a product cannot be replaced, repaired or refunded the initial purpose of the product will be denied. The Australian Competition and Consumer Commission encourages this view by emphasize on the guidance on the unfit purpose test than that of a reasonable consumer (Manacorda, Centonze & Forti, 2014 Pg. 64). This is because products should conform to products guarantee, for example, according to the ACCC’s consumer guarantees it is if minor failures to comply with a consumer guarantee can normally be resolved or fixed in a reasonable amount of time. In the case of Finn it was a matter of replacement and nor refund because if the product do not conform with the purpose that was intended to it then the company was obligated to make a refund. Therefore, in case Finn had asked for a replacement of the software that would function and do activities that were intended to it then the company would have agreed. However, he asked to be refunded the money that he had given in order to purchase the product. Although Finn was deceived by the salesperson, Section 18 provides that the supplier cannot be asked for pecuniary damages. The only remedy that the act provides is damages and repairing, replacing the product that does not fit the intended purpose. Therefore, when Finn asked for Monetary compensation it is correct to say that he does not have a claim against Computer Limited as they law provides for other remedies other than pecuniary if the consumer is misled. Finn relied on the information that was given to him by the salesperson without realizing that he was misleading him into buying a product that was not fit for the intended purpose. In contract law, it is very hard to prove that a person misrepresented the other person. Meaning that the burden of proof falls on the consumer to establish that the information that he or she relied on was misleading. Therefore, although it was clear that Finn had informed the salesperson that he was not acquainted with the software Finn expected him to give him proper information regarding the appropriate software that could be used in the accounting firm. However, the salesperson took advantage of the lack of knowledge of Finn as he informed him that the software that he had picked would function property in his business. When Finn was signing the contract, he did not establish whether it had guaranteed the quality and purpose of the good. Therefore, when he purchased the good from the beginning it was not indicated in the contract that it was fit for the purpose that it was intended. Under the ACL, consumers are protected from suppliers who may use misleading information to make the consumers buy their products. However, this is not acceptable under the law because misleading statements or advertising when relied on by a person may cause damages. The impact of sec 18 of the ACL has been very wide in the sense that the courts have been wary about misleading conduct that is in effect to displace the law for contract. Misleading or deceiving conduct must occur in trade or commerce in the sense that a commercial transactions must have occurred in order for the misrepresentation or misleading conduct to occur. Sec 18 of the Australian Consumer Law protects both the consumer and the supplier in the sense that, on part of the consumer the section ensures that the supplier gives the consumer goods that conform to the requirements of the products. The supplier, on the other hand, is protected by ensuring that the consumer does not claim for pecuniary damages in products that can be replaced or repaired. Therefore, in the case of Finn he bought a product that did not conform to the requirements of the descriptions that he had given the salesperson. This is because the salesperson decided to mislead him into buying a product that was not to his description. For that reason, the only claim that he has under the law of consumer protection is replacement of the product with another product that conforms to the requirement, but not with pecuniary compensation. This means that computed Ltd had a reason to refuse the demands that were being given by the consumer on the product that was sold to them. However, the company was also at fault because they failed to include the suitability of the software purposes in the contract. Purchasing decisions by consumers are vital in the development of competitive and dynamic markets. For that reason, consumers need to trust the information that is provided by the seller in a commercial transaction to help them in making good decisions on the goods they intend to purchase. In that, credence goods, which are goods that are difficult for the consumer to determine whether they are good or not or true its claims the consumer depends on the information of the supplier on whether the product is good. Therefore, in such a case when suppliers make false or misleading claims they compromise the effectiveness of operation of markets. In business transactions, it is wrong to make incorrect statements that are going to create a false impression. These false statements include those statements that are made in advertisement, product packing, statements made in the media or statements made by a person representing your business. In that, a person should not make false claims regarding the value, age, quality, price and benefits of goods and services or any guarantee or warranty. Under the Australian Consumer Law section 18(1) provides that individuals should not, in commerce, engage in conduct that is misleading or deceptive or conduct, which is likely to deceive or mislead (Pride, 2011, Pg. 56). This section applies to business-to-business cases; additionally, the section is used when an over-excited sales persons persuades a consumer to buy goods with statements that turn out to be untrue. The courts have held that ‘deceptive’ requires an intention to commit fraud or deceive, misleading on the other hand, requires no particular state of mind or intention. Proving fraud in court is not an essay task, but the prohibition of any misleading conduct imposes strict liability. This ensures that people do not lead other into error in consumer and commercial dealings. Schedule 2 of the Competition and Consumer Act 2010, which was formerly referred to as the Trade Practice Act 1974 forbids conduct by corporation in commerce and trade, which are deceptive or misleading or conducts that are likely to mislead. Additionally, section 12DA of the Australian Securities and Investment Commission Act 2001 forbids deceptive or misleading conduct in financial services. The misleading or deceptive conduct doctrine of the Australian law is meant to offer consumer protection by preventing businesses from misleading their consumers. Section 18 (1) of the ACL unrestricted in it wording where it can be understood by any person reading the clause to understand that it applies to all business transactions. However, in order to determine what misleading conduct is it is important to define it. In that in section 4(2) (a) of the Competition and Consumer Act 2010 conduct is defined as the “ doing or refusing to do an act; including the making or, or the giving effect to a provision of, a contract or arrangement, the arriving at or the giving effect to a provision of and understanding or the requiring of the giving or the giving of a covenant.” Therefore, whether a conduct