Australian Consumer Law: Misleading Conduct and Unconscionable Conduct

This article discusses the provisions of Australian Consumer Law related to misleading conduct and unconscionable conduct. It covers the relevant laws, cases, and applications with solved questions. The first question deals with Section 18 of ACL and the second question deals with Section 20 of ACL.

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Australian Consumer Law
Questions
09-Feb-18
(Student Details: )

Australian Consumer Law
Question 1
Heading
Section 18 Australian Consumer Law- misleading or deceptive conduct
Issue
Whether the provisions of ACL were breached by in this case by Kristof and Cameron, or not?
Law
In Australia, the Competition and Consumer Act, 20101 applies which safeguards the interests of
the consumers and also ensures that a healthy competition takes place in the nation. Schedule 2
of this act covers the consumer related provisions in particular and is known as the Australian
Consumer Law, herein referred to as ACL2. Section 18 of the ACL puts a restriction on the
people who are indulged in activities of trade or commerce from undertaking any such conduct
which could be characterised as misleading or deceptive, or where the effect of such conduct is
to mislead or deceive3. So, there is a need to refