Consumer Rights under Australian Consumer Law
Question:
Discuss about the Unconscionable conduct and unfair contract terms.
- A Force Majeure clause is a French term for ‘superior force’, which permits a contractual party to terminate or suspend the performance of its contractual obligations due to circumstances over which such party does not have any control. Such circumstances make the performance of the contractual provision inadvisable, impossible or impracticable[1]. The purpose of this contractual clause is to provide a means of escape to the party who is unable to fulfill his respective contractual obligations because of events that are beyond his control.
- A ‘statute of frauds’ is a law that require there should a written contract and the parties signing the contract should be legally bound by the contract. Since the statute of fraud purports to prevent from fraudulent conduct, it renders certain contracts as voidable instead of void. A void contract is unenforceable but avoidable contract remains valid until one of the parties decides to render it as void.
- A deed is usually required to transfer or conveyance a title to property. Deeds are the most certain safe and less-expensive legal instrument that is used to confirm any right, interest in a property[2]. It has greater validity and is less rebuttable presumption compared to any other legal instrument signed by the party to the deed.
- The Legal principle derived from the case of Olley v Marlborough Court Hotel [1949][3] is when a party to a contract makes representation, it cannot be considered as a term of contract if such representation has been incorporated after the parties have entered into such agreement.
- While writing legal assignments it is important to quote the legal citations as it ensures accuracy of the assignment. Since the legal assignments deals with case scenarios or case judgments, it becomes essential to refer to the legislations or particular case laws that are used as precedents and forms the basis of several legal theories or principles. The content in textbooks is also helpful but several books may have several versions, which often distorts the real facts, or case scenarios from which the legal principles have originated.
- The term ‘four corners’ is defined as the contents of a document that is construed without referring to or considering any outside document[4]. The ‘four corner rule’ refers to a rule that any document be it a will, deed or a contract shall be construed as a complete document without using any outside document as an evidence, if such documents deem to be complete on the very face of it.
- The doctrine of contra proferentem refers to a legal rule which states that if any contractual term or provisions is ambiguous, the provision or term shall be construed in favor of the party that has not incorporated such clause or is unaware of the inclusion of such terms or provisions within the contract. If both the contracting parties agree to the inclusion of such ambiguous clause or provision in the contract, the law will not favor one party over the other contracting party.
- The rule in Pinnel’s case is that if a person owes a sum to another person and agrees to pay part of such amount in full settlement, the rule is that part payment is bad consideration for a promise to forgo the balance amount. This rule extends protection to a creditor from the economic constraint of his debtor.
- A collateral contract is considered as a separate contract that exists along with the main contract. A contract where parties to one contract agree to enter in to another contract is commonly known as collateral contract. A collateral contract takes the form of unilateral contract where only one party promises in return of something else.
- The doctrine of privity refers to the general rule that except the contracting parties, the rights or obligations arising out of the contract shall not be conferred upon any third party. In Dunlop Tyre v Selfridge [1915] AC 847 it was held that only a promise is entitled to enforce a promise and if the third party is not the promise he shall not be considered as privity to the contract.
- According to the Australian Consumer Law (ALC), the consumers are entitled to the right to repair, refund or replacement along with compensation for any loss or damages sustained due to any commodity or services. It is implied that when a consumer purchases a commodity or service, the consumers are automatically guaranteed that such commodity and services rendered shall be in accordance with the description of such product and services[5]. The consumers shall be entitled to compensation for any loss or damage that he or she suffers due to the defect in the product or the service especially when such supplier could reasonably foresee such defect in the goods or services. Further, under section 18 of the Australian Consumer Law consumers are safeguarded from misleading advertisements of the products and services. Businesses are not allowed to make any false statements with respect to the style, quality of any product or service as was observed in ACCC v TPG Internet Pty Ltd. If a consumer relies on such misleading claims, the aggrieved consumers must firstly contact the seller or business and inform about the problem regarding the product or service. If the problem remains unresolved, the consumer may contact the ACCC or initiate legal proceedings.
On the facts here, Carlos purchased a computer for his child. Under the Australian Consumer Law, the goods purchased by consumers are automatically guaranteed to be as per its description and it is illegal to make false statements with respect to the size or quality of any product or service[6]. In this case, the computer bought by Carlos did not work as per its advertisement, which amounts to breach of consumer rights/guarantee. Hence, under such circumstances, Carlos may either contact the business/seller or claim refund, replacement, or he may ACCC or may initiate legal proceedings against such seller.
