Australia consumer law Essay Example

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Question 1

Section 3(1) of the Australian Consumer Law (ACL) defines a consumer as a person who has purchased or acquired goods or services that does not exceed $40,000. Kate and John are consumers since they spent $2500 in payment for the holiday spent at Fabo Resort Pty Ltd (‘Fabo Ltd’).

The Australian Consumer Act (ACL) section 18 prohibits a person from engaging in conduct that is misleading, deceptive, or likely to mislead or deceive. In the case Taco Co of Australia Inc v Taco Bill Pty Ltd (1982) the court held that misleading and deceptive conducted identified through the conduct of the defendant, the conduct must be misleading and a large number of people are misled as to existence of the facts. Fabo engages in misleading conduct through making an advert that misrepresents the kind of holiday services that one expects from Fabo.

Misleading advertisement reflects Fabo Ltd conduct through failing to offer transport from the airport to the resort, failing to supply five star accommodations at the seafront instead giving them small, old and run down rooms. The company fails to offer a full day tour gold class coach to the surrounding rainforest. Fabo totally misrepresented that the service of Fabo Ltd were of a standard, quality and value or grade and this is in breach of section 29 of ACL.

Fabo Ltd also breached section 34 of the ACL as held in Doherty v Traveland Pty Ltd (1982) that misleading the public as to the nature, characteristic and suitability of their services in prohibited. Fabo Ltd failed to provide the Asian bouquet and Gloria Glow who performed was a ‘fake’. Section 32 ACL prohibits falsely offering rebates, gifts or prizes in connection to services. Fabo Ltd fails to deliver the autographed copy of Gloria Glow CD.

The remedies available for breach of consumer protection are damages under section 236 (1). Further the court can declare the consumer contract void, vary the contract, refuse enforcement of all or part of the contract, refund of money or return of property or order the repair of whole or part of good supplied. Other reliefs include; injunctions (s23), undertakings (s218) and substantiation notices.

Question 2

The issue is whether Ginger is entitled to damages or gets freebies. The law states at section 32 ACL that a person must not, in trade or commerce offer any rebate, gift, prize, or free item with the intention of not providing it. The advert states hat patrons who dine at Buck Pty Ltd would receive a free bottle of wine and free dessert with their meal. Buck Pty Ltd is also at fault for accepting payment without intention to supply contrary to section 36 of the ACL. In the case of Dawson v World Travel Headquarters Pty Ltd, it was held that a person must have reasonable grounds to believe that they are unable to supply the goods or services within the specified period of time. In this case, Buck received money but failed to give the free desert and meal, hence contravening section 36.

The remedies imposed under the ACL are public warning notices, civil pecuniary penalties of $1.1 million for corporations since Buck Pty Ltd is a corporation. Ancillary orders that include; a declaration that the contract is unenforceable, varying or voiding the contract, transfer of property or a refund. ACL also provides for non-punitive orders such as community service, prohibition of conduct order, disclosure order or corrective advertising order and disqualification from managing a corporation. The remedies available include; damages, disclosure orders, injunctions, undertakings or substantial notices.

Question 3

Section 29 of the ACL prohibits the promotion by any means of services, which amounts to false and misleading representation. In the case of ACCC v Chen (2003), the court stated that it is wrong to falsely represent that goods have approval, sponsorship when they don’t. The use a person’s character for advertising to promote the hotel without approval is illegal as held in Pacific Dunlop Ltd V Hogan. The actions taken by Buck Pty Ltd to cut from other commercial and make it appear that Nicloe Kidman, Hugh Jackman and Kate Blenchett were promoting the hotel amounts to false advertising leading to deceptive and misleading conduct.

Buck Pty Ltd is in breach of the ACL in relation to misleading advertising and Thurston can sue for damages, refund and void the contract to stay at Shooting Star. .

Question 4

In this case, Thurston has the right against Shooting Star hotel shop for misrepresentation as to the origin of the product as well as false advertising. Section 18 of the ACL prohibits conduct that is deceptive, misleading, or likely to mislead or deceive. The information on the products did not only confuse Thurston by led him to get the wrong idea that the goods were made in Australia with minimal imported components only to learn later that it was ‘made in China’. It is also in bad faith to give false information in labels of products as held in Crocodile Marketing Ltd v Griffith Vintners Pty Ltd. It is imperative to state that the shop’s price tags and products description led Thurston to get the wrong idea about the price and origin of the product (ACCC v GIA Pty).

