Other sections of the Trade Practices Act and the Fair Trading Act

Contributed by Ian Macdonald and Su Mahalingham and current to 1 September 2005

The Acts prohibit businesses from engaging in conduct that is liable to mislead the public about the nature, manufacturing process, characteristics, fitness for purpose or the quality of any goods or services (TPA ss.55,55A; Fair Trading Act ss.17,18).

In relation to home-operated businesses or businesses involving the investment of money and the performance of persons, the Act prohibits statements that are false or misleading about profitability, risk or any other relevant aspect of the business (TPA s.59; Fair Trading Act s.22).

The Acts prohibit false or misleading statements concerning the nature of interest in land, the price payable for the land, its location, characteristics, uses and the availability of facilities associated with the land (TPA s.53A, Fair Trading Act s.12(2)).

Businesses trading in goods or services or in land are prohibited by the Acts from representing that they have a sponsorship, affiliation or approval that they do not have.

In relation to the supply of goods or services and in relation to the supply of an interest in land (such as lease), the Acts prohibit the offering of gifts, prizes or other free items with the intention of not providing them as offered (TPA ss.54,53A; Fair Trading Act s.16).

The Acts prohibit the offering of goods or services at a special price in order to snare prospective purchasers into obtaining some more costly item. A special price would include a bargain or sale price and one which is advertised as having been reduced (TPA s.56, Fair Trading Act s.19).

UNCONSCIONABLE CONDUCT

The TPA/Fair Trading Act deals specifically with conduct which is “unconscionable”. The relevant sections are sections 51AA and AB of the TPA and section 11 of the Fair Trading Act.

Background

The background to unconscionable conduct lies in common law. The common law has always recognised that certain behaviour giving rise to contracts is totally unacceptable, and gives the affected party the right to cancel the contract. Clearly the effect of the court cancelling a contract is fairly significant, and therefore the court only intervened in really serious cases of misconduct. Over a number of years, the general principles that arose in relation to the application of this particular law were that the court would step in where one party was at a disadvantage vis-a-vis the other

party, and the latter party took advantage of the former party’s disability or disadvantage. The disadvantaged party would have to bring a personal common law claim against the offending party.

This was a fairly expensive process as it required a full civil court trial.

The Trade Practices Act

In 1986 the TPA sought to create statutory laws based upon the common law concepts of unfair behaviour. This law is now reflected in Sections 51AA and 51AB of the TPA. Section 51AA simply says that whatever else exists in relation to statutory law relating to unconscionable conduct, the common law (or as it is described in the Act, the “unwritten law”) continues to apply. Section 51AB reflects in a statutory form some of the principles that arose out of common law actions in relation to unconscionable conduct. It tries to spell out the circumstances where conduct would be considered to be unconscionable.

This clearly would be quite a difficult drafting task and so the draftsperson, rather than spelling out every sort of behaviour that is unacceptable, has set out broad perimeters known as the shopping list. The shopping list is used in order to establish whether or not unconscionable conduct may have occurred, with each item on the shopping list relevant to a smaller or larger extent depending upon the facts. Of course, matters outside the shopping list may also constitute unconscionable conduct, and the shopping list provides simply a guide. The shopping list sets out certain criteria to establish whether or not conduct is unconscionable including the:

• relative strength of the parties’ bargaining power; conditions imposed on the consumer; complexity of the documentation;
• presence of any undue influence or pressure; and
• amount charged for equivalent goods or services elsewhere.

Remedies for Unconscionable Conduct

The Act provides that in the event of conduct being unconscionable then, firstly and most importantly, the Australian Competition and Consumer Commission (“ACCC”) can investigate the allegation and where appropriate bring a representative action. This is a very powerful provision of the Act, as it in effect makes the ACCC a watchdog. It gives consumers who feel as though they have been the victims of unconscionable conduct the ability to make a complaint to the ACCC, and have them investigate and in certain circumstances bring the claim. Quite clearly, this takes a lot of stress and financial burden off the shoulders of the oppressed party.

The Act also allows claims to proceed against the party behaving unconscionably with the remedies including injunctions and other orders. The other orders include (where the court considers it appropriate) compensating a party for loss or damage; declaring a contract void in whole or part; requiring a refund of money or return of property, or requiring that specific services be performed.

UNSOLICITED GOODS AND SERVICES

Unsolicited goods and services are those which are delivered to or for a consumer without the consumer having “ordered” or requested the goods. Such behaviour is governed by the TPA in sections 63A to 65 and the Fair Trading Act in sections 28 to 32.

Should such a delivery be made, then, if done in the course of trade (that is, a business delivery to a consumer), the person so delivering shall not assert a right to payment from the consumer. Asserting a right to payment would include the following:

• threatening legal proceedings;
• placing the consumer’s name in a list of debtors or defaulters;
• seeking the involvement of a collection agency;
• sending to the consumer an invoice or similar document or setting out the price or charge on a document without stating prominently that such price or charge is not a claim for payment.

If unsolicited goods are delivered to a consumer, then, after the expiration of a certain period, the goods become the property of the consumer free of any cost or charges whatsoever if the seller has not taken re-delivery of them upon request. The period depends upon whether or not the consumer gives a certain notice to the deliverer. If notice is given then the period is one month, otherwise it is 3 months, from the date of delivery. Until that period expires, the consumer is not liable to make payment for the goods nor is he or she liable for any loss or damage to the goods other than damage or loss resulting from the doing of a wilful and unlawful act.

The goods do not become the property of the consumer after the expiration of the period (being one or three months) if during that period:

• the consumer refuses to permit the deliverer of the goods to take possession;
• the deliverer does take possession;
• the goods were received and the consumer ought to have known or reasonably expected that they were not intended for the consumer.

UNSOLICITED CREDIT CARDS

The TPA and Fair Trading Act prohibit the sending of a credit card or a replacement except in pursuance of a request in writing by the recipient.