Australian consumer law

Jul 23, 2019 | 0 comments

Jul 23, 2019 | Miscellaneous | 0 comments

Business Law Analysis- Australian consumer law

 

PART A

Issue

Latitude Development owns Cooktown Shopping Centre. David Cotton makes an appointment with Arthur Preston, the representative of LD. Arthur Preston realizes that David understands only limited English and is well conversed with aboriginal language, and he is also not an expert in financial and business matters. Arthur informs David that he is required to sign a lease of 30 pages within 24 hours given that the vacant spaces in the shopping center are limited and they were also in high demand. David who does not understand many of the complex terms of the contract lease proceeds and signs the document. Not known to David, there was a term inserted into the lease that stated that he will be charged a rate of rent which was 30% higher compared to other occupants in the shopping center. Moreover, he did not mention to David that two months after signing the agreement, they will close the shopping center for the renovation of the faulty buildings for about 4 months. All other tenants, on the other hand, were advised of the fact.

Law

Deceptive and misleading conduct

Section 18 of the Australian Consumer Laws broadly prohibits deceptive or misleading conduct in commerce or trade. This conduct can include statements and actions, such as misleading promotions, advertisements, representations, and statements by a person, and quotations. The business has a higher likelihood of breaching the Australian Consumer Law if they create an overall impression that is misleading with the consumer about the value, quality, or price. A breach of law can also take, place even if the business did not intend to mislead the consumer about a service or a product. Similarly, a business can be considered, as breaching the Australian Consumer Law by failing to disclose the essential details, the correct details or even passing on the facts that are important or that are relevant to the decisions of the consumer (State Library, 2018).

Unconscionable conduct

Section 18 also details unconscionable conduct. According to the State Library (2018), unconscionable conduct is an action or a statement that is so unreasonable and also defies good conscience. The Australian Consumer Law, under section 21 prohibits unconscionable behavior that is connected with the supply of services or goods, or the acquisition of services or goods, in a business transaction. State Library of New South Wales (2018) outlined some of the examples of unconscionable conduct which depends on the circumstances:

1. Not explaining properly, the conditions outlined in a contract to an individual they understood does not speak English or has a disability in learning

2. Not providing sufficient time to read an agreement, get advice, or ask questions

3. Using a relative or friend of the customer to influence the decisions of the customer

4. Encouraging an individual to sign a one-sided or a blank contract (5).

Unfair Contract terms

Part 2-3 of the Australian Consumer Law aims to improve consumers’ protection by removing unfair terms in the contract of the consumer. Consumer contracts according to State Library (2018), are contracts for the supply of services and goods, or the grant or sale of an interest in land, to an individual for household, domestic, or personal use.

Item is considered unfair if:

1. The term of the contract is one-sided and favors greatly the business over the customer

2. There’s no commercial reason that is satisfactory with the business need to include such a term in the contract

3. The customer will be suffering financial loss, disadvantages, or inconvenience if the term inserted in the contract gets enforced.

Misleading or false representations

Businesses must not make misleading or false statements about services and goods, regarding:

1. The grade, value, quality, or standard of services or goods

2. Particular individual agreeing to acquire the services or goods

3. Whether the goods are new

4. The prices of the services or goods

5. Testimonials by any individual that relates to the services or goods

6. The availability of spare parts or repair facilities

7. Any warranty, guarantee, or condition of the services or goods

Application of Law

From the provided case study, it is evident that Arthur, the representative of LD, showed deceptive or misleading conduct. As contained in section 18 of the Australian Consumer Laws, deceptive or misleading conduct in commerce and trade is prohibited. The Australian Consumer Law prohibits businesses as well as their staff from engaging in behavior that is; actually, deceiving or misleading or is likely to deceive or to mislead (GWA, 2018). The deceptive or misleading conduct as depicted in the case study by Arthur included Intentionally misleading and lying to the client. Moreover, he also did not correct misunderstanding in the contract given that David was not understanding English properly. Arthur also left out or concealed some important information in the contract. Lastly, he stayed silent about some material facts or did not disclose some of the important aspects of the contract. For deceptive and misleading conduct, it may lead to civil remedies which include declarations, injunctions, compensatory, damages orders, non-punitive orders, and orders for non-party consumers. Moreover, consumer protection agencies may also issue warnings to the public against traders or businesses that have been given court orders for deceptive or misleading conduct (State Library, 2018).

The law recognizes that there exists a power disparity between the consumers and the real estate agency they are dealing with because the real estate agency has greater expertise. This imbalance may be worsened by poor documentation, lack of explanation, vulnerable consumer, and a complex situation. Under the Australian Consumer Laws, property managers cannot exploit the power imbalance unfairly. The Australian Consumer Law does not define the conduct that will or will not constitute conduct regarded as unconscionable since it is a legal concept that is subjected to change over time. The Australian Consumer Law sets out the factors that may assist the court in identifying the unconscionable conduct (GWA, 2018). From the provided case study, it is evident that Arthur was guilty of unconscionable conduct when dealing with David. By assessing the factors spelled out by the Australian Consumer Laws, it is evident that Arthur had a relative bargaining strength of the business when compared to David who was the consumer. Moreover, it was evident that some additional requirements were imposed on David, the consumer, that were not reasonably necessary in protecting the commercial interest or LD, which Arthur was representing. That is also evident given that David who was the consumer was unable to understand the documentation which he signed. It is also evident that Arthur, who was the stronger party in the contract failed in disclosing the intended conduct by hiding some of the vital information. It is also evident from the case study that this was a high-risk situation since the consumer didn’t understand the contracts or the advertising because of a lack of English literacy as well as an insufficient explanation. For unconscionable conduct, there exists a list of factors that may be taken into account by the courts as contained in section 2 of the Australian Consumer Law. The maximum civil penalties for individuals are $220,000 and for the body corporates, it is $1.1 million.

In deciding whether a contract term is unfair, three questions need to be answered.

1. That is if the term causes a significant imbalance in the obligations and rights of the parties under the contract? from the provided case study, it is evident that there were some terms inserted into the contract that caused a significant imbalance to the rights and obligations of David. Not known to David, there was a term inserted into the lease that stated that he will be charged a rate of rent which was 30% higher compared to other occupants in the shopping center. Moreover, he did not mention to David that two months after signing the agreement, they will close the shopping center for the renovation of the faulty buildings for about 4 months.

2. Is the term inserted into the contract reasonably necessary in protecting the legitimate interests of the party that is advantaged by the term? from the case study, it is evident that the term that was inserted into the contract that needed David to pay 30% higher compared to other tenants was not reasonably necessary for protecting their legitimate interests

3. Will the term in the contract cause a detriment to one of the parties if it gets enforced? from the case study, it is evident that if the term gets enforced, it will cause a detriment to David. This is because he will be paying rent that is 30% higher compared to other tenants in the shopping spaces (GWA, 2018).

It is only the Consumer, Trader and Tenancy Tribunal (CITTT) or a court which can determine if a term in a contract is unfair. If a tribunal or a court finds that a turn in a contract is unfair, it is void. The unfair time will be regarded as if it never existed and cannot be relied on or be enforced. However, the contract will still be binding the trade and the consumer if it can be operated without the unfair term.

The Australian commission of law also has specific prohibitions on making misleading or false representations about services or goods when promoting, offering to supply, or supplying the services or goods (GWA, 2018). From the provided case study, it is evident that Arthur, the representative of LD, made some false representation by leasing out shopping spaces for faulty rooms that were to be repaired for 4 months. Misleading or false representation is also evident in the pricing of the spaces where David was charged 30% higher than other tenants Making misleading or false representations is an offense under the Australian Consumer Law, carries maximum criminal penalties. Dishonest statement in the misrepresentation seizes to exist as it was held in Honsfll v Thomas [1862] 1 H&C 90. To an individual, it is due $220000, for the corporate body it is $1.1 million (State Library, 2018).

Conclusion

In summary, David signed a contract with Latitude Development through their representatives Arthur Preston. From their contact detail, it is evident that Arthur displayed deceptive and misleading conduct, unconscionable conduct, used unfair contract terms, and also applied misleading or false representation. When the law is applied, the Author will be found guilty of violating Australian consumer laws and is liable for $220000 as an individual. Latitude Development company also a corporate is representing is also liable for $1.1 million. The available remedies available for David under the Australian Consumer Laws include filing for compensation in courts or seeking redress through Consumer, Trader, and Tenancy Tribunal (CITTT).

PART B

Issue

David walks on the Cooktown racetrack, owned and run by the Cooktown Turf Club (CTC) after a slightly rainy day. The club has recently renovated the grandstand and the paint applied on the stairs edges Med them dangerously slippery when wet. Moreover, there is no warning sign to indicate slippery staircases. David fractures his ankle and further aggravates his lower back injury that was preexisting hence restricting his mobility. When he was walking down the staircase, he was receiving a phone call from his friend and also holding a bag of bananas weighing 2 kilograms in his left arm. After the injury, David was hospitalized for 6 months making him unable to work at the shopping Centre. Furthermore, because of his injuries, he developed depression and anxiety. To alleviate his depression, he began smoking ice which he became addicted and as a result of that, he lost 000 from his ice addiction.

Law

The Civil Liability Act 2003 (Qld) applies to any claim for harm or damages. By the term “claim,” it is considered as a claim for damages as a result of liability for damage to personal injury, economic class, and property. However, in the Act, the term claim also includes all possible forms of losses, which include personal injury, economic loss, and damages to property (Taylors, 2018). The applicability of the Civil Liability Act 2003 (Qld) is subject to certain exclusions. This Act does not apply to situations of any civil claim for damages for personal injury whereby the harm involved:

1. Dust-related condition injury

2. An injury as defined under the 1996 Workcover Queensland Act, except as stated expressly

3. An injury that occurred as a result of smoking or usage of or being exposed to tobacco smoke and products (Taylors, 2018).

Application of Law

Chapter 2 of the Civil Liability Act 2003 (Qld) outlines the civil liability for harm. An individual does not breach a duty of taking precautions against the risk of harm unless (1) it was a foreseeable risk, that is a risk that the individual ought to have known or knew (2) It was not a significant risk (3) in the circumstances, a reasonable person who was in a similar position as the individual would have taken the precautions. In deciding as to whether a reasonable individual would have taken necessary precautions against the risk of harm, the court will take the following considerations into account: (1) The probability of the harm will be taking place if care was not taken (2) the burden of setting up precautions to prevent the risk of harm (3) the likelihood of the seriousness of the harm (4) the activities’ social utility that creates the harm’s risk. Based on the general standard of care under breach of duty (Queensland, 2005). David breached the duty of taking precautions against the risk of harm because the risk of the slippery stairs was foreseeable. Moreover, in the circumstances in which David found himself, a reasonable person in his position would have taken precautions. Moreover, the probability of David getting harmed by the slippery staircases had he taken care of was minimal. If David could also have taken precautions, the seriousness of his harm would have been less serious. Even though there was no indication or warning sign of the slippery staircases, the burden of taking precautions while walking with a 2 kg of banana weight majorly fell on David.]). To determine a breach of duty of care the objective test is used. In Vaughan v Menlove [1837] 3 Bing NC 467, the defendant’s haystack caught fire due to poor ventilation, despite being warned several. He reasoned that he had used his unsurpassed judgment therefore not foreseeing the event it was held that his best judgment was not good enough by the standard of a reasonable man

Assumption of risk under Civil liability for harm indicates that an individual who has suffered harm is presumed to be aware of the obvious risks if; (1) damages for breach of-duty action that caused the harm, there was a voluntary assumption of the risk by the defense (Cooktown Turf Club) and it was an obvious risk, it is taken that the plaintiff ought to have been aware of the risks until he can make proof on the balance of probabilities that he was not aware. (2) An individual is aware of a risk if he or she is aware of the kind or type of risk (Queensland, 2005). From the assumption of risk, David has no legal basis claiming for compensation because he voluntarily assumed the risk. Moreover, he was aware of the type of risk while walking on the slippery staircases.

Under section 15 subsection 1, a defendant (Cooktown Turf Club) does not owe a duty to any individual to the obvious risks, making them not liable for the damages to David. Section 16 also indicates that there is no liability for the materialization of inherent risks. That is, an individual is not liable for negligence for harm suffered by another individual due to the materialization of a risk that is inherent. In the case study, David aggravated his existing lower back injury by falling on the slippery staircases. Cooktown Turf Club cannot be liable for this inherent risk (Queensland, 2005).

Conclusion

In summary, David did not take precautionary measures when using the slippery staircases with a weight of 2 kg of banana and making a call to his friend while not walking carefully. Chapter 2 of the Civil Liability Act 2003 (Qld) outlines the civil liability of harm. Based on the applicable laws, Cooktown Turf Club is not liable for the injuries David got, and therefore they cannot compensate him for the injuries he suffered.

References

GWA. (2018). Mandatory CPD 2013: Australian Consumer Law. Retrieved from https://www.commerce.wa.gov.au/sites/default/files/atoms/files/aclpmmanual2013.pdf

Queensland. (2005). Civil Liability Act of 2003. Retrieved from https://www.legislation.qld.gov.au/view/pdf/2005-10-14/act-2003-016

State Library. (2018). Consumer Law. Retrieved from http://www.correctiveservices.justice.nsw.gov.au/Documents/Related%20Links/library/legal-portal/money-matters/consumer-law.pdf

Taylors. (2018). What is the Civil Liability Act QLD – Taylors Solicitors – Civil Liability Lawyers. Retrieved from http://www.taylors.net.au/legal-resources-qld/civil-liability-act/

Cases

Vaughan v Menlove [1837] 3 Bing NC 467

Honsfll v Thomas [1862] 1 H&C 90