Consumer Protection Law

Reference: CACL Chapter 13

ACL Extracts and ACCC Guide to the ACL (see
Moodle)

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Introduction
Note 1.

The Australian Consumer Law (ACL)

provides protection to consumer transactions.

This is a big deal: consumer spending

accounts for roughly 60% of Australias GDP.
As of 12 November 2016, unfair contract term
protections will also cover small business
contracts. Small business transactions make
up about 15% of GDP (not counting those
transactions already embedded in the
consumer classification).

Therefore by the end of this year, three-

quarters of the final spending in Australias
economy will be protected in one way or
another by the ACL.
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Note 2.

Consumer protection under the ACL is

conceptually different to the law of contract
that we have been studying
Contract is basically a common law creation;
consumer protection is a statutory creation
Contract law concerns agreements that are made
between two or more parties. Consumer
protection laws are imposed by the parlt and
(mostly) cannot be avoided
Contract law provides remedies designed to
compensate the innocent party. Consumer
protection laws provide much broader remedies
that include civil and criminal penalties.

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Note 3.

Dual purpose of consumer protection law:

It protects consumers by:
prohibiting misleading conduct, specific
misrepresentations, certain unfair
practices, unfair contract terms and
unconscionable conduct
providing that statutory guarantees apply to
each consumer contract
ensuring product safety and manufacturers
liability for defective goods

It prevents businesses from gaining a

competitive edge by not complying with the law

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Case examples of the dual purpose behind

the statute: ACCC v Turi, ACCC v Luv a Duck
and ACCC v Coles (CACL 13.62)
Consider the dual consumer protection role at
work in these examples:
how is the consumer of eggs and ducks
protected?
why would Turi, Luv a Duck and Coles have a
competitive edge over their competitors if this
conduct were not prevented?

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 Introducing the Australian
Consumer Law (CACL 13.20 13.35 and 6
inc Fig 13.1)
The ACL is located in Schedule 2 of the Competition and
Consumer Act (CCA) 2010. The ACL has the following
chapters (see Fig 13.1):
Chapter 1 Introduction
Definitions and interpretations

Chapter 2 General Protections

Misleading conduct and unconscionable conduct
Unfair contract terms

Chapter 3 Specific Protections

Specific false reps and unfair practices
Consumer guarantees
*Manufacturers liability for defective goods

Chapter 4 Offences
Criminal offences relating to certain conduct

Chapter 5 Enforcement and Remedies

* = not examinable

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1. Prohibition of misleading or
deceptive conduct
s18(1) provides:

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The elements of s18
A person
both natural and legal persons are included

In trade or commerce
s 18 is concerned with the conduct of a
corporation towards persons ... with whom it ...
has or may have dealings whichbear a trading
or commercial character: Concrete
Constructions v Nelson HCA (CACL 13.50). What
doesnt?
Intra-company communications company
says man-hole cap is screwed down it
wasnt. Is it in t or c? No (CC v N)
Serious question are universities engaged
in trade or commerce?

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Engage in conduct what is
conduct? (CACL 13.170)
Puffs?

Opinions, statements about the future,

promises? not misleading conduct unless

NB Statements about the future: s4(1) (CACL

13.450)
Where a person makes a representation about
a future matter (the effect of climate change)
BUT does not have reasonable grounds for
making it, the representation may be
misleading: ACCC v Taxsmart Group (CACL
13.452); ALDI v EFTPOS (CACL 13.451)

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Silence no general duty to disclose
but
Literal truth may be misleading
Failure to disclose changed circumstances
Failure to disclose where there is a
reasonable expectation that disclosure
would be made:
Henjo v Collins Marrickville (CACL 13.171)
Demagogue v Ramensky (CACL 13.172)
Traderight v BOQ 2015 (see Moodle)
Miller v BMW (CACL 13.173)
Why did HCA say policy was not
misleading or deceptive?
Note last para of case extract (CACL
13.173): what did the justices say
about the duty to disclose info?

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misleading or deceptive 1
what does misleading or deceptive mean?
WSC v Parish HCA (CACL 13.60)
inconsistent with truth

Objective test- is conduct is likely to mislead the public to whom the

representation is directed? (no need to show a person actually misled
see ACCC v TPG (CACL 13.61)

How do we assess whether conduct is m or d?

