Specific Contractual Issues about the Australian Consumer Law - Literature review Example

Heading: Australian Consumer Law Your name: Course name: Professors’ name: Date Introduction In the increasingly competitive corporate world, businesses strive to maximise profits by all means. As a result, several companies find themselves in legal issues with the consumers because of unfair business practices. Following that, different jurisdictions have specific consumer laws that protect the consumers from illegal business practices by companies. The Australian Consumer Law was created to serve this purpose and guide consumers and companies on the appropriate ways of conducting business. The legislation guides on contractual issues including unconscionable conduct, misleading or deceptive conduct, false representation, unfair consumer contracts, and consumer guarantees among other unfair practices. This paper intends to advise the BHP Billiton Oil on specific contractual issues with regard to the Australian Consumer Law. Background BH Billiton Oil is a leading mining company in Australia, established from a merger of Billiton and BHP. It was established in 1860 and since then, it is among the biggest producers of main commodities including copper, aluminium, energy coal, manganese, iron ore, nickel, metallurgical coal, titanium, silver, uranium, gas, and oil. It has more than 100 sites across the world, and 100,000 contractors and employees working with it. To ensure smooth running of its business and satisfaction of consumer needs, knowledge about Australian consumer Law and consumer protection are highly indispensable for the company’s management. It is imperative that the management has adequate knowledge on specific contractual issues to enhance its business practices (BHP Billiton Oil 2012). ACL According to Australia Government (2010), the Australian Consumer Law is a sole, national regulation about fair-trading and consumer protection that is applicable nationally in every Territory and State. Currently, consumers have similar expectations and protections concerning business conduct in every part of the country. Likewise, organizations have similar responsibilities and obligation across the country. According to the Productivity Commission, the reform could result in annual benefits to the community worth between $1.5 and $4.5 billion. Additionally, Australia Government (2010) says the law replaces various existing State and Territory and national consumer laws and elucidates its understanding for both Australian businesses and consumers. It also entails an agenda to Competition and Consumer Act of 2010 that was formerly Trade Practices Act 1974. The law is applicable as a Commonwealth law, and every State and Territory is required to incorporate within its jurisdiction in order to have it applicable throughout the country. The Australian tribunals and courts, including tribunals and courts of the Territories and States enforce it. The ACCC and every Territory and State’s consumer law agency administer the law. Besides, the Australian securities and investment commission act 2001 (ASIC Act) generally reflects the law in its provisions in order to treat financial services and products equally. Consumer guarantees Consumer guarantees offer consumers a complete set of rights concerning the services and goods acquired. They central principles as implied conditions and warranties, which formerly existed in State and Territory laws on fair-trading and the Commonwealth Trade Practices Act 1974 contains the consumer guarantees. Besides, they do form distinct obligations and rights more explicitly. The current precedents and case laws applicable to the former law can enable the interpretation and application of the consumer guarantees. Moreover, it worth noting that the financial services’ warranties contained in the ASIC Act remains applicable and ASIC separately administers them. Temporarily, the implied conditions and warranties in territory and state Trade Practices Act (TPA) 1974 and commercial laws cover appropriate services and goods purchased prior to January 1, 2011 (Australia Government 2010). Furthermore, the BHP Billiton Oil management needs to understand fully what consumer guarantees entail. It is imperative to note that both supplies and producers automatically give guarantees on particular goods sold, hired, or leased, as well as services provided to the clients. These rights are existent despite the warranty the manufacturer or supplier provides. In this context, a supplier includes anyone in commerce or trade who sells services or goods to the consumer, such as trader, service provider, and retailer (Graw 2012). On contrast, Blum (2007) holds that a manufacturer involves a business or a person making or putting things together, or putting their names on the particular goods. This could include an importer, if the manufacturer has not office in the country. Both the manufacturer and a supplier of goods guarantee that the commodities have the desired quality and meet the description requirements. They also guarantee the honouring of any direct warranties. Suppliers ought to guarantee that the client is purchasing goods with clear title, unless stated otherwise. They also guarantee that the products have no undisclosed securities, and that they are suitable for any revealed reason. Moreover, suppliers should also guarantee products have a right to uninterrupted possession, and that