- The issue arising in this given case is pertaining to the applicability of the terms and conditions of the contract formed between Carlos and XYZ firm. Now, as per section 20(1) of the Australian Consumer Law, a person is prohibited from engaging in unconscionable conduct in trade or commerce within the meaning of unwritten law periodically[7]. A conduct may be considered as unconscionable if it is oppressive and is against conscience when judged against the societal norms. The court considers certain factors while determining whether a conduct with respect to selling or supplying of services or goods to a customer amounts to unconscionable conduct.
Such factors include relative bargaining strength of the parties; use of unfair tactics by the stronger party and the extent to which the parties have acted in good faith. The person practicing unconscionable conduct shall be subjected to pecuniary penalty. In this case, Carlos enters sends his quotations along with his terms and conditions that includes capping his liability to his fee amount but the purchaser mentions in its purchase order that the supplier/Carlos cannot cap his liability. Such circumstances lead to an unconscionable business conduct that is evident from the relative bargaining strength of the parties.
Here, the contract entered into with XYZ stipulated that the provisions of the agreement shall prevail over rte terms and conditions of the suppliers. Additionally, the purchasers’ terms and conditions stipulated that Carlos Cannot cap his liability and these factors make Carlos the weaker or the oppressive party. Hence, the terms and conditions of Carlos should be used under such circumstances to ensure a fair contract where the contracting acts in good faith.
- The issue arising in this case is whether an agreement that is ‘subject to contract’ is legally binding upon the signing parties. The expression ‘subject to contract’ refers to the fact that the parties to the contract are at stage of negotiation and have not yet agreed to the contractual terms. In Stelland Pty Ltd v North Queensland Fuel Pty Ltd [2015][8], the buyer made an offer to purchase a service station business and property subject to diligence and other conditions. The seller accepted the offer subject to the enforcement of the concerned contract. Whole the buyer was seeking for further amendments to be made with respect to eh form of the contract, the seller found another buyer for a higher price and denied the former buyer any legal binding of the ‘subject to contract’. The Supreme Court of Queensland held that seller intended to be bound by the former contract despite the enforcement of such contract.
The signing of the contract signifies the intention and consent of the parties to be legally bound by the contractual terms with the intention to formally record such terms later. On the facts here, Carlos entered into an agreement with the vendor who agreed to enter into the agreement ‘subject to contract’. Therefore, as observed in Stelland’s case, the seller has signified his intentions to be bound by the contract before its execution as is evident from the signing of the contract, which further signifies the consent, and intention of Donald and the vendor to be bound by the contractual terms.
- The issue arising in this case is whether the exclusion clause shall be enforceable to restrict the liability to compensate for the damages caused to Carlos’s car. An Exclusion clause is used by business within the contracts to limit or exclude their liability for damages caused to consumers or other businesses. Such exclusion clause is construed by court like any other clause as per its ordinary meaning provided such clause is adequately incorporated within the contract and is not inconsistent with the law. If such exclusion clause is not acknowledged to the consumers, it is likely to become unenforceable.
In order to be incorporated in the contract, the clause is effective of it is included in a written contract signed by the other party. In the absence of a written contract but there are signs stating the clause, it shall be interpreted as a contractual provisions if such signs are brought to the attention of the intended customers as was stated in Thornton v Shoe Lane Parking Ltd [1971][9].
In regards to the legal compliance, section 64 of the ACL renders a contract as void if it purports to modify or exclude any consumer rights. As per section 64A of the ACL, is an exception to section 64 as it permits the supplier to restrict the remedies available to the consumers if the contract deals with goods and services that are not used for personal or domestic purposes.
Unconscionable Business Conduct
On the facts here, Carlos went to ABC Motors to repair his car but did not sign a document that includes an exclusion clause, which exempts the garage from any damage caused to his care due to fire within the premises. However, as was held in Thornton’s case, it is necessary to inform the consumer about such exclusion clause otherwise the clause shall not be enforceable.
Though Carlos visited the garage frequent times in the past years, he did not sign any document on the present day and neither was he acknowledged about such clause. Further, he is denied his consumer guarantee right to repair or compensate which is contrary to section 64 of the ACL. Furthermore, the car was his personal car hence, section 64A should not be applicable. The court will determine the exclusion as per its original meaning and since it has not been informed to Carlos, the clause shall not be enforceable.
