Facts
Discuss about the Business and Corporations Law.
In the present situation given, the consumer had bought a car from the supplier and the machinery of the car broke down. The validity of the insertion of an exclusion clause by the supplier which waives off his liability under the Australian law is under dispute in the present case.
- Whether Linyu would be termed as a consumer under the Australian Consumer Law?
- Whether the guarantees as provided under the consumer law would have to be adhered to by the supplier in the present situation?
- Whether there was an unconscionable bargain on behalf of the supplier?
The Australian Consumer Law has sought to provide various guarantees which have to be adhered to while the supply of a good or service takes place. Also it mentions regarding the definition of a consumer. According to Section 3 of the Australian Consumer Law, a consumer is a person, whose goods and services are of kinds which are ordinarily bought for using it personally and these could be more than $40,000 (Hobart Community Legal Service Inc., 2013).
The consumer law of Australia, under Section 51 states regarding the grant of title. The grant of title refers to the grant of ownership in the goods and therefore in the present situation, it was stated that the grant of the possession of the vehicle was also given.
The goods which have been supplied by the supplier should be of a quality that is acceptable. If the goods are of a quality not fit for the purpose for which it was purchased then it will not be held as the good for acceptable quality. In this case, the car had been already run for 7000 kilometers. In the case of Medtel Pty Ltd v Courtney, (2003) 130 FCR 182, it was held that there lies a difference in the expectation of the fitness for a particular purpose of a good that are inexpensive and goods that are very much expensive. Whether the goods purchased meet that standard or not, has to be assessed in accordance to the information that is known at the time of the trials (Dilan, Vivi, Claudio, and Anne, 2015). In yet another case, Nesbit v Porter, (2000) 2NZLR 465, it was stated that the purpose is to be measured according to everything possibly expected out of the purchase (Michaelkeall, 2017).
The standards for checking the fulfillment of the purposes should be consonant with the Section 74 D of the Trade Practices Act 1974.
If the nature of the goods is not served then the goods are not of the acceptable quality. Section 55 states that the goods which are supplied carry a guarantee as to the fitness of the goods for any particular or a specific purpose for which it has been acquired. S.56 acknowledges that the goods should be related to the description for which these have been supplied (Australian Consumer and Competition Commission, 2017).
Issue
According to section 57 of the consumer law, the guarantees as to the supply of goods with the help of the sample or model that has been demonstrated should be given along with the supply of the goods.
Section 58 mentions the guarantee would be taking the suitable action that is to be taken by the supplier in case any damages arise. The supplier should provide the reasonable facilities for the repair of the goods. These facilities are available for a reasonable period of time after the goods have been supplied.
These guarantees as stated above cannot be limited by way of a contract as mentioned in Section 64 as the contract would then be considered as void. Any term of the contract that is mentioned and excludes, modifies or alters the terms of the contract would be void and cannot be enforced (Legal Services Commission of South Australia, 2017). The case, ACCC v Valve Corporation (No 3) [2016] FCA 196, at [2], was based on consumer law (Thompson, Webb, and Kuti, 2016). It was held that the exclusion of guarantees under the contract by the supplier with the intention of misleading the customer would be void (Brennan, 2014).
Under Section 64 A, however, it has been mentioned that one can limit their liability under the contract; however it should be fair and reasonable to do so (Australasian Legal Information Institute, 2017).
Section 260 of the Consumer Law states that the failure to comply with the guarantee would be a major failure if the goods which have been supplied are substantially unfit for purpose or if the goods do not confirm to the description given.
The unconscionable bargain states that a person indulges into the unfair conduct and incorporates the terms that are not just and these terms are in favor of one party. Also these are not consonant with the equity principle of good conscience (Clarke, 2013).
On the basis of section 3, Linyu is a consumer as she bought the vehicle for her personal use. The guarantees that have been mentioned above would be applicable in the present case. Section 54 to 58 states regarding the various guarantees that have to be fulfilled if supply of goods takes place. The car which has been sold, in the case given, is not fit for the purpose and not of acceptable quality as the gear box was not in order. In the present situation, the purpose cannot be fulfilled as the car is not fit and has been already run for 7000 kms. At the time of the purchase, this was not known to Linyu. Hence, the supplier would be held liable for the losses occurred.
