Business/Commercial Law Implied term Consumer Protection Prepared by tutor. Daniel Pan

Implied terms Implied by statue (ACL) Yeah!! Implied by common law

Terms implied by common law – Implied by past dealing – Implied by trade custom Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Aust) Ltd – Implied by court BP Refinery (Westernport) Pty Ltd v Hastings Shire Council – reasonable and equitable; – necessary to give business efficacy to the contract; – ‘it goes without saying’; – capable of clear expression – it must not contradict any express term in the contract.

Consumer Contract Terms implied by Statutory Law ACL – for “consumer contract only” !! – Sections in ACL

statutory guarantees If a consumer contract in statutory meaning exist 1.A contract for supply of goods / services by A person – Natural person – Both individual / corporation 2. To Consumer Provide for statutory guarantees (implied terms) for: ACL S.51 to S.64

What is a consumer contract ? A supply of goods/ service By a legal person To CONSUMER! s.3 definition Trade or commerce

Terms implied Terms implied: – statutory guarantee fog contract for sales of good : Ownership by seller s.51 Quiet procession by buyer s.52 Acceptable quality s.54 Fit for its purpose s.55 Corresponding quality and identity s.56 Corresponding to samples s.57

Terms implied Terms implied: – statutory guarantee fog contract for sales of service : Due care and skill s.60 Reasonably fit for its purpose s.61 (1) Nature / quality/ state /condition that they might reasonably be expected to achieve that result s 61(2)

s.3 consumer S 3(1) if any one of the following criteria are met: 1.The amount payable for the goods does not exceed the prescribed amount (currently $40,000) or 2.The goods are of a kind ordinarily acquired for personal, domestic or household use or consumption (here no limit on the amount); or 3.The goods consisted of a vehicle or trailer acquired for use principally in the transport of goods on public roads (also here no limit on the amount). Page 9

s.3 consumer ? S.3 (2) : main exception to S3(1) – However, s3 (1) does not apply when – Goods are acquired for resale / re-supply – Goods are acquired for reproduce / repair

Effect of exclusion clauses: Any term implied by the ACL cannot be excluded, restricted or modified s 64 of the ACL – Any term that attempts to do so, is void However, where the goods acquired are not of a type normally acquired for personal, domestic or household use, a seller is allowed under s 64A(1) and (2) – To limit its obligations to those of Replacing repairing or repaying for the replacement or repair of the goods. Page 11

What if its not ? NOT a consumer contract ? Goods Act apply – How does it apply – What is the similarity ? – What is the different ?

Goods Act 1958 Vic Terms implied: – Implied term for contract for sales of good : Merchantable quality s.19(b) Fit for its purpose s.19(a) Corresponding description s.18 Corresponding to samples s.20 Differences with ACL: – No provision for contract of services – Excludability (clear and précised) s.61

ACL: Consumer Protection Consumer Protection Statutory Guarantee s.51 - s.64 Misleading s.18 Unconscionable Conduct s.20,21,22 Manufacture's liability

Misleading: s.18 The Australian Consumer Law contains a number of provisions that relate to misrepresentation. Section 18: misleading and deceptive conduct; A legal person In trade or commerce Should not engage in misleading / deceptive conduct 2Future Education Pty Ltd - All right reserved 15

Misleading: s.18 Misleading conduct – Conduct is misleading when it lead the persons at whom it is directed into error. McWilliam’s Wines Pty Ltd v McDonald's System of Australia Pty Ltd (1980) Silence can be a form of misleading Intention or negligence is irrelevant – Yorke v Treasureway Stores Pty Ltd (1983) Action can be bought by all parties as long as the conduct is in breach of s.18

TERMS IMPLIED BY STATUTE Australian Consumer Law If Part 3-2, ACL applies to a particular consumer purchase then statutory obligations are imposed on the manufacturer. The statutory obligations imposed on the manufacturer relate to: 1) Fitness for Purpose: the consumer may take action against the manufacturer under s 271(1), ACL where a consumer guarantee under Pt 3-2 is not complied with eg not fit for purpose (s 54(2), ACL). 2) Description: action is available against the manufacturer under s 271(3), ACL where a consumer guarantee under Pt 3-2 is not complied with eg if the goods do not correspond with the description (s 56, ACL). 3) Merchantable Quality: 74D - the goods must be of merchantable quality 4) Sale by Sample: 74E - if the purchase is on the basis of samples then the goods supplied must correspond with the sample. Note: the manufacturer must compensate the consumer for loss or damage. Note: manufacturers are required to provide repairs or spare parts unless the consumer is made aware that these services will not be provided: s 58, ACL (former s 74F, TPA).

MANUFACTURER’S LIABILITY FOR DEFFECTIVE GOODS Australian Consumer Law Part 3-5 The ACL Pt 3-5 (former TPA Pt VA) provides that a manufacturer is liable for defective goods in circumstances where a person is injured or suffers property damage. The injured party or the person suffering the loss does not have to prove negligence merely that they suffered loss and that it was caused by the defective product. Strict Liabilityd

The key elements of Pt 3-5 are: – s 7 : definition of manufacturer. – s 9 : defines “safety defect in relation to goods” as meaning “if their safety is not such as persons are entitled to expect” and lists relevant matters to take into account. s 138 ACL – allows a claim by ANY individual suffering loss as a result of injury. s 139 ACL : – loss as a third party S 140 ACL : – allows a claim for damage to other goods, however these other goods must be of a kind ‘ordinarily acquired for personal domestic or household use or consumption’. s 140 ACL bv – allows a claim for damage to land, buildings or fixtures (ordinarily acquired for private use).

MANUFACTURER’S LIABILITY FOR DEFFECTIVE GOODS The manufacturer has recourse to defences set out in s 142, ACL (former s 75AK, TPA). These include: – the goods were not defective when the goods left the control of the manufacturer, – the goods complied with mandatory safety standards. A statutory defence of “contributory negligence” is also provided in s 137A, Competition and Consumer Act 2010 (Cth) (former s 75AN, TPA). Note: Exclusion clauses are void: s 150, ACL (former s 75AP, TPA)

UNCONSCIONABLE CONDUCT Unconscionable conduct refers to a pre-contractual situation in which one of the contracting parties has – superior bargaining power and the other party has some ‘special disability Schroeder Music Publishing Co. Ltd. v Macaulay, Commercial Bank v Amadio, Louth v Diprose. Statutory provision: Sections 20-22: – Sec. 20 (1) prohibited all unconscionable conduct in general law – Sec. 21 (1) specifically prohibited unconscionable conduct in supply of goods – Sec. 22 (1) specifically prohibited unconscionable conduct in supply / acquisition of goods (all business transaction) Extent the remedy to not only rescission but damages 2Future Education Pty Ltd - All right reserved 21