Competition & Consumer Law in Australia

Small Businesses------------------------------------------

Peter McLaughlin

Director

redchip Lawyers

Overview: Introduction to the Australian Consumer Law Consumer Protection:

Consumer Guarantees Lay-by agreements Unfair contract terms

Avoiding Unfair Business Practices Misleading or Deceptive Conduct False or Misleading Representations Unconscionable Conduct Representations About Country of Origin Information Standards

Replaces previous Federal and State legislation to create uniform law – standard terms and definitions

Introduces new law on unfair contracts New national consumer guarantee provisions New national lay-by provisions Structure of the ACL

The Act renamed the Trade Practices Act (Cth) 1974 as the Competition and Consumer Act 2010 (Cth)(CCA).

Uniformity under the ACL across Australia: Consumers have the same protections Businesses have the same responsibilities and obligations

Introduction to the Australian Consumer Law

Consumer Guarantees Previously implied warranties had to be enforced as breach of

contract – now a breach of the ACL Guarantees now automatically provided regardless of any

warranty Suppliers guarantee goods: Manufactures guarantee goods:

Express warranties Spare parts and repair facilities

Service providers guarantee services

Which goods are covered? All goods purchased for less than $40,000 If goods cost more than $40,000 but are used

for household or domestic purposes Vehicles and trailers Applies to second hand and ‘seconds’

What goods are not covered? Bought before 1 January 2011 One off sales (garage sales) Auction sales (where the auctioneer is agent

for supplier) Business purchases costing more than $40k Goods you buy to on-sell

What are the guarantees? The goods will be of an acceptable quality The goods will be fit for their purpose The description of the goods in any catalogue is accurate The goods will match any sample or demonstration model Suppliers and manufacturers will honour any express

warranties The goods will have clear title and be free of hidden

securities Manufacturers or importers will provide spare parts and

repair facilities.

What if the product fails? If a product fails to meet a consumer

guarantee, consumer may be entitled to a replacement, repair, refund or other remedy

But not if consumer changes their mind, damages the goods or were told about any defects before purchase

Remedy depends on whether major or minor issue

Minor problems Problems that can normally be fixed or

resolved (eg repairing stitching on clothing) Supplier can choose refund, repair or

replacement Supplier must have a chance to fix the

problem

Major problems If there is a major failure with the goods, the

consumer can: reject the goods and get a refund reject the goods and get replacement, or one

of similar value if reasonably available, or keep the goods and get compensation for the

drop in value caused by the problem

Major problems Major problem with a product when: you would not have purchased the product if you had known

about the problem. the product is significantly different from the description,

sample or demonstration model you were shown. the product is substantially unfit for its normal purpose or for

the purpose told to supplier (eg ski jacket is not waterproof) the product is unsafe (eg electric blanket with faulty wiring)

Returning/rejecting goods Only applies if major problem Must reject within a reasonable time Consumer must return unless cost is significant – if so

supplier must collect Consumer must show proof of purchase Original packaging not required

Guarantees for services Services costing less than $40,000 Services costing more than $40,000 but used

for household or domestic purposes A supplier must supply services;

with due care and skill

which are fit for their purpose

within a reasonable time

Services - dealing with problems Minor - supplier can choose to refund or

repair (free of charge and in reasonable time) Major – consumer can cancel the services and

get refund or seek compensation for difference in value

Business transactions Suppliers can limit liability where not for

household or domestic purposes to:

- replacing or repairing

- reimbursing for replacement or repair

- re-supplying services

- reimbursing for re-supply

Lay-By agreements A 'lay-by' is essentially a contract where you pay for a

product over a period of time rather than upfront. A lay-by agreement must be in writing and specify all the

terms and conditions, including any termination charge.  The trader may charge a termination fee (if a lay-by

agreement cancelled) of not more the trader’s ‘reasonable costs’ relating to the agreement.

If cancelled all amounts paid must be refunded except for the termination charge. 

Trader can only terminate for breach of the agreement

Avoiding Unfair Business Practices:Unfair Contract Terms (ACL ss 23-28) Unfair contract terms in standard form contracts are void. Consumer contracts entered into on or after 1 July 2010 and to the

terms of existing contracts that are renewed or changed on or after 1 July 2010.

3 part test of unfairness Must look at contract as a whole A term is unfair if:

Would cause significant imbalance between the parties; Not reasonably necessary to protect legitimate business interest; AND Would cause detriment if used