they equal demonstration or sample model (Australia Government 2010). Furthermore, Graw (2012) asserts that they should guarantee that businesses give their services with suitable skill and care, and are appropriate for any particular intention. They should also ensure that firms offer the services within a reasonable time whenever there is no time set. On the other hand, manufacturers should guarantee the availability of spare parts and repairs. In addition, knowledge on the applicability of the law is also essential to the BHP Billiton Oil management. Consumer guarantees are applicable to services and goods that a consumer purchased before January 1, 2011 from either a manufacturer or a supplier in the trading process. They are applicable to any kind of service or good that costs up to $40,000, and services or goods that cost over $40,000 that are usually essential for domestic, personal, and household functions. Consumer guarantees also apply to trailer or a vehicle. Here, the cost of the trailer or vehicle is immaterial (Australia Government 2010). It is also crucial to note in the event that failure of a service or a good to satisfy a guarantee, a consumer can have rights against the supplier or a manufacturer, who should then give a remedy. A remedy concerns an effort to correct a deficiency, fault, or failure to satisfy a requirement. In case of a minor problem in a product, the supplier may opt between giving a refund or replacement or a repair. However, in case of a major failure, the consumer may request for compensation, or reject the products, and select either a replacement or a refund. Consumer protection agencies can take a legal action in place of affected clients, when a manufacturer or supplier fails to satisfy the consumer guarantees’ requirements (Paterson, Robertson, & Duke 2012). Consumer guarantees cover goods provided a business sell them in commerce or trade and the consumer purchases it. They also cover leased, second-hand, or hired goods. Nonetheless, certain consumer guarantees are applicable whether a business sells the products in commerce or trade. These guarantees are as to undisturbed possession, title, and undisclosed securities. Notably, commerce or trade imply in the process of a manufacturer or supplier’s professional or business activity including a non-profit activity or business. Consumers refers to an individual buying any product that costs up to $40,000; a trailer or a vehicle employed to transport goods; and products that cost $40,000 that are usually applied for household, personal, or domestic purposes (Paterson 2011). The management should also know that consumer guarantees do not cover all goods. Some of the goods not covered in this case include those purchased before January 1, 2011. The TPA 1974, implied warranties, conditions, territory, and state law function prior January 1 2011. They also do not cover from one-off sales by private sellers, such as garage fetes and sales. More so, Australia Government (2010) asserts that they do not cover for goods purchased at auctions, where the auctioneer serves as owner’s agent. They also exclude products costing over $40,000, which an individual would usually purchase for business purpose. Consumer guarantees also exclude products that people buy to re-supply or on-sell, as well as those that people want to utilise in business for manufacturing or producing or repairing other products. In terms of services, the management should know that some of the services costing u to $40,000 despite their use or intention, and well as those costing over $40,000 and obtained for household, domestic, and personal reasons. Nonetheless, consumer guarantees for no cover services purchases prior to January 1, 2011, as well as those costing over $40,000 for commercial purpose. They also do not cover insurance contracts, as well as storage or transportation of products to consumer’s trade, business, occupation, or profession (Australia Government 2010). Unconscionable conduct The ACL establishes certain responsibilities and rights for business in their daily dealings with clients and other firms including prevention of unconscionable conduct. This refers to an action or statement, which is so irrational that it disregards good ethics. A specific conduct may be unconscionable if it is mainly oppressive or harsh. It requires more than mere hard commercial negotiation; it implies doing what ought not to by good conscience (Paterson, Robertson, & Duke 2012). In relation to business, a company should not act unconscionably when supplying or selling products to a consumer; and when acquiring or supplying products to or from a company. There are several instances of unconscionable conduct by a business may, and they vary depending on the situation. First, a trader acts unconscionably if he explains the contractual conditions improperly to someone he knows that has a learning problem or does understand English. This also happens when a trader fails to allow adequate time to read a contract, seek advice, or ask questions. Traders also act unconscionably if they use a relative to a friend of a client to manipulate the client’s decision. Moreover, traders act unconscionably when they fail to reveal fundamental contractual terms to the other party (Blum 2007). Furthermore, the BHP Billiton should know that inducing an individual to sing a one-sided or blank contract amounts to unconscionable action. Additionally, taking advantage