The Consumer Protection Act 1987 - Essay Example

Question 1 (a) Consumer Protection: The Consumer Protection Act 1987 enables a claim to be brought where harm has occurred as a result of defect in a given product. The idea is the imposition of strict liability so that the manifestation of restrictions means that in cases of negligence, or by the supplier the manufacturer, the actual factor of negligence need to not be established in a court of law. Payment made in cash In accordance with the law, in case of faulty goods, the need on the part of the consumer, first and foremost would be to prove purchase. This would mean that in case of a cash purchase, Natalie, would need to first and foremost, prove that she bought the goods, and this could be done only when she is able to produce a receipt. Once she has been able to produce the receipt and proven purchase, the burden of proof would fall on her as well, meaning that she would need to demonstrate that the goods were defective. Once this has been achieved, a refund would be in order. With cash, the problem that arises is that there is no proof of purchase, with the consumer other than the receipt that has been issued to the consumer by the supplier. In case the receipt has been lost or misplaced, or even in cases where no receipt was issued, Natalie would be entitled to no refund at all, meaning that until and unless she is able to prove purchase, she has no rights as a consumer whatsoever. Other than this, the standard concerns of the goods having a fault one could not have known about when it was purchased, or the good not matching the sample shown transcend the test as well. In case of cash purchases, more often than not there is no refund but the goods purchased could be exchanged. Payment by cheque In case Natalie had made relevant payments by cheque, the best remittance again would be to exchange the products that she bought, given the fact that in case the cheque had been cashed already, the only other remittance available would be to refund money. When cheques are issued, however, other methods of grievance redressal are also available. Payment by cheques is allowed in cases of special agreements only. So in case the good are defective, payment on cheque could be stopped until: There is an exchange for an identical product that is free from defects; There would also be the option of ensuring that the price of the product so that it could be brought in proportion to the defect; or She could ask for a free repair of the defect. Payment by credit card In case payment has been made by credit card, the rights of redressal for Natalie become easier to get, given the fact that the credit card statement is a valid and acceptable proof of purchase, and if Natalie is able to prove that the goods that she bought were defective, the onus of proof of purchase would be visibly reduced, so that the ultimate redressal for her would be that the supplier, or the store from where she made her purchases would have to debit the amount of purchase/ defective goods to her credit account. The remittance here is that the amount needs to be credited. ‘ By a Bill of exchange If Natalie bought the products from the supplier based on a bill of exchange, the idea would be that the supplier would retain ownership of the product delivered until complete settlement of all claims from an ongoing business relationship with the customer. If payment is made with a cheque or bill of exchange, the property rights remain in effect until cashing of the cheque or redemption of the bill of exchange. Cheques and bills of exchange are accepted only on the basis of special agreements, and would be acceptable as the mode of payment only when the supply side of the contract has been fulfilled. In the case of this event, Natalie would be well within her rights to renegade on the payment of the bill, and return the goods in whichever condition she found them when she bought them to the retailer, especially given the fact that in case of a scenario when the bill of exchange the supplier retains ownership of the goods until a complete settlement of claims is carried out and only in cases when the consumer, (Natalie) would be satisfied with what she bought. Question 1 (b) According to Australian credit card law, if a credit card is lost or stolen, the conditions of use require the cardholder to notify the financial institution or issuer “immediately” or “as soon as possible” (Latimer, 2008). The cardholder is not liable for losses from authorized transactions after notification to the card-issue of misuse, loss or theft of the card (under cl 5.4 of the EFT Code of Conduct (2002): s16(670). The EFT Code of Conduct says that the account holder is liable for losses from authorized transactions if it: Contributed to the losses through fraud or breach of security (such as by voluntarily disclosing a PIN), or Delayed notification after it became aware of the misuse, loss or theft of the access method (under cl 5.5, 5.6 of the EFT Code of Conduct (2002). In the context of this case, there are a couple of variables that one would have to consider before one would arrive at a definitive conclusion about the duties and liabilities that Natalie would have. First and foremost, one would have to determine whether or not the PIN that was available to the thief in Natalie’s electronic organizer would constitute a contribution to the fraud. The fact that the PIN was being carried and was not kept under password would not constitute a breach, simply because of the fact that the leak was not on purpose. Second, she would need to prove, that on discovering theft, she acted as a reasonable consumer and reported the event as soon as she could. In the context of this case therefore, if the bank were to refuse repaying Natalie the money stolen from here it would have to satisfy either of the two criteria. First the bank would need to prove, that Natalie as a reasonable consumer, failed to exercise appropriate care and did not care to inform the bank about the stolen card and PIN thereby freeing the bank of all liability and that the payment made by the bank was made in good faith. Given the fact however that period of notification according to the law extends to 30 days, within which the item or statement of account and notify the bank could be made. In this respect therefore, Natalie in her capacity as reasonable customer could allege that the bank did not exercise ordinary care in paying the item and that the failure substantially contributed to loss. Malfunctioning ATM machine: Under section 18 of the EFT, it is clarified that the responsibility for the a malfunctioning machine and damage resulting from that malfunction would rest with the bank, which would mean that the bank owning the financial instrument that has malfunctioned would have to reimburse a consumer for the damages that he or she incurs as a direct consequence of the malfunctioning financial instrument such as an ATM machine. It states, “The stored value operator is liable to the user of a stored value facility for any losses (including any amount of lost stored value) arising from a failure to execute or the defective execution of the user’s transactions, where the failure to execute or the defective execution is attributable to a malfunction of the