Foundation Studies Business Environments: Unit 8 Consumer Protection Law - Detailed Study Notes

Key focus on the Competition and Consumer Act 2010 (Cth) which encompasses:
- Australian Consumer Law (ACL)
- Misleading or deceptive conduct
- Consumer guarantees

Competition and Consumer Act 2010 (Cth) (CCA)
- Encompasses various sections including:
  - Section 18: Misleading or deceptive conduct
  - Sections 54, 55, 56, and 57: Consumer guarantees

The CCA aims to:
- Promote fair trading and competition in the marketplace.
- Protect consumers.
- Encourage competition and regulate various commercial practices.

Competition Law
- Prohibits anti-competitive practices, such as:
  - Cartels
  - Abuse of market power
  - Anti-competitive mergers and acquisitions
Consumer Protection
- Offers protections against unfair trading practices including:
  - Misleading or deceptive conduct
  - False advertising
  - Unfair contract terms
Australian Consumer Law
- Found in Schedule 2 of CCA;
  - Governs the supply of goods and services by a person to a consumer.
  - Purpose: Enhance consumer welfare.

Section 18(1) of the ACL states:
- "A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive."
This section aims to protect consumers and businesses from false or misleading statements affecting decisions or actions.

To succeed in a case based on Section 18, a plaintiff must prove:
- ‘A person’
- ‘Trade or commerce’
- ‘Engaging in conduct’
- ‘Misleading or deceptive’ or ‘likely to mislead or deceive’

‘Person’
- Section 18 applies to:
  - Individuals
  - Corporations (legal persons: a company becomes a separate legal entity upon incorporation)
‘Trade or commerce’
- The transaction must have a trading or commercial character:
  - Goods/services supplied in a personal capacity will not breach Section 18.
  - Example of non-commercial conduct:
    - Private sale of property by an individual unless in a business context.
    - Statement of government policy by a minister.
‘Engaging in conduct’
- Covers:
  - Doing (act) or refusing to do an act (omission).
  - Includes making statements, performing acts, making claims, or refusing to act.
  - May cover inaction; e.g., remaining silent can constitute engaging in conduct under specific circumstances.
‘Mislead or deceive’
- Means leading a person into error or creating a false impression:
  - Silence can be misleading if vital information is withheld.
  - Fine print that contradicts main messages can mislead.
  - Puffery: Wildly exaggerated claims that are not considered misleading, e.g., "the best steaks on earth."
‘Or is likely to mislead or deceive’
- No need to prove actual mislead; a real chance of misleading is sufficient.

Conduct: Apple advertised that its "iPad with WiFi + 4G" could connect directly to Telstra LTE.
Fact: The product could not connect to any networks promoted as 4G in Australia.
Misleading or deceptive claim: Consumers believed the product would connect to a 4G network, which was false.
Intention: Intention to mislead is not relevant.

Conduct: Products were marketed as being formulated for specific pain relief.
Fact: All products contained the same active ingredient.
Misleading claim: Consumers were led to believe multiple products were needed for adequate relief.

Conduct: Advertised Galaxy phones as water-resistant to 1.5 meters for 30 minutes.
Fact: Phones were not suitable for use in all types of water.
Misleading claim: Misled consumers about water resistance and durability.

The ACL regulates business-to-consumer transactions through non-excludable consumer guarantees related to the sale of goods and services.
Non-applicability: ACL does not apply to business-to-business contracts—regulated by state/territory Sale of Goods Acts.

Section 54: Acceptable quality
- Goods must be fit for their commonly intended purpose: acceptable in appearance, without defects, and safe.
Section 55: Fitness for disclosed purpose
- Goods must be suitable for any purpose made known to the supplier, unless the consumer does not rely on the seller’s judgment.
Section 56: Correspondence with description
- Goods must match their description including size, type, or color; applies even to goods that are not yet seen.
Section 57: Supply by sample
- Goods supplied by sample must match the quality of the sample. Consumers should have the chance to compare the goods with the sample.

Next week’s focus: The Sustainability Environment of Business: Ecology and Climate Change—the relationship between human activities and the natural world.
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