Table of Contents
T1 Introduction 2
T3 Consumer Guarantees 4
T4 Misleading and Deceptive Conduct 15
T5 Unconscionable Conduct and Unfair Terms 20
Unfair Contract Terms 20
Unconscionable Conduct 23
T7 Intro to Comp Law and “Markets”, “Market power” and “Competition” 29
T8 Mergers 32
T9 Misuse of Market Power 37
T10 Anti-competitive Agreements 42
Cartel Conduct 42
Anti-competitive agreement 45
T11 Non-price Vertical Restraints (Exclusive Dealing) 52
T12 Resale Price Maintenance 57
Topic 3: Consumer Guarantees
• [X] will argue that they are entitled to relief from [SUPPLIER / MANUFACTURER] for breaching a consumer guarantee under Part 3-2 of ACL. In order to do so
successfully, they will need to establish the following elements on the balance of probabilities unless otherwise stated
Step 1: Define Parties – Was the acquisition of goods/services made by a “consumer”?
• Only a “consumer” can bring an action against a “manufacturer” and/or a “supplier”
• 1. Is [P] a “consumer”?
o If acquiring goods
§ S3(1) A person is taken to have acquired particular goods as a consumer if, and only if:
• (a)(i) the amount paid or payable for the goods did not exceed
$40,000; or
• (b) the goods were of a kind ordinarily acquired for personal, domestic or household use or consumption; or
• (c) the goods consisted of a vehicle or trailer acquired for use principally in the transport of goods on public roads
§ (2) However, subsection (1) does not apply if the person acquired the goods, or held themselves out as acquiring the goods:
• (a) for the purpose of re-supply; or
• (b) for the purpose of using them up or transforming them, in trade or commerce:
o (i) in the course of a process of production or manufacture; or
o (ii) in the course of repairing or treating other goods or fixtures on land.
o If acquiring services
§ S3(1) A person is taken to have acquired particular services as a consumer if, and only if:
• (a)(i) the amount paid or payable for the services did not exceed $40,000; or
• (b) the services were of a kind ordinarily acquired for personal, domestic or household use or consumption
• 2. Is [D] a “manufacturer” or “supplier”?
o A manufacturer includes the following (ACL s7)
§ (a) a person who grows, extracts, produces, processes or assembles goods;
§ (b) a person who holds himself or herself out to the public as the manufacturer of goods;
§ (c) a person who causes or permits the name of the person, a name by which the person carries on business or a brand or mark of the person to be applied to goods supplied by the person;
§ (d) a person (the first person) who causes or permits another person, in connection with:
• (i) the supply or possible supply of goods by that other person;
or
• (ii) the promotion by that other person by any means of the supply or use of goods;
§ to hold out the first person to the public as the manufacturer of the goods;
§ (e) a person who imports goods into Australia if:
• (i) the person is not the manufacturer of the goods; and
• (ii) at the time of the importation, the manufacturer of the goods does not have a place of business in Australia.
o Supplier/ supply means: (ACL s2)
§ (a) in relation to goods—supply (including re-supply) by way of sale, exchange, lease, hire or hire-purchase; and
§ (b) in relation to services—provide, grant or confer
§ NB: ACL s5(1)(a) deems that a donation of goods/services is not treated as supply, unless the donation is for promotional purposes Step 2: Was the supply in “trade or commerce”?
• ToC is only a requirement for ss54-62; that is, CGs apply to ss51-53 even if not in ToC
• TOC mean TOC within Australia (s2(a)); TOC between Australia and other places outside Australia (s2(b))
• TOC includes any business or professional activity (whether or not carried on for profit)à TOC is a question of fact
o Private sales are not in trade or commerce Step 3: Are there any exclusions?
• S64(1): Any attempts to exclude/restrict/modify consumer guarantees are void
• Goods/Services NOT covered by consumer guarantees include those:
o Goods/Service bought BEFORE 1 January 2011;
o Goods bought from: private sellers, auctions (in person or online);
o Goods bought for the purpose to on-sell, re-supply or to use as part of a business
o CGs do not apply to contracts for the transportation or storage of goods (s63(1)(a)); or contracts of insurance (s63(1)(b))
Step 4A: Guarantee for Goods: There is a guarantee that…?
