Issue

Whether Adil has any rights under the Australian Consumer Law against Trang, or not?

In Australia, the consumers are protected from unfair competition through the Competition and Consumer Act 2010 (CCA), which is an act of the Commonwealth (Corones, 2012). The provisions’ regarding the protection of consumers are specifically contained in Schedule 2 of the CCA, and is known as the Australian Consumer Law (ACL). ACL protects the consumers from unconscionable conduct, misleading or deceptive conduct, unfair contractual terms, and the false representations (Coorey, 2015).

In order to claim the safeguards under the ACL, an individual is required to be a consumer as per section 3 of ACL. As per this section, an individual who makes a purchase for a price which is lower than $40,000 is a consumer. However, even if the price of a certain commodity are over this price limit, and if the goods are purchased for household, personal or domestic consumption or such use, then the person would be deemed as a consumer for the purposes of this act (Australasian Legal Information Institute, 2017).

One of the protections given to the consumers in Australia is the protection from unconscionable conduct. Through section 21, the individuals have been prohibited from engaging in such conduct which can be deemed as unconscionable when the goods and services are supplied. The protection from unconscionable conduct is provided only when a person is deemed as a consumer as per section 3 of the act and acquires the goods for personal of domestic use, or consumption (Australian Competition Law, 2014).

The decision regarding what can be deemed as an unconscionable conduct is decided by the court, after considering certain factors and the same have been provided in section 21(2) of ACL. These factors include the presence of undue influence or tactics which can be held against the consumer, the bargaining strength of both the parties, the prices at which the goods could have been attained by the consumer from a third party, the understanding on part of the consumer regarding the terms of the transaction, and the compliance of all the conditions on part of the consumer (Hobart Community Legal Services, 2013). The contravention of this section incurs a liability in terms of fine valuing an amount of $1.1 million, along with criminal conviction as per Chapter 4 of the ACL, for a corporation. An individual also has the same liabilities, though the amount of fine stands at $220,000 (Federal Register of Legislation, 2013).

Apart from the statutory provisions, the provisions of unconscionable conduct are also contained in equity. Unconscionable conduct shows that when transactions take place between a dominant and a weak party, the dominating party puts the weaker party under duress or applies undue influence. When an individual has a special disability, for instance lacks the education, knowledge or literacy level, the weaker party has to be safeguarded (Australian Contract Law, 2011). In Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447, it was held that the stronger party’s conduct had to be acknowledged to hold if the conduct was unconscionable conduct or not. In this case, Amadio had limited English understanding which was considered as a factor in the unconscionable conduct on part of the bank being upheld by a majority of 3-1 (Australian Contract Law, 2013).

Rule

Apart from the unconscionable conduct, the consumers are also protected from unfair terms under a contract. As per section 23 of the ACL, any term contained in the consumer contract, which can be deemed as unfair, where the contract is a standard form of contract, such term of the contract would be void. And the contract is to be applied, and remains binding, save for the unfair term contained in it. The unfairness of the contract is depicted in section 24, as per which, a contract’s term would be deemed as unfair when it causes a major imbalance in the obligation and rights of the parties of the contract; it proves to be detrimental for the party which relies upon it; and the interests of the dominant party are not required to be protected owing to the advantage received by them (Federal Register of Legislation, 2013).

Section 18 puts an obligation over the people, who are engaged in commerce or trade, from not indulging in such conduct, the result of which is the consumer being misled or deceived (Kolivos and Kuperman, 2012). In Google Inc v ACCC High Court of Australia [2013] HCA 1, owing to the deceptive and misleading conduct of the company Google, they were held to have contravened the erstwhile section 52 of the Trade Practices Act, 1974 (Lexology, 2013). In Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] FCAFC 37, the court held that TPG was indulged in deceptive and misleading conduct as they failed to show that a price higher than what they were claiming had to be paid, which mislead the consumers into believing that they had to pay a lesser amount (High Court of Australia, 2013).

The provisions regarding false or misleading representations are contained in section 29 of ACL. As per section 29(1)(i), during the promotion of a good or service, the individuals should not indulge in such practices which can be deemed as unfair, as a result of the misleading or false representation made regarding the standard, value or another aspect of the product (Federal Register of Legislation, 2013). In Australian Competition and Consumer Commission v Jetstar Airways Pty Ltd [2015] FCA 1263, holding the failure of the defendants in disclosing the true amount of the services offered, the defendant was held to have made false representation and engaged in misleading practices (Jade, 2015).