of lowly paid clients through false statements concerning the actual loan cost entails unconscionable act. More so, use of high-pressure tactics including refusal to accept no for an answer qualifies to be an unconscionable act (Paterson, Robertson, & Duke 2012). Paterson (2011) says that ACL has specific principles to help consumers and businesses in comprehending what entails unconscionable conduct. They also enable courts make informed decisions concerning unconscionable conduct. Under ACL, unconscionable conduct is not restricted to historical judge-created regulation. Moreover, it is unnecessary to indicate that the weaker party had a disability or special disadvantage that the stronger one exploited. The law also states that a conduct or behaviour can be unconscionable even if that complainant did not incur any damage or loss where no particular victim is recognised (Popat & McDougall 2011). ACL also recognises that unconscionable conduct is unlimited to circumstances involving a contract. Even so, in case of contract, the courts may consider how the parties entered a contract, for instance use of pressure in negotiating, as well as the contractual terms and extent of its execution (Australia Government 2010). For the BHP Billiton Oil to avoid acting unconscionably or suffering from unconscionable conduct, the management should know certain practical suggestions. Firstly, they should ensure that all business agreements are in writing, and ensure that they absolutely understand all contractual terms. The management should also avoid signing of every agreement before through reading. It is also crucial to ask for plain language clarification and acquire autonomous professional financial or legal advice if in doubt. If the management feel like it is handled differently, it should inquire. What is more, the management should encourage negotiations of wrong deals through high-pressure sale strategies. It should be cautious if given tight deadlines to meet. Looking for the best contract and trying to bargain the desired result is essential to the management. The management should also avoid suspicious deals, as it may be an oppressive or unreasonable deal (Popat & McDougall 2011). According to Goldring (1998), to avoid involving the firm in unconscionable conduct, the management should be reasonable in executing its rights in an agreement; avoid exploiting the other party during negotiations; and consider vulnerabilities and features of the clients. It is also imperative to ensure that the contracts are easy to understand and comprehensive. Explicit disclosure of vital or uncommon condition and terms of a contract is critical to the company. All clients should also understand all contractual terms and conditions, and should properly consider the offer. A cooling-off period, as well as giving consumers a chance to consult before accepting the deal is indispensable for best business practices. More so, the management should openly resolve complaints, and avoid rewarding staff for unfair, pressure-oriented selling (Australia Government 2010). In case a company suspects that it is subjected to unconscionable behaviour, it is imperative to contact ASIC, ACCC, or local agency. It can also take a private action against the other party. In an event that a court of law determines that a firm has acted unconscionably, some of the remedies include financial penalties, compensation for damage or loss, declare the deal void, either wholly or partly, performance or refund of particular services, and varying the arrangement or contract (Paterson 2011). Misleading or deceptive conduct Another fundamental issue regarding consumer law that the BHP Billiton Oil management ought to know involves misleading or deceptive conduct. It is illegal for any business to make statements deceptive and commerce are deceptive or misleading, and that would be probable to deceive or mislead. Failure to reveal relevant information, opinions, promises, and predictions may be also be deceptive or misleading. Businesses should not depend on disclaimers and small prints as excuses for deceptive or misleading conduct. Misleading or deceptive conduct consists of statements and actions including advertisements, quotation, promotions, statements, and any representation by an individual (Paterson 2011). Blum (2007) says that business conduct is possible to violate the law if it leads to a misleading general feeling among the value, price, and quality of consumer products. Here, business statements and actions matter, rather than its intensions. A business may deceive and mislead without the any intentions. For instance, a business name proposes an affiliation with a developed institution. The name may deceive or mislead due to similarity. The trader’s purpose when selecting a business name does not matter. Goldring (1998) argues that it is also imperative for the management to know about puffery, which entails wildly exaggerated, vague, or fanciful claims that no rational individual could probably take it seriously, or find it deceptive. For instance, an owner of a cafe alleges to brew the best coffee worldwide. In addition, silence is can also amount to deceptive or misleading at times. A firm may violate laws by failing to reveal relevant information to a client. The management should know that silence becomes deceptive or misleading if an individual fails to caution others on facts that they only know, and the information is