Australian Consumer Law ACL Is a Broad-Based Essay

  • Length: 6 pages
  • Sources: 6
  • Subject: Business - Law
  • Type: Essay
  • Paper: #87243624

Excerpt from Essay :

Australian Consumer Law (ACL) is a broad-based law the impacts both businesses and consumers. The ACL represents a unified codification of a variety of prior product liability laws. In fact, one of its main benefits is that the law is applicable throughout Australia. Another major component of the law is that it imposes a strict liability standard on manufacturers and suppliers of goods, which was not a uniform standard prior to the introduction of this law. This is a relatively new law; the need for it was identified in 2009 after a Productivity Commission reviewed existing consumer protection laws and found glaring inconsistencies, which made it difficult, if not impossible, to enforce those laws that did exist.

Perhaps the greatest change to the law is that the ACL is now a strict liability law. Strict liability "means that a breach may be committed without negligence" (The FindLaw Team, 2012). In other words, even those manufacturers and suppliers that have taken every reasonable precaution can still be held responsible for damages arising from the use of the product. "The overarching reason for making consumer guarantees a strict liability offence, is to ensure that the consumer's expectations will be met by the supplier or the manufacturer, and if a retailer fails to meet the consumer guarantee provisions, then there is no need to find who was at fault in the supply chain, but rather it is the supplier or manufacturer who will be held liable" (The FindLaw Team, 2012).


The ACL was not developed from scratch, but was based on the Trade Practices Act 1974 (TPA). In addition, it incorporated existing state and territory consumer protection laws that may not have been covered by provisions existing in the TPA. The consumer protection standards that had been part of the TPA included prohibitions against misleading and deceptive conduct, rules about contract terms, regulations on the type of selling schemes (such as pyramid schemes), price regulations, consumer guarantees, and product safety (Australian Competition & Consumer Commission, 2012). However, there was little strength to these provisions, which is what the ACL sought to change.

While the ACL is a comprehensive law, it does not cover every possible commercial transaction. Part 3-2, Division 1 of the ACL states that in all purchases, the consumer is entitled to title, possession, and undisclosed securities (The FindLaw Team, 2012). However, when goods and services are provided in trade or commerce, then the ACL imposes additional consumer guarantees, which are not applicable to private sales. These guarantees include: acceptable quality, fitness for purpose, compliance with description, supply by way of sample or demonstration model, repairs and spare parts, and compliance with express warranties (The FindLaw Team, 2012). There are some exclusions to the law, for example good bought at auction, goods bought to be transformed in trade or commerce, and other exclusions, but generally the ACL will apply to all goods for sale in trade or commerce (The FindLaw Team, 2012).

The ACL also covers services, though the exclusions on services are more extensive than the exclusions on goods. The services must be consumer services as defined by the ACL, and generally have to be for less than $40,000, unless acquired for personal, domestic, or household use or consumption (The FindLaw Team, 2012). This provision makes it clear that the purpose of the ACL is to protect personal consumers, who are generally in a weaker bargaining position than suppliers and manufacturers, from unfair trade practices, rather than protecting business people who are in a more advantageous position. There are a number of services that are common, but not considered consumer services under the ACL including: financial services, services by architects and engineers, transportation services, storage services, insurance contracts, telecommunications, gas and electricity, and suppliers of recreational services who have limited liability for personal injuries (The FindLaw Team, 2012).

While the ACL may appear to be unduly burdensome for manufacturers and suppliers, that perspective ignores the fact that there are very real benefits for products when consumers can rely upon the quality. Laws like the ACL may seem to burden business, but they can actually increase a country's relative reliability from an international business perspective. In a study examining the successful international marketing of different brands, Pappu et al. discovered that the country of origin for the brand was critical in helping determine the reputation of the product (2007). Products from countries with a reputation for substandard products were rated lower, and this rating did not seem to reflect actual differences in product quality (Pappu et al., 2007). Instead, it was a reflection of perceptions of national quality, and those concerns about national quality were one of the driving factors behind development of the ACL.

In fact, when examining the need for the ACL, the Productivity Commission found the increasingly national nature of Australian commerce to be one of the most pressing reasons to develop a national consumer protection law. According to the Productivity Commission: "Australia's consumer product and service markets are becoming increasingly national in character. In 2007 around 48 per cent of goods and services, measured by turnover, were supplied by firms operating nationally. Since 1998, the number of retail businesses operating nationally has increased from 47 per cent to 53 per cent and, since 2003, there has been a

70 per cent increase in the number of firms that operate in every State and Territory" (Bowen, 2009).

Moreover, most of this increase in national-based businesses are not linked to trends that are isolated to Australian business practices, but reflect a global transition in the business environment suggesting a permanency to these changes. Not only will Australian businesses become more national, but one would assume that they are also going to grow increasingly global as business practices grow more streamlined. Already, "innovations in supply chain management, enabled by the greater use of information technology and better transport infrastructure, have led to an expansion in nationally-focused businesses that supply a range of goods and services to consumers across Australia. Internet technology has also seen the increase of consumers buying goods or services across jurisdictions" (Bowen, 2009). In order to continue to encourage this type of barrier-free trade, the Productivity Commission believed that national consumer protection laws were a necessity.

One of the problems with laws existing prior to the ACL was the lack of a uniform method of enforcement. Consumers in one area might have far greater access to enforcement than consumers in another territory or jurisdiction. "The ACL is administered and enforced jointly by the ACCC and the State and Territory consumer protection agencies, with the involvement of the ASIC on relevant matters" (The Commonwealth of Australia, 2010). In fact, all Australian consumer protection agencies, the New Zealand Ministry of Consumer Affairs, and the New Zealand Commerce Commission are all signatories to the Memorandum of Understanding (MOU) that outlines how they will work together for ACL enforcement (The Commonwealth of Australia, 2010).

The MOU provides that these agencies will work together to enforce the ACL. First, it states the need for greater communication between the various signatories, and then stresses that they may need to refer complaining parties from one signatory to another in applicable scenarios. The MOU does not outline the specific steps in an enforcement strategy, but declares that the signatories will work together to develop compliance strategies. Moreover, the MOU does not require uniform compliance strategies across the territories, but leaves room for each territory to develop its own approach to compliance (Australian Consumer Law: Memorandum of Understanding). This is a significant weakness in the law because it leaves open the possibility that citizens in different locations will experience different levels of protection in the context of consumer affairs.

While the law is relatively new, there has been some litigation under the law helping define its parameters. Not all of that litigation has resulted in decisions that are friendly to the consumer; in fact some of the decisions suggest an anti-consumer attitude that appears at-odds with the intent of the ACL. There are limits to the misleading and deceptive conduct provisions of the ACL. For example, "if a person making a representation intends to honour it when it is made, then a subsequent change of mind does not demonstrate misleading and deceptive conduct" (Dawson, 2011). Even more interesting is that, in the same case, the Court determined that even intentional or deliberate breaches of contract might not be prohibited as unconscionable under the ACL (Dawson, 2011).

The case that helped shape these opinions was Body Bronze International Pty Ltd. And Scott Meneilly and Brian John Mitchell v Fehcorp PtyLtd [2011] VSCA 196. In that case, Body Bronze and Fehcorp entered into a franchise agreement. Under the terms of the agreement, Body Bronze (the franchisor) agreed to lend Fehcorp (the franchisee) the costs in excess of $250,000 that Fehcorp incurred in fitting out a salon, but the parties franchise agreement did not include that financial obligation. Initially, Body Bronze lent Fehcorp money, but then refused to…

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