In the given case study, a number of breaches have been made by Trang. The first and foremost breach of provisions of ACL relates to the unconscionable conduct. But establishing the unconscionable conduct on part of Trang, it needs to be clarified that Adil was a consumer as per section 3 of the ACL. This is because he wanted to purchase the car for his personal use and even though it crossed the value stated in this section, the purpose of this purchase, makes Adil the consumer under ACL.

Trang had a dominating position in this case as Adil was not very well versed in English. He took advantage of this and got Adil to sign a clause which waived off his rights under ACL. As per Commercial Bank of Australia Ltd v Amadio, this would be deemed as unconscionable conduct on part of Trang and hence, the penalties stated above would be applicable.

Secondly, the term which was included in this standard purchase agreement regarding waiver of rights, is unfair terms as per section 23 and 24, as the same proves detrimental for Adil. Trang was also indulged in misleading and deceptive conduct, as he led Adil into believing that the car was new and that it was flawless, when in reality, it had a defective gear box and had run for 7,000 kms. So, on the basis of Australian Competition and Consumer Commission v TPG Internet Pty Ltd, this would be deemed as misleading advertisement on part of Trang and hence, he would be held to have contravened sections of ACL.

Lastly, section 29 of ACL was also breached by Trang as he made false representation about the product being new and being perfect, when in reality, it was defective. As per Australian Competition and Consumer Commission v Jetstar Airways Pty Ltd, Trang had to disclose that the gear box was defective. By failing to do so, even this section has been breached.

Conclusion

Hence, Adil can sue Trang for breach of section 18, 21, 23, 24 and 29 of the ACL.

References

Australasian Legal Information Institute. (2017) Competition And Consumer Act 2010 – Schedule 2. [Online] Australasian Legal Information Institute. Available from: https://www.austlii.edu.au/au/legis/cth/consol_act/caca2010265/sch2.html [Accessed on: 23/05/17]

Australian Competition Law. (2014) Section 21: Unconscionable conduct in connection with goods or services. [Online] Australian Competition Law. Available from:

https://www.australiancompetitionlaw.org/legislation/provisions/acl21.html [Accessed on: 23/05/17]

Australian Contract Law. (2011) Unconscionable Conduct. [Online] Australian Contract Law. Available from:

https://www.australiancontractlaw.com/law/unconscionable.html [Accessed on: 23/05/17]

Australian Contract Law. (2013) Commercial Bank of Australia v Amadio (1983) 151 CLR 447; [1983] HCA 14. [Online] Australian Contract Law. Available from:

https://www.australiancontractlaw.com/cases/amadio.html [Accessed on: 23/05/17]

Coorey, A. (2015) Australian Consumer Law. London, United Kingdom: LexisNexis Butterworths.

Corones, S.G. (2012) The Australian Consumer Law. New South Wales: Lawbook Company.

Federal Register of Legislation. (2013) Competition and Consumer Act 2010. [Online] Australian Government. Available from:

https://www.legislation.gov.au/Details/C2013C00620/Html/Volume_3#_Toc368657533 [Accessed on: 23/05/17]

High Court of Australia. (2013) Australian Competition and Consumer Commission V TPG Internet Pty Ltd (M98/2013). [Online] High Court of Australia. Available from:

https://www.hcourt.gov.au/assets/cases/m98-2013/M98-2013.pdf [Accessed on: 23/05/17]

Hobart Community Legal Services. (2013) Unconscionable Conduct under the ACL. [Online] Hobart Community Legal Services. Available from:

https://www.hobartlegal.org.au/tasmanian-law-handbook/consumers-money-and-debts/australian-consumer-law/unconscionable-conduct [Accessed on: 23/05/17]

Jade. (2015) Australian Competition and Consumer Commission v Jetstar Airways Pty Limited [2015] FCA 1263; (2016) ATPR 42-523. [Online] Jade. Available from: https://jade.io/j/?a=outline&id=418609 [Accessed on: 23/05/17]

Kolivos, E., and Kuperman, A. (2012) Consumer law: Web of lies-legal implications of astroturfing. Keeping good companies, 64(1), p. 38.

Lexology. (2013) Google Inc v ACCC [2013] HCA 1. [Online] Lexology. Available from:

https://www.lexology.com/library/detail.aspx?g=f263c111-d7f3-44d5-8f30-c715629319c3 [Accessed on: 23/05/17]