• Guarantee as to title – s51
o There is a guarantee that the supplier had legal title of the good, and so has the right to pass title to consumer (s51(1))
o S51(1) will not apply to a supply of limited title if it is clear from the contract (s51(2)(a)) or can be inferred from the circumstances of that contract
(s51(2)(b)) that the supplier only had limited title
o S51(1) does not apply to supply by way of hire or lease (s51(3))
• Guarantee as to undisturbed possession – s52
o If the supply is not a supply of limited title (s52(1)(b)), there is a guarantee that the consumer has a right to undisturbed possession of the goods (s52(1)) o Does not apply if someone else is entitled to the benefit of any security,
charge or encumbrance that was disclosed prior to purchase (s52(2)) o [IF good was supplied with limited title]: there is a guarantee that the
supplier, will not disturb possession (s52(3))
o [IF goods are hired/leased]: the guarantee will only apply for the duration of the hire/lease (s52(4))
• Guarantee as to undisclosed securities, charges or encumbrances – s53
o There is a guarantee that goods supplied (which are not of limited title) are free of any securities, charges or encumbrances, which were not disclosed in writing prior to the supply of the good (s53(1)(c)(i)) or that the consumer did not expressly consent to prior to acquisition (s53(1)(c)(ii))
§ There is also a guarantee that the good will remain free from such securities/charges/encumbrances until the property passes to the consumer (s53(1)(d))
o However, supplier only fails this guarantee if there is a floating charge and the floating charge becomes enforceable (s53(2))
o S53(1) does not apply if supply is by way of hire/lease (s53(4))
• Guarantee as to acceptable quality – s54
o Where goods are supplied, in trade or commerce to a consumer (s54(1)(a)), and not by way of auction (s54(1)(b)), there is a guarantee that the goods are of acceptable quality (s54(1))
o 1. Are the goods of acceptable quality?
§ TEST: Goods will be of acceptable quality per s54(2), if the reasonable consumer who is fully acquainted with the state and condition of the goods (including any hidden defects of the goods), would regard it as being:
• (a) fit for all the purposes for which goods of that kind are commonly supplied;
• (b) acceptable in appearance and finish;
• (c) free from defects;
• (d) safe; and
• (e) durable
§ When assessing s54(2), give regard to the factors in s54(3):
• (a) nature of the good,
• (b) price of goods,
o // A reasonable consumer would expect higher quality the more expensive the goods
• (c) any statements made about the goods on any packaging or label on the goods;
• (d) any representations made about the goods by supplier/
manufacturer; and
• (e) any other relevant circumstances relating to the supply of the goods
§ Goods need not be perfect, but must be acceptable to the reasonable consumer (Paisley) à ‘reasonable consumer’ = objective,
hypothetical test
o 2. Do any exclusions in (4)-(7) apply?
§ Exceptions: Goods are deemed to be of acceptable quality if:
• Reasons why good would have been of unacceptable quality were specifically drawn to consumer’s attention before acquisition (s54(4))
• Where goods are displayed for sale/ hire – taken to have been drawn to Consumer’s attention under s54(4) if reasons were disclosed on a written notice that was displayed with goods and that was transparent (s54(5))
• Consumer causes goods to become of unacceptable quality, or fails to take reasonable steps to prevent them from becoming of unacceptable quality (s54(6)(a)); and they are damaged by abnormal use (s54(6)(b))
• Consumer examines them before acquisition (s54(7)(a)), and the examination ought reasonably to have revealed that the goods were not of acceptable quality (s54(7)(b))
• Guarantee as to fitness for any disclosed purpose etc – s55
o There is a guarantee that goods supplied, in trade or commerce (s55(1)(a)), and not by way of auction (s55(1)(b)), are reasonably fit for any disclosed purpose, and for any purpose for which the supplier represents that they are reasonably fit for (s55(1))
o A disclosed purpose is a particular purpose (whether or not that purpose is a purpose for which the goods are commonly supplied) for which the goods are being acquired by the consumer and that: (s55(2))
§ (a) the consumer makes known, expressly or impliedly, to:
• (i) the supplier; or
• (ii) a person by whom any prior negotiations or arrangements in relation to the acquisition of the goods were conducted or made; or
§ (b) the consumer makes known to the manufacturer of the goods either directly or through the supplier or the person referred to in paragraph (a)(ii)
o However: This section does not apply if the circumstances show that the consumer did not, or it was unreasonable to, rely on, the skill or judgement of the supplier/manufacturer (s55(3))
o Consider Ashford Shire: Council specifically asked whether tractor could
“grade roads” and salesperson (supplier) confirmed – they relied on the skill and judgement of the salesperson, thus a breach of s55