is deceptive or misleading the conduct of the person who did the act should first be determined wholly. In that, for a conduct to be held to be misleading it must contain a misrepresentation that is capable of inducing the relevant person into error. Misrepresentation refers to the situation where an individual induces either the other person to enter into contract partly or entirely using a false assertion. Additionally, misrepresentations are false statements of facts; however, in some cases, true statements may also be misrepresented if they do not have the ability to induce customers into error. Therefore, the test that is conducted by the court determines whether the conduct mislead or is likely to mislead. When a passing is passing information he or she does not intend to mislead unlike the person who provides the information directly to the consumer. Section 29 of the ACL forbids false misrepresentation in relation to a large number of matters with respect to goods or services that include need, price, standard, quality or value and desirability among others. Additionally, section 9 of the Fair Trading Act forbids false or misleading representations, which are also prohibited under section 13. The burden of proving the breach of prohibitions in most cases falls on the Commerce Commission in its implementation capacity (Campbell, 2010, Pg. 34). Therefore, the consumer has the burden to establish that the supplier gave him or her information that was misleading before they entered into a contract. Additionally, the consumer has to show that he or she relied on that information in order to make the purchase. It has been established that section 18 of the ACL protects the consumer in commercial transaction. For example, when parties are negotiation in the sale of business (Kenyon, NG-Loy & Richardson, 2012, Pg. 67). However, it is important to establish whether the consumers are guaranteed on their products or goods. Because even though some of the products come with a warranty that guarantees the quality of the good it is not enough as people rely on the supplier to give them information on the products. Section 54 of the ACL states that products that the supplier sells to the consumers must be of acceptable quality in the sense that they should be safe, lasting with no faults. The products should look acceptable, as well as, do all the things that someone would expect them to do. The Act provides that acceptable quality takes into account what the product would normally do or what it is expected to do for the type of product and price (Morandin & Smith, 2011 Pg. 45). Additionally, the product should match the descriptions made by the salesperson, in promotions and advertisements as well as labels and packaging. The product should also meet the extra promises that are made about the performance, quality and condition such as money back offers and guarantees (Latimer, 2011, Pg. 87). Lastly, the products must have spare parts and facilities that are available to hold in repairing the products within reasonable time after purchase. Moreover, the services provided by the salesperson should be acceptable and they should be provided with skill, care or technical knowledge while taking all the necessary steps to avoid damage or loss. The products that are sold to the consumer must also fit their particular purpose whereby the supplier should ensure that the product functions as he or she has told the client. In so doing, the product will serve it purpose and the organization will be free of claim of deceiving or misleading the consumer. When goods are said to be of acceptable quality it means that the goods will reach the standards that a reasonable consumer would repute as good enough. Consequently, when suppliers are selling goods or products to the consumer they must ensure that the goods are of acceptable quality. The product that the consumer buyers from the supplier should be fit for the purpose. However, in case the product is not fit for the purpose then it constitutes to a major failure if it cannot be remedied. This is provided for under section 260 (c) and (d) of the ACL it provides that failure of a product to be fit for the purpose because it has defects will constitute to a major failure in case that defect cannot be remedied easily and with reasonable time. Australia Consumer law provides remedies for person’s who have been found in breach of the contract if they are found to have deceived or mislead the other party into buying goods or products. When a person or corporation have been found to be in breach to have deceived the person buying the goods the consumer has remedies under the law that can help in recovering his goods (Corones, 2012, Pg. 56). However, breach under section 18 does not provide for pecuniary penalties in that is a person be found to be in breach under section 18 of the ACL then the supplier cannot be asked to pay pecuniary penalties. Conversely, if a person is found to be in breach of numerous provisions in the Australian Consumer Law, the ACCC can seek pecuniary penalties of up to$220,000 from individuals and $1.1 million for organizations. Section 271 of the ACL allows buyers to enforce the guarantees of acceptable quality and comply with the samples, and provide spare parts and repair network that are in compliance with an express warranty directly against the manufacturer. Therefore, if the consumers guarantee is not meet, the failure to comply with is a major issue. It has been established that the rejection period has not lapsed then the consumer is entitled to their choice of refund, replacement or repair of the product. Secondly, a victim of deceptive or misleading conduct is entitled to damages that is monetary compensation in case they have suffered damage or loss because of the conduct of the supplier. Loss or damage in ACL is the same as that in tort or contract law. Section 82(1B) of the CCA provides that if a victim contributed to the damage or loss that they suffered the court can reduce the amount of damages awarded to the consumer. Therefore, the law protects the consumer from suppliers who are misleading and deceptive and who cannot give their buyers goods of acceptable quality. References Beale, H. G. (2012). Mistake and Non-Disclosure of Fact Models for English Contract Law. Oxford, OUP Oxford. http://public.eblib.com/choice/publicfullrecord.aspx?p=1029653. Campbell, D. (2010). International protection of foreign investment. New York, NY, Juris Publishing, Inc. Campbell, D. (2010). Remedies for international sellers of goods. Huntington, N.Y., Juris Publishing. Corones, S. G. (2012). The Austalian consumer law. Rozelle, N.S.W., Lawbook Co. Kenyon, A. T., NG-Loy, W. L., & Richardson, M. (2012). The law of reputation and brands in the Asia Pacific. Cambridge, Cambridge University Press. Latimer, P. S. (2011). Australian business law 2012. North Ryde, N.S.W., CCH Australia. Manacorda, S., Centonze, F., & Forti, G. (2014). Preventing corporate corruption: the anti- bribery compliance model. http://dx.doi.org/10.1007/978-3-319-04480-4. Morandin, N., & Smith, J. (2011). Australian Competition and Consumer Legislation 2011. Sydney, CCH Australia. Pride, W. M. (2011). Marketing principles. South Melbourne, Vic, Cengage Learning. Reynolds, C. (2011). Public and environmental health law. Annandale, N.S.W., Federation Press. Read More