Lecture 9 - consumer protection

SHOP Consumer Protection Lecture 9

Lecture Objectives

  • Revisit previous lectures and principles.

  • Understand the implications of the Consumer Council and frameworks:

    • Undue influence.

    • Unconscionable Contract Ordinance: Protects consumers and defines what is unconscionable.

    • Supply of Services (Implied Terms) Ordinance: Consumer protections.

    • Exemption Clauses Ordinance: Sections to protect consumers.

    • Money Lenders Ordinance: Focuses on consumer protections in money lending.

The Consumer Council

  • Established: 1974.

  • Objective: Promote consumer rights and protection through various functions defined in the Consumer Council Ordinance (Cap. 216) effective from July 15, 1977.

  • Functions:

    • Collect, receive, and disseminate information about goods, services, and property.

    • Examine consumer complaints and offer advice.

    • Encourage businesses to establish codes of practice.

    • Suggest government actions based on findings.

Understanding Undue Influence

  • Concept: Doctrine used to nullify transactions gained through undue influence, meaning the affected party was misled or coerced into the transaction.

  • Classes of Undue Influence:

    • Class 1: Actual undue influence requires proof of undue influence exerted on the complainant.

    • Class 2A: Presumed undue influence in legally recognized close relationships (e.g., parent-child).

    • Class 2B: Presumed undue influence in general trust-based relationships.

Class 1: Actual Undue Influence

  • Key Elements:

    • The wrongdoer had the capacity to influence the complainant.

    • Undue influence was exercised.

    • The influence led to the transaction.

  • Case Example: Bank of Scotland v Bennett highlights the pressure leading to a strained decision.

Class 2A & 2B: Presumptive Influences

  • Class 2A: Certain relationships create an assumption of undue influence without needing evidence of actual influence.

    • Relationships include

      • Parent and child (Wright v Vanderplank).

      • Solicitor and client (Wright v Carter).

      • Doctor and patient (Mitchell v Homfray).

  • Class 2B: Involves trust and confidence but does not require proof of actual undue influence if the relationship demonstrates such trust.

    • Case Reference: Barclays Bank plc v O’Brien, where trust alone can imply undue influence.

Consequences for Third Parties

  • Banks or third parties may not be directly involved but have duties to ensure transactions are free from undue influence.

    • Constructive Notice: Banks failing to investigate potential undue influence may face consequences.

The Unconscionable Contract Ordinance

  • Provisions:

    • Courts can refuse to enforce unconscionable contracts or adjust their terms.

    • Defines what constitutes dealing as a consumer and the onus of proof lies with the complainant.

  • Factors in Assessment:

    • Strengths of bargaining positions.

    • Need for compliance with unreasonable conditions.

    • Consumer understanding and ability to acquire equivalent services.

The Supply of Services (Implied Terms) Ordinance

  • Implies terms for service agreements initiated in business contexts.

    • Requires reasonable care and skill.

    • Services to be delivered within a reasonable timeframe.

    • Recognizes contracts for services and apprenticeship differently.

The Control of Exemption Clauses Ordinance

  • Purpose: Protect consumers from unfair exclusion or limitation of liability, particularly for death and injury due to negligence.

    • Evaluates reasonableness of contract terms based on parties' knowledge and circumstances.

Money Lenders Ordinance Overview

  • Licensing Requirement: No individual may conduct money lending without a license.

  • Interest Rate Regulations:

    • Excessive rates (over 60%) deemed unlawful.

    • Written memorandum of agreements is mandatory.

  • Additional safeguards to protect consumer rights concerning high interest and loan agreements.

Presentation Credits

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  • Questions encouraged.