o A breach of s55 will occur where C only partly relies on S’s skill and
judgement, provided the matters complained of are matters C relied on re S’s skill and judgement (i.e. where they also are partially at fault) (Ashington) o Examples:
§ If a parent was buying a controller for their kid’s PlayStation and they ask for help from the shopkeeper who gives them an Xbox controller, the controller clearly will not work for the disclosed purpose and they have relied upon the skill and judgement of the shopkeeper so they will be able to rely on s55
§ However, if the parent themselves picked the wrong controller, then that is their problem and they cannot rely on s55 – they did not rely on the skill or judgement of the shopkeeper (s55(3))
• Guarantee relating to the supply of goods by description – s56
o There is a guarantee that goods supplied, in trade or commerce (s56(1)(a)), and not by way of auction (s56(1)(b)), correspond with the description
• Guarantees relating to the supply of goods by sample or demonstration model – s57
o There is a guarantee that goods supplied, in trade or commerce (s57(1)(a)), and not by way of auction (s57(1)(b)):
§ (c) Correspond with the sample or demonstration model in quality, state or condition; and
§ (d) if the goods are supplied by reference to a sample—the consumer will have a reasonable opportunity to compare the goods with the sample; and
§ (e) the goods are free from any defect that:
• (i) would not be apparent on reasonable examination of the sample or demonstration model; and
• (ii) would cause the goods not to be of acceptable quality
• Guarantee as to repairs and spare parts – s58
o There is a guarantee that goods supplied, in trade or commerce (s58(1)(a)), and not by way of auction (s58(1)(b)), there is a guarantee that the
manufacturer of the goods will take reasonable action to ensure that facilities for the repair of the goods, and parts for the goods, are reasonably available for a reasonable period after the goods are supplied
o This section does not apply if the manufacturer took reasonable action to ensure that the consumer would be given written notice, at or before the time when the consumer agrees to the supply of the goods, that: (s58(2))
§ (a) facilities for the repair of the goods would not be available or would not be available after a specified period; or
§ (b) parts for the goods would not be available or would not be available after a specified period
• Guarantee as to express warranties – s59
o There is a guarantee that goods supplied, in trade or commerce (s59(1)(a)), and not by way of auction (s59(1)(b)), there is a guarantee that the
manufacturer of the goods will comply with any express warranty given or made by the manufacturer in relation to the goods
o There is a guarantee that goods supplied, in trade or commerce (s59(2)(a)), and not by way of auction (s59(2)(b)), there is a guarantee that the supplier will comply with any express warranty given or made by the supplier in relation to the goods
Step 4B: Guarantee for Services: There is a guarantee that…?
• Guarantee as to due care and skill – s60
o There is a guarantee that services will be rendered with due care and skill (s60)
o Note: ‘Due care and skill’ is not defined in the Act and is to be determined by the court
o Warnock: bank manager failed to render due care and skill by failing to advise a customer on preconditions of insurance policy taken out by customer through the bank for a loan
• Guarantees as to fitness for a particular purpose etc. – s61
o If a supplier supplies services to a consumer in trade or commerce (s61(1)(a)), and the consumer, expressly or impliedly, makes known to
o the supplier any particular purpose for which the services are being acquired by the consumer (s61(1)(b)), there is a guarantee that the services, and any product resulting from the services, will be reasonably fit for that
purpose(s61(1))
o If a supplier supplies services to a consumer in trade or commerce (s61(2)(a)), and the consumer, expressly or impliedly, makes known to the supplier (s61(2)(b)(i)), or a person by whom any prior negotiations or arrangements in relation to the acquisition of the services were conducted or made
(s61(2)(b)(ii)), the result that the customer wishes the services to achieve, there is a guarantee that the services, and any product resulting from the services, will be of such a nature, and quality, state or condition, that they might reasonably be expected to achieve that result
o S61 does not apply if circumstances show that it was unreasonable for consumer to rely on, the skill and judgment of the supplier (s61(3)) o S61 does not apply to a supply of services of a professional nature by a
qualified architect or engineer (s61(4))
• Guarantee as to reasonable time for supply – s62
o There is a guarantee that services will be supplied within a reasonable time, if the time within which services are to be supplied is not fixed by the contract (s62(b)(i)); or is not determined in a manner agreed to by the consumer and supplier (s62(b)(ii))
Step 5: Was a false representation made??