facility or of a device, terminal or other equipment controlled or provided by or on behalf of the stored value operator, provided the malfunction was not caused by the user knowingly or in breach of the Terms and Conditions of use of the facility”. Stored value operator’s obligations Section 18.1 of the same EFT code however, separates damages incurred from the stored value operations. The idea in essence that while damages to a consumer would be the responsibility of the company that owns the financial instrument/machinery, but value additions and a problem with future plans would not flall within the ambit of this judgment given the fact that it is unfair to expect financial institutions to concur responsibility with respect to future plans that could not fall in place because of a mal functioning machine, A stored value operator: (a) may not avoid its responsibility to meet any obligation owed to users by reason only of the fact that another system participant has caused or contributed to the failure to meet the obligation; and (b) shall not require users to raise complaints or disputes regarding the use of a stored facility with, or have these complaints or disputes investigated by, any other system participant. Question 2 Accommodation Bill An accommodation bill is a bill of exchange signed by a party as drawer, drawee, and endorser to accommodate another party whose credit is not strong enough to enable him to borrow on his single name. It is drawn for the purpose of arranging temporary finance. Therefore an accommodation bill is in essence, a bill of exchange which has been drawn on and accepted by a reputable party for the purpose of giving value to the bill so that it could be discounted. Ordinary bills are drawn for some consideration-known also as Trade Bills. But, accommodation bills are those that are drawn and accepted without any consideration. Here, the idea is to assist one or both the parties financially. accommodation bill is also known as a Kite Bill-Kite Flying or Kiting is the discounting of an accommodation bill at a bank, knowing that the person on whom it is drawn will dishonor it, if the required amount is not remitted to him. Given the fact that no considerations are involved, accommodation bills are not legally enforceable. Though accommodation bills are not bills from a legal point of view, yet they are in practice no way different from an ordinary bill. The idea behind is that one party draws the bill and another party accepts it. Then the drawing party gets it discounted from the bank and received ready cash of which they are in need. The money received is either wholly utilized by the drawer or by both, the drawer and the acceptor. Before, the due date approaches, the required sum of money is sent to the acceptor in order to make him able to honor the bill and the bill is honored by the acceptor on the due date. Thus, although there is no legal liability, there exists a strong moral understanding between the parties concerned. Duties of parties involved Where an accommodation bill is concerned, the standing of the acceptor is the first consideration but the drawer and endorsers, if any, are hardly less important. The acceptor of an accommodation bill is a surety [49 Geo. 3, c. 121, s. 8], and must prove his debt under a commission. He would also pay to the commissioners the duties payable for the same. Where a bill is accepted or endorsed when it is overdue, it shall, as regards the acceptor who so accepts or any endorser who so endorses it, be deemed a bill payable on demand. The drawer of the bill though not strictly a surety fir the acceptor, who is generally primarily liable may be in the nature of a surety; but the drawer if first liable by the real nature if the transaction, with reference to the distinction whether the acceptor had effects or not, is liable to have relief as a “person liable with the stat. 29 Geo. 3, c. 121, s, 8. Id. Protection of bank in case of bankruptcy The drawer of the bill payable to his own order but drawn by him for the accommodation of the first indorsee is not surety for or liable for the debt of the indorsee. The acceptor of an accommodation bill is a surety, and must prove his debt under a commission against the drawers. The drawer of an accommodation bill may discount it, provided there is no usury or fraud in the transaction [Owens v. Miller, 29 Md. 144. 249]. The certificate is a bar, not only to any action at the suit of the surety for the recovery of the money paid in discharge of the original debt, but to any action for the consequential damage accruing from the non-payment by the bankrupt of such debt when due; therefore, where the acceptor of an accommodation bill brought an action against the drawer after he had become bankrupt and obtained his certificate, for not providing him with funds, whereby he had incurred the costs of an action, and been obliged to sell and estate in order to raise money to pay bills. Here it was held that the certificate could be a good bar to action. Where the protection of the bank is concerned one would have to remember the fact that under 6 geo 4 c. 16 it has been held that an accommodation endorser is a person liable to pay the bill for the party accommodated; against whom therefore, if he became bankrupt, such endorser, though not called on to pay the bill till after the bankruptcy may prove the amount [Bassett v Dodgin 9 Bing. 653;2 M & Scott, 777). How else the bill could be drawn up Another method by which the bill could have been drawn up would be to make it a simple bill of exchange and not an accommodation bill. A note drawn payable by installments is held good, and the holder is protected by the statute 3 & 4 Queen Anne; three days of grace may be demanded for every installment. The term 'usance,' in connection with foreign bills, denotes the customary tenor at which bills are drawn, depending upon the distance between countries; where usance is half a month, the time is fifteen days. A sola bill of exchange is a single bill, as distinguished from bills drawn in sets. In drawing a bill of exchange, care should be taken in the description of the payee, that he be not confounded with another of similar name. When a bill is drawn by procuration, the authority to draw is admitted, but not to indorse. The power given to another person to draw, accept, or indorse, by the term ‘per procuration,’ is recognised by the law only to a limited extent. It is held that any person giving value for a bill drawn, indorsed, or accepted ‘per procuration,’ without inquiring as to what extent such authority has been given, does so at his own risk, and will lose the amount if the authority be unauthorised. References Conditions of Sale and Delivery Heger GmbH European Diamond Tools. Retrieved September 11, 2010, Consumer Rights. Retrieved September 11, 2010, Latimer, P., (2008). 2009 Australian business law. CCH Australia Limited. p1033 Mathur, S., (2010). Trans Auto Engines Systems. Tata McGraw Hill. p329-331 Miller, L., Jentz, M. A., (2007). Business Law Today: The Essentials. Cengage Learning. p484-486 Refunds. Retrieved September 11, 2010, < http://www.ziggy.com.au/d-zz-refunds.pdf> Whittington, O. R., and Delaney, P. R., (2008). Wiley CPA Exam Review 2009: Regulation. John Wiley and Sons. P214 Read More