- A contract may be terminated due to the breach of its contractual terms committed by either of the contracting parties[10]. When a contracting party is exhibiting an unwilling behavior to perform their contractual obligations, it amounts to repudiation of a contract and the innocent party is entitled to terminate the contract. The unwilling conduct includes words or conduct of the party repudiating the contract. The courts determine the conduct of the party while determining whether an actions amounts to unwilling conduct to perform contractual obligation. A repudiation of a contract allows the innocent party to either insist on performance or accept the repudiation and discharges him/her from any further contractual obligations under the contract.
On discharge from the contractual obligations, they are entitled to claim damages against the default party[11]. On the facts here, Carlos refused to pay any more amount to his mother after he paid $750000 and his refusal to pay the remaining sum shall be determined as an unwilling conduct to perform his contractual obligations which was to repay his mother $1000000. This signifies repudiation of contract against which his mother may either insist on performance where the contractual obligations shall remain applicable or discharge her from the contract and claim damages against him.
However, in case Carlos was 17 years old, he would have been considered as a minor who does not have a legal capacity to enter into a contract and shall be rendered as voidable under the Common law except under certain circumstances. As was held in Nash v Inman [1908][12], a contract by minor in respect of necessities is legally binding on both the contracting parties. ‘Necessities’ refer to the ‘existing life style’ of minors and such necessity should be mandatory for maintaining a lifestyle[13]. On the facts here, if Carlos was 17 years old, the contract shall be voidable unless it falls within the exception of necessity. However, the contract is binding unless the minor avoids the contract and the minor is bound by the obligations until it is avoided.
Reference list
ACCC v TPG Internet Pty Ltd
Adriaanse, Mr John. Construction contract law. Palgrave Macmillan, 2016.
Andrews, Neil. Contract law. Cambridge University Press, 2015.
Competition and Consumer Act 2010 (CCA)
Corones, Stephen G. Competition law in Australia. Thomson Reuters Australia, Limited, 2014.
Dunlop Tyre v Selfridge [1915] AC 847
Goldberger, Jeffrey. “Unconscionable conduct and unfair contract terms.” Commercial Law Quarterly: The Journal of the Commercial Law Association of Australia 30.2 (2016): 17.
Howells, Geraint, and Stephen Weatherill. Consumer protection law. Routledge, 2017.
Jackson, Sheryl. “Amendments potentially time-barred: A practical approach.” Proctor, The 35.5 (2015): 42.
McKendrick, Ewan. Contract law: text, cases, and materials. Oxford University Press (UK), 2014.
Nash v Inman [1908] 2 KB 1
Oliver, Justin. “When consumer goods turn bad: Mandatory reporting under the’Australian Consumer Law’.” Proctor, The34.2 (2014): 18.
Olley v Marlborough Court Hotel [1949] 1 KB 532
Poole, Jill. Textbook on contract law. Oxford University Press, 2016.
Stelland Pty Ltd v North Queensland Fuel Pty Ltd [2015] QSC 119
Thornton v Shoe Lane Parking Ltd [1971] 1 ALL ER 686.
[1] McKendrick, Ewan. Contract law: text, cases, and materials. Oxford University Press (UK), 2014.
[2] Poole, Jill. Textbook on contract law. Oxford University Press, 2016.
[3] Olley v Marlborough Court Hotel [1949] 1 KB 532
[4] Adriaanse, Mr John. Construction contract law. Palgrave Macmillan, 2016.
[5]Oliver, Justin. “When consumer goods turn bad: Mandatory reporting under the’Australian Consumer Law’.” Proctor, The34.2 (2014): 18.
[6] Competition and Consumer Act 2010 (CCA)
[7] Goldberger, Jeffrey. “Unconscionable conduct and unfair contract terms.” Commercial Law Quarterly: The Journal of the Commercial Law Association of Australia 30.2 (2016): 17.
[8] Stelland Pty Ltd v North Queensland Fuel Pty Ltd [2015] QSC 119
[9] Thornton v Shoe Lane Parking Ltd [1971] 1 ALL ER 686.
[10] McKendrick, Ewan. Contract law: text, cases, and materials. Oxford University Press (UK), 2014.
[11] Adriaanse, Mr John. Construction contract law. Palgrave Macmillan, 2016
[12] Nash v Inman [1908] 2 KB 1
[13] Poole, Jill. Textbook on contract law. Oxford University Press, 2016.
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