• If a false representation is made, a parallel claim may be possible under Part 2-2 (misleading conduct) and Part 3-1 (misrepresentations, particularly s29)
• The supplier/manufacturer must not, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the
concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy (including a guarantee under Division 1 of Part 3-2) (s29(m))
o Examples: (Gordon)
§ Oral misrepresentations by staff that franchisee had no obligation to provide a remedy while product was still covered by manufacturer’s warranty
§ Oral misrepresentations by staff that franchisee had no obligation to provide consumers with a choice of remedy if the product was supplied more than 3 months ago
§ Oral misrepresentations by staff that consumer would have to pay postage and handling fee before the product could be returned from manufacturer
Step 6: Conclusion + Remedies?
• FOR GOODS
o 1. Is it a major failure or a non-major failure?
§ A failure to comply with a guarantee referred in s259(1)(b) that applies to the supply of GOODS is a major failure if (s260):
• (a) Goods would not have been acquired by a reasonable consumer who is fully acquainted with the nature and extent of the failure; or
• (b) Goods depart in one or more significant respects, from a description, sample or demonstration model; or
• (c) Goods are substantially unfit for purpose, for which goods of the same kind are commonly supplied and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or
• (d) Goods are unfit for a disclosed purpose that was made known to supplier, or person whom prior
negotiations/arrangements were made, and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or
• (e) Goods are not of acceptable quality because they are unsafe
§ Note: ACL doesn’t define ‘non-major failure’- presumably, if failure does not fall within the above it would be a non-major failure o 2A. If non-major failure and CAN be remedied:
§ Consumer may require supplier to remedy failure within a reasonable time (s259(2)(a))
§ The supplier may choose to provide a refund, replacement or repair (s261)
§ If such a requirement is made of the supplier but the supplier refuses or fails to comply with the requirement, or fails to comply with the requirement within a reasonable time—the consumer may:
• (i) otherwise have the failure remedied and, by action against the supplier, recover all reasonable costs incurred by the consumer in having the failure so remedied; or
• (ii) notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection
§ Consumer may recover damages, from the supplier, if it was
reasonably foreseeable that they would suffer such loss or damage as a result of failure to comply with guarantee (s259(4))
• Damages: A person suffers loss or damage due to
contravention of Chapter 2 or 3, the claimant may recover the amount of the loss or damage (s236(1))
§ Can claim both compensation and damages (s259(6))
§ Note: Consumer can seek remedies even if the goods are not in their original packaging (s259(7))
o 2B. If non-major failure and CANNOT be remedied:
§ Consumer may notify supplier that they reject the goods and of the ground or grounds for the rejection (s259(3)(a)); or
§ Consumer may recover compensation, by action against the supplier, for any reduction in the value of the goods below price paid/payable for the goods (s259(3)(b))
§ Consumer may recover damages, from the supplier, if it was
reasonably foreseeable that they would suffer such loss or damage as a result of failure to comply with guarantee (s259(4))
• Damages: A person suffers loss or damage due to
contravention of Chapter 2 or 3, the claimant may recover the amount of the loss or damage (s236(1))
§ Can claim both compensation and damages (s259(6))
§ Note: Consumer can seek remedies even if the goods are not in their original packaging (s259(7))
o 2C. If major failure:
§ Consumer may notify supplier that they reject the goods (s259(3)(a));
or
§ Consumer may recover compensation, by action, for any reduction in the value of the goods below price paid/payable for the goods
(s259(3)(b))
§ Consumer may recover damages, from the supplier, if it was
reasonably foreseeable that they would suffer such loss or damage as a result of failure to comply with guarantee (s259(4))
• Damages: A person suffers loss or damage due to
contravention of Chapter 2 or 3, the claimant may recover the amount of the loss or damage (s236(1))
§ Can claim both compensation and damages (s259(6))
§ Note: Consumer can seek remedies even if the goods are not in their original packaging (s259(7))
• FOR SERVICES:
o 1. Is it a major failure or a non-major failure?