Campomar (slide 12)
ordinary and reasonable
ACCC v TPG (CACL 13.61)
dominant message
ACCC v Turi (CACL 13.65)
significant number of hypothetical consumers to whom advertising
directed
ACCC v Coles (CACL 13.66)
ordinary and reasonable members of the class of prospective
purchasers

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Three broad categories of misleading 1
conduct: 3
1. ACCC takes action against Corps for
misleading or deceptive advertising
Example: ACCC v Turi /Luv a Duk(CACL 13.65)
Facts and Issue
Decision - Why were the advertisements in both cases m or d?

NB Also action under s29(1) (specific false rep re history of

product), s33 (specific false rep re nature and characteristics)
hence the fine of $1m (penalty not available for breach of
s18).
Example: ACCC v Metricon (CACL 13.165)
See facts and note that both s18 and s29(1) were breached
Note the two points in concluding paragraph:
Only need to show conduct likely to mislead
Individuals must sue M to get damages (ACCC does not
collect on their behalf)
Example: ACCC v Coles (CACL 13.66) (baked fresh)
s18 and ss29/33
Example: ACCC v Basfoods (CACL 13.66) (vic
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2. Competitor takes action against a
competitor (to protect consumers from
deception)
Campomar v Nike (see next slide)
McWilliams Wines v McDonalds Systems (CACL
13.90)
Parkdale v Puxu (CACL 13.100)
Apand v Kettle Chip (CACL 13.120)

Question: What are the competing interests in each

of these cases? IE. Whats the effect of preventing
Puxu from manufacturing lounge suites that looked
like Parkdales? Or preventing Apand from copying
KC?
Hint: effective monopoly

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Example: Campomar v Nike (HCA)
Facts: Sports fragrances and perfumes made by
the Spanish perfume maker Campomar were
displayed under the name NIKE in the sports
fragrances section of department store, and next
to similar Adidas products. Misleading conduct?

How to judge whether conduct is m or d?

Ordinary or reasonable members of the class to
whom the reps are made: (CACL 13.60
The court can ignore fanciful reactions.

In this instance, the average reasonable person

would safely assume that the products were
marketed by Nike (the sports company).

Therefore conduct is misleading.

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3. Consumers sue corporations for m or d
conduct (often for conduct in pre-
contractual negotiations)
Bevanere v Lubidineuse (CACL 13.150)
Head employee would continue

Byers v Dorotea (CACL 13.160)

Features and quality in relation to home units

ACCC v Metricon (CACL 13.165.read carefully):

Note: the alternative actions under ACL
Note: no-one actually misled

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Issue of fault and intention (CACL 13.174)
General rule s18 imposes a form of strict liability
need to show a causal link between conduct loss or
damage but no need to show intention to mislead

Exception - if you are merely transmitting

information: Yorke v Lucas (CACL 13.174)

Exclusion clauses and s18 (CACL 13.176)

General rule a party cannot directly exclude s18
eg Section 18 does not apply to this contract.

But a contract may have a clause which puts other

party on notice that he shouldnt rely: read Butcher
v Lachlan Elder Real Estate (CACL 13.177) read
carefully.

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Remedies for breach of s18

Main remedy is damages: s236(1) CACL 13.780

May recover the amount of loss or damage caused by
the misleading conduct
Wakefield Trucks v Lach Transport (CACL 13.800)
HTW v Astonland Pty Ltd (CACL 13.810)
Damages = Difference between contract price and
what youve got

Individuals involved in the contravention liable for

damages (not just corp): s2(1) (CACL 13.830)
Aided and abetted
Induced
Knowingly involved in any way in the contravention
(ie not strict liability)
See Yorke v Lucas (CACL 13.840)

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Figure 13.3 Summary of the features of section 18

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Unconscionable conduct
ACL prohibits persons from engaging in
unconscionable conduct: ss20-21

Two categories:
1. Under the unwritten law (or common law):
s20
Review CBA v Amadio (CACL 7.890 and Louth v
Diprose CACL 7.910)
Compare ACCC v Berbatis (CACL 13.220) with
ACCC v Samton Holdings (CACL 13.225)
Why the different decisions?
Do the unconscionability provisions make
disclosure of information more important?:
(CACL 13.230). Note the two points:
No duty to look after anothers interests
No general duty to disclose
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2. Unconscionable conduct in connection with
goods or services: s21 (CACL 13.240)
Meaning of unconscionable not defined but:
22(1)(a) (l) lists the matters to consider. Read
carefully.
See ACCC v Lux (CACL 13.250)

3. Unconscionable conduct and small business

(CACL 13.260)
Sections 21 and 22 also protect small businesses from
the unconscionable conduct of large businesses.
Same factors as listed in s22(1) apply.

.The remedies (CACL 13.280)

Pecuniary penalty
Damages
injunction

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