vital to the decision made. It can also be deceptive of misleading if a business conceals significant details an individual ought to know. Moreover, silence may be deceptive or misleading if an alteration in situation implied information already given was wrong. Whether silence is deceptive or misleading depends on the situation f each case (Paterson, Robertson, & Duke 2012). As Paterson (2011) says, it is also worth noting that opinions and predictions may be misleading if the individual making them is aware it was wrong, did care if it was right or wrong, or had no grounds to make it. In handling this, there are certain exceptions for those who provide information including television and radio stations, and newspaper and magazine publishers. Information providers are legally responsible if they publish deceptive or misleading advertisement. Nevertheless, they may not be liable if they are in that business; receive an advertisement in the course of the business; and they were unaware and did not suspect that the item was deceptive or misleading. Some of the possible incurred when a court finds one guilty of the deceptive or misleading conduct include injunctions, damages, declarations, compensatory orders, non-punitive orders, and non-party orders. Others include public alerts, court-enforceable undertakings, and issue substantiation. Criminal sanctions and fines are inapplicable (Paterson 2011). False representations The company’s management should also know that it is illegal for a business to make misleading or false representations concerning products during supply, offer to supply, and promotion of the products. Whether a representation is misleading or false depends on the situation. It is unconstitutional for a firm to create false testimonial. A firm should provide evidence that whatever statement made was not false. In law, it is an offense to create misleading or false representation (Goldring1998). Notably, Blum (2007) says that the maximum fine for the offence is $220,000 for a personal and $1.1 million for a corporate. Some of the examples of a misleading or false representation include the quality, standard, grade or value of a product. A business can also commit it on the style, composition, or model of the product. A business may also give a false or misleading representation in terms of product prices, as well as availability of spare parts of repair facilities. Some of the damages include damages, injunctions, compensation, disqualifying orders, negative publicity orders, and corrective advertising orders. Unfair contract Popat and McDougall (2011) assert a contract is a consent formed between at least two parties meant to be lawfully enforceable. It arises when one contractual party proposes and the other demonstrates the intent to accept it. Contracts may be written or verbal and may be entered into in various signing, agreeing on phone, and clicking ‘I agree’ button on a website page. ASIC and the Act define consumer contract. Standard form contract entails an agreement that one party prepares and is not subject to bargaining among the parties involved. The offering process of the contract based on the ‘take it or leave it’. It is useful in the supply of products t clients in several industries including finance, telecommunication, gyms, travel, domestic building, utilities, and motor vehicles. To determine this, a court considers whether one of the contractual parties possesses one or more bargaining power in the deal. It also considers if one contractual party prepares the deal prior to any negotiations between the parties. The court also considers whether one of the parties was needed to either decline or accept the contractual terms, as well as whether one party got a chance to bargain the contractual terms. It is also imperative that the court considers if the contractual terms regard certain features of the other contract party, or the specific deal (Paterson 2011). Conclusion Certainly, ACL is in full force in every part of Australia; hence enhanced consumer protection from unfair business practices. ACL addresses various aspects including unconscionable conduct, unfair contract, consumer guarantees, misleading or false representations, and deceptive or false conduct. In order for the BHP Billiton Oil Company to succeed, it is essential for the management to have full knowledge and understanding of the ACL. The law is beneficial to the company in handling contractual issues effectively, as well as maintaining its consumers’ confidence. References Australia Government, 2010, The Australian Consumer Law. Pp. 1-31. http://www.consumerlaw.gov.au/content/the_acl/downloads/ACL_an_introduction_November_2010.pdf BHP Billiton Oil 2012, BHP Billiton Oil. Retrieved on November 1, 2012 from http://www.bhpbilliton.com/home/aboutus/ourcompany/Pages/default.aspx Blum, B 2007, Contracts: examples & explanations, New York: Aspen Publishers. Pp. 1-30. Graw, 2012, An Introduction to the Law of Contract, 7th ed, Thomson Reuters, Rozelle, N.S.W. Pp. 12-40. Goldring, J 1998, Consumer protection law, Federation Press, Leichhardt, N.S.W. Pp. 350-370. Paterson, J 2011, Principles of contract law, Thomson Reuters (Professional) Australia, Rozelle, N.S.W. Pp. 1-30. Paterson, Robertson, & Duke 2012, Principles of Contract Law, 4th ed, Thomson Reuters, Rozelle, N.S.W. Pp. 210-40. Popat & McDougall, A, 2011, International product law manual. Aspen Publishers, New York. Pp. 10-50. Read More