Rule
Also, the supplier was duty bound to provide for the facilities to the customer in case of any problem caused due to damaged goods, however this purpose was also not fulfilled. There is a guarantee of the quality of the goods. The goods are said to be of the acceptable quality if they are free from any of the defects, safe and also durable. In the present case, the vehicle is not of an acceptable quality. Its gear box was not in a working condition and already damaged. Also, the goods should be of such description which has been stated by the supplier and therefore this guarantee comes along with the supply made. The goods, as stated, must be consonant with the description otherwise these would not be fit and the supplier would be held liable for the same.
This section states that a person, who sells the goods in the trade and commerce, supplies them with the guarantee that the goods would correspond to the sample which has been shown by the supplier at the time of the sale. Also the quality and condition as shown must correspond to the goods supplied. There is unconscionable bargain in the present case as the terms of the contract as incorporated by the supplier were against the good conscience. Also the supplier has majorly failed in the delivering of the goods that are fit for the purpose. There is no good conscience involved in the present dealing.
The first case talks about the purpose which is shown at the time of the purchase. The same way when Linyu went to purchase the car, she was told that the car was fit for the purpose however, it was not the case. In the second case cited above it has been mentioned that the purpose should be of every kind that has to be fulfilled and is related to the supply. In the present case the main purpose that is use of the car domestically, could not be fulfilled as the car was unfit for travelling. The third case is related to the present situation as the supplier had misled Linyu by incorporating a term that worked against Linyu and in favor of the supplier (Australian Government, 2015).
Conclusion
Linyu being a consumer under the present case would be entitled to all the guarantees and remedies that are available to a consumer under the consumer law of Australia.
References
Australasian Legal Information Institute, 2017. Competition And Consumer Act 2010 – Schedule 2 [Online] <https://www.austlii.edu.au/au/legis/cth/consol_act/caca2010265/sch2.html> Accessed on 10 January 2017.
Australian Consumer and Competition Commission, 2017. Consumer guarantees [Online] <https://www.accc.gov.au/consumers/consumer-rights-guarantees/consumer-guarantees> Accessed on 10 January 2017.
Australian Government, 2015. The Australian Consumer Law – A framework overview [Online] <https://consumerlaw.gov.au/files/2015/06/ACL_framework_overview.pdf> Accessed on 10 January 2017.
Brennan, T., 2014. The Australian Consumer Law 2010 [Online] <https://www.13wentworthselbornechambers.com.au/wp-content/uploads/2014/02/Brennan-australianconsumerlawbytombrennan.pdf> Accessed on 10 January 2017.
Clarke, J., 2013. Unconscionable Conduct [Online] <https://www.australiancontractlaw.com/law/avoidance-unconscionable.html> Accessed on 10 January 2017.
Dilan, T., Vivi, T., Claudio, B. and Anne, 2015. Australian Commercial Law, New South Wales: Cambridge University Press, pp. 422-423.
Hobart Community Legal Service Inc., 2013. Consumer Guarantees – What you need to know [Online]<https://www.hobartlegal.org.au/tasmanian-law-handbook/consumers-money-and-debts/australian-consumer-law/consumer-guarantees-what> Accessed on 10 January 2017.
Legal Services Commission of South Australia, 2017. Exclusion Clauses and the Australian Consumer Law [Online] <https://www.lawhandbook.sa.gov.au/ch10s02s06s01.php> Accessed on 10 January 2017.
Michaelkeall, 2017. Nesbit vs. Porter [Online] <https://www.michaelkeall.com/pdf/Nesbit%20v%20Porter.pdf> Accessed on 10 January 2017.
Thompson, D., Webb, K. and Kuti, A, 2016. ACL reach broadened as ACCC wins case against Valve Corporation [Online] <https://www.claytonutz.com/knowledge/2016/april/acl-reach-broadened-as-accc-wins-case-against-valve-corporation> Accessed on 10 January 2017.
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