§ A failure to comply with a guarantee referred in s267(1)(b) that applies to the supply of SERVICES is a major failure if (s268):
• (a) Services would not have been acquired by a reasonable consumer who is fully acquainted with the nature and extent of the failure; or
• (b) Services are substantially unfit for purpose, for which goods of the same kind are commonly supplied and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or
• (c) Services, and any product resulting from the services, are unfit for a particular purpose for which the services were acquired by the consumer that was made known to the supplier, and the services, and any of those products, cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or
• (d) Services, and any product resulting from the services, are not of such a nature, or quality, state or condition, that they might reasonably be expected to achieve a result desired by the consumer that was made known to the supplier, and cannot, easily and within a reasonable time, be remedied to achieve such a result; or
• (e) Services create an unsafe situation
§ Note: ACL doesn’t define ‘non-major failure’- presumably, if failure does not fall within the above it would be a non-major failure o 2A. If non-major failure and CAN be remedied:
§ Consumer may require supplier to remedy failure within a reasonable time (s267(2)(a))
§ If such a requirement is made of the supplier but the supplier refuses or fails to comply with the requirement, or fails to comply with the requirement within a reasonable time—the consumer may:
(s267(2)(b))
• (i) otherwise have the failure remedied and, by action against the supplier, recover all reasonable costs incurred by the consumer in having the failure so remedied; or
• (ii) terminate the contract for the supply of the services
§ Consumer may recover damages, from the supplier, if it was
reasonably foreseeable that they would suffer such loss or damage as a result of failure to comply with guarantee (s267(4))
• Damages: A person suffers loss or damage due to
contravention of Chapter 2 or 3, the claimant may recover the amount of the loss or damage (s236(1))
§ Can claim both compensation and damages (s267(5)) o 2B. If non-major failure and CANNOT be remedied:
§ Consumer may terminate the contract for the supply of the services (s267(3)(a)); or
§ Consumer may recover compensation, by action against the supplier, for any reduction in the value of the services below price
paid/payable for the services (s267(3)(b))
§ If consumer terminates contract for supply of services, and goods are inextricably linked to the services, the consumer may also choose to reject the goods when terminating the contract for services –
returning the goods to the supplier and obtaining a refund (s270)
§ Consumer may recover damages, from the supplier, if it was
reasonably foreseeable that they would suffer such loss or damage as a result of failure to comply with guarantee (s267(4))
• Damages: A person suffers loss or damage due to
contravention of Chapter 2 or 3, the claimant may recover the amount of the loss or damage (s236(1))
§ Can claim both compensation and damages (s267(5)) o 2C. If major failure:
§ Consumer may terminate the contract for the supply of the services (s267(3)(a)); or
§ Consumer may recover compensation, by action against the supplier, for any reduction in the value of the services below price
paid/payable for the services (s267(3)(b))
§ If consumer terminates contract for supply of services, and goods are inextricably linked to the services, the consumer may also choose to reject the goods when terminating the contract for services –
returning the goods to the supplier and obtaining a refund (s270)
§ Consumer may recover damages, from the supplier, if it was
reasonably foreseeable that they would suffer such loss or damage as a result of failure to comply with guarantee (s267(4))
• Damages: A person suffers loss or damage due to
contravention of Chapter 2 or 3, the claimant may recover the amount of the loss or damage (s236(1))
§ Can claim both compensation and damages (s267(5))
[IF relevant]: Step 7: Warranties
• Per ACL s102, Reg 90(1) prescribes that a warranty against defects must:
o (a) Be in a document that is transparent (i.e. expressed in reasonably plain language, legible and presented clearly);
o (b) Concisely state:
§ (i) What the person who gives the warranty must do so that the warranty may be honoured; and
§ (ii) What the consumer must do to be entitled to claim the warranty o (c) A warranty against defects must include the text mentioned in
subregulation (2);
o (d) A warranty against defects must prominently state the following information about the person who gives the warranty:
§ (i) the person’s name;
§ (iii) the person’s telephone number
• (2) For paragraph (1)(c), the text is ‘Our goods come with guarantees that cannot be excluded under the Australian Consumer Law. You are entitled to a replacement or refund for a major failure and compensation for any other reasonably foreseeable loss or damage. You are also entitled to have the goods repaired or replaced if the goods fail to be of acceptable quality and the failure does not amount to a major failure’
• Failure to comply can attract penalties per offence of up to $50,000 for companies or
$10,000 for individuals, as well as other remedial orders such as damages or injunctions
