CLWM4000 Business and Corporations Law- Australian Consumer Law

Answers

Issue 1

Is Chong a consumer under the Australian Consumer Law?

Applicable Law

The law dealing with the Australian Consumer Law (ACL) is applicable in the given scenario.

The ACL is framed for the protection of consumers. Section 3 of the ACL defines a consumer. As per section 3, a person purchasing goods is considered to be a consumer provided:

1. The max amount of the goods so purchased must not exceed $ 40,000;
2. However, if the goods are purchased for more than $ 40,000, then such goods must be acquired for:
3. The goods must be purchased for consumption/household/domestic/personal use;
4. The article is a vehicle/trailer which is required in the transport of goods on public road.

But, if the goods are acquired for re sale or for use on trade/commerce, then, such action cannot be carried out by a consumer. In Bevanere Pty Ltd v. Gaetan Djino Lubidineuse & Ors (1985) the scope of section 3 was explained. ( Bailey, 2016)

Application of Law

It is submitted, that Chong is intended to buy a truck for his construction business and he buys a white 6 wheel Hino Tipper priced at $55,000.

As per section 3 of ACL, since the price of the truck is more than $ 40,000 then Chong must not be considered as a consumer. But, as per section 3 (1) (b)- (c), the truck is acquired by Chong for consumption and the same is to be used in the transport of goods on public roads. Thus, it does not make any difference whether the amount is less than $ 40,000 or not.

Conclusion 

So, Chong is a consumer as per section 3 of ACL.

Issue 2

Did Jason breach any law when he advertised a used truck as brand new?

Applicable law

Now, once the purchaser falls in the category of the consumer there are few actions which are prohibited to undertake by the seller of the goods.

False and misleading representation

Part 3-1, Division 1 of ACL (section 29) submits that no manufacturer must indulge in any act or promotion of goods that results in any kind of false and misleading representation upon the consumer. Some of the representations that are considered to be false and misleading include:

1. That the goods so supplied are of certain value, quality, style, composition, model, quality, grade or of any previous use;
2. That the goods supplied are new;
3. A representation that certain person has confirmed the purchase of goods;
4. That the goods has certain kinds of benefits
5. About price, repair facility, origin,
6. A representation that certain guarantee, warranty is excluded. In Australian Competition and Consumer Commission v Bunavit Pty Ltd[2016], violation of section 29 (1) (m) was taken into consideration. (Hannebery and Sapountsis, 2016)

If any seller is found to be in contravention of section 29 of ACL must face pecuniary penalties. In Kailash center for personal development Inc, v Yoga Malik Pty limited (2003), the scope of section 29 of ACL was analyzed. ( Davidson, 2015) 

Application of law 

 Now, when Chong purchased the truck from Jason then there are few representations that are made by him. That is:

1. The truck is almost new, is in immaculate condition with no mechanical fault.
2. That a clause is inserted into the purchase agreement waiving his protection under the ACL guarantees.

It is submitted that these representations of Jason are violation o section 29 of ACL. As per section 29 (1) (m), he cannot represent the waiver of any guarantees provided under the ACL. Thus, as per Australian Competition and Consumer Commission v Bunavit Pty Ltd , there is violation. Also, by representing the truck as new, he make a misrepresentation as per section 29 (1) ((a-c).

Conclusion 

So, Jason is in violation of section 29 of ACL when he advertised a used truck as brand new?

Issue 3

Did Jason breach the law when he included the waiver in the agreement?

Applicable law

It is specifically submitted under section 18 and section 29 of ACL that the liability raised under section 18 of ACL cannot be excluded. Thus, if any seller includes a waiver term in the contract then the same has no relevance.

Application of law 

As per section 18 and 19 of ACL, no statutory guarantee can be excluded even if clause is incorporated. Thus, Jason cannot claim that Chong waived his protection under the statutory guarantees when he signed the purchase agreement.

Conclusion

 Thus, even if Chong has signed the waiver clause, still the same is not applicable as per section 90 of ACL.

Issue 4

Can Jason claim that Chong waived his protection under the statutory guarantees when he signed the purchase agreement?

Applicable law

As per section 90 of the ACL, a consumer has no right to waive his rights under ACL by signing a contractual agreement with the seller. If the seller persuades the consumer to do then he may face civil and criminal charges and a penalty of $50,000 (body corporate) and $10,000 (individual). (Austi, 2016)

Application of law 

As per section 90, no seller can persuade the consumer to waive his consumer guarantees mentioned under ACL nor there any validity of the exclusion clause if made part of the contract.

Conclusion 

Thus, Jason cannot claim that Chong waived his protection under the statutory guarantees when he signed the purchase agreement.

Issue 5

Has Jason breached any other provisions of the Australian Consumer Law?

Applicable law

Misleading and Deceptive conduct

As per section 18 of ACL, no seller must act which results in misleading or deception of the consumer. If the seller in a trade or commerce made any statement or act (which in the knowledge of the seller is false and misleading) upon which the seller relied and because of such reliance, if the consumer suffers losses, then the act of the seller is in vocalization of section 18, provided the seller is aware that the consumer is relying upon his sense of judgment prior entering into a contract with him. the scope of section 18 of ACL is analyzed in Houghton v Arms [2006] and Butcher v Lachlan Elder Realty Pty Ltd [2004].

Violation of section 18 results in imposing fines (up to $1.1 million (corporations) and $220,000 (individuals); claim for damages,

Application of law 

Now, when Chong was purchasing truck from Jason, Jason submitted that the truck has no mechanical fault but in reality he is aware that truck has oil leaks. Also, Jason is aware that Chong doesn’t understand English and is mainly relying on the sense of judgment of Jason.

Thus, Jason intentionally deceives Chong by making false statements of facts and misled Chong., Thus, as per Houghton v Arms and Butcher v Lachlan Elder Realty Pty Ltd, Jason is on violation of section 18 of ACL.

Conclusion

Thus, Chong can cancel the contract as Jason is in violation of section 18of the ACL. There is false representation and deceptive conduct on the part of Jason and thus Chong has every rights to terminate the contract.

Reference List

Books/Articles/Journals

Bailey, J (2016). Construction Law, CRC Press.

 Davidson, A. (2015) Social Media & Electronic Commerce Law, Cambridge University Press.

Case laws

Australian Competition and Consumer Commission v Bunavit Pty Ltd [2016],

Bevanere Pty Ltd v. Gaetan Djino Lubidineuse & Ors (1985).

Butcher v Lachlan Elder Realty Pty Ltd [2004].

Houghton v Arms [2006]

Kailash center for personal development Inc, v Yoga Malik Pty limited (2003).

Online Material

Austi (2016) Consumers and Contracts (Online). Available at: https://austlii.community/foswiki/Archive/ACTLawHbk/ConsumersAndContractsAustralianConsumerLaw. Accessed on 15th September 2016.

Hannebery and Sapountsis (2016) Australian Consumer Law Update: Accc Cases Targeting False Or Misleading Representations (Online). Available at: https://www.davies.com.au/ip-news/australian-consumer-law-update-accc-cases-targeting-false-or-misleading-rep. Accessed on 15th September 2016.