Question 5

Dean chutney’s name is ‘Granma’s Yummy Chutney’ and Jam For All Pty Ltd uses ‘Gran’s Yummy Chutney’ all bearing pictures of a cottage and a fruit tree. In this case, section 18 of the ACL states that a person should not engage in deceptive and misleading conduct in relation to the goods and services offered. The use of name and pictures mislead consumers as to the nature and origin of the products. The names are also similar and this can give a person the wrong idea or confuse the person while choosing the products. This offence is product infringement known as passing off as stated in Pinetrees Lodge Pty Ltd v Atlas International Pty Ltd and that Jam For All Pty Ltd trades on reputation of Dean. Dean can complain for product infringement and unfair competition.

Question 6

Comparative advertising refers to a competitor comparing its products with that of another person directly dealing in the production of same products (Ever Ready Australia Pty Ltd v Gillette Australia Pty Ltd). In Australia, this is allowed as long as it is not unfair, misleading or deceptive. Comparative advertising is wrong if it leads a person to get the wrong idea about the other person’s products as held in McWilliams Wines Pty Ltd v Mc Donald’s System of Australia Pty Ltd.

Restrictive Practices

Question 1

George is a consumer for the purpose of the definition at section 3 (1) of the ACL. Section 54 of the ACL states that a supplier of services or goods to a consumer must guarantee that the goods are of acceptable quality defined as fit for all-purpose, safe, durable, acceptable in appearance and free from defects. In the case of Wren v Holt the court held that beer contaminated with arsenic was not acceptable quality for purpose. A failure to honour a guarantee occurs when the consumer is not fully aware of the extent of its failure and is unfit for a disclosed purpose. When George bought the food, he believed it to be good and fit for consumption and was not aware of the defects or safety of the food at the time.

George can take action against River Boat Hotel and Jerry for failure to provide goods suitable for consumption.

Question 2

Kramer a sales attendant at the Riverboat Hotel tells Elaine that the ‘Skimmer’ water skis are safe and suitable for people of all level of skiing. This was false misrepresentation since Elaine was smashed into a passing speeding boat suffering serious injuries. Section 55 of the ACL states that a supplier of goods must guarantee that the goods are suitable and fit for any purpose for which the supplier represents. Elaine disclosed the particular purpose of goods but the ski was unfit for purpose as held in Laverick v Lease Auto Pty Ltd (2002).

Question 3

The River Boat Hotel has breached the consumer guarantees at section 60 of the ACL that the services rendered will be by due care and skill. Further, section 61 of the ACL states that where there is a guarantee that the services will be reasonably fit for that purpose acquires the purpose for which services. In this case, there is a major failure under section 267 then the entire service would be rejected.

Question 4

The shirts delivered at the Riverboat Hotel were different contrasted to those ordered by Jerry a week ago. Section 57 states that if a person supplies goods to a consumer by reference to a sample or demonstration model there is a guarantee that the goods will correspond to sample, quality, state and condition. The goods supplied must also be free from defects and therefore Jerry can sue for damages and refunds since the shirt delivered was unfit for the purpose intended.

Question 5

Riverboat Hotel sells OzzeiOi Pty Ltd products for 25% less that the recommended prices. Section 48 prohibits vertical price fixing since it eliminates price competition, stops efficient sellers passing on lower costs and results in fixed pricing. In Ron Hodgeson Pty Ltd v Westco Motor Pty Ltd that one cannot discount since it amounts to restrictive trade practices.

Question 6

Mergers and acquisition reduce competition in the market as per section 50 of the ACL. Mergers are allowed especially when its impact is to increase the job market. OzzeiOi Pty Ltd is the major shareholder of souvenir Clothes Market in Australia and it can merge with Jolly Jumbuck Pty Ltd for better performance and profits. On the other hand, if OzzeiOi Pty Ltd held only 14% of the market, then it would still be able to merge with Jumbuck since they would be able to control 29% of the Souvenir Clothe market in Australia.

Question 7

The owners of the six large building meeting together can be defined as a cartel. A Cartel is defined under the Consumer and Competition Act (2010) ‘where two or more businesses which should be operating in competition with each other agree to cooperate rather than act independently. Section 46 prohibits the misuse of market power if its aim is to eliminate a competitor in the market, prevent entry of a new competitor and deters someone from being competitive in the market. It is prohibitive as stated in the case of ACCC v EURONG Beach Resort Ltd.


ACCC v EURONG Beach Resort Ltd.

Australian Consumer Act (2010) (Cth)

Consumer and Competition Act (20100 (Cth)

Crocodile Marketing Ltd v Griffith Vintners Pty Ltd

Doherty v Traveland Pty Ltd (1982)

Laverick v Lease Auto Pty Ltd (2002)

Ron Hodgeson Pty Ltd v Westco Motor Pty Ltd

Taco Co of Australia Inc v Taco Bill Pty Ltd (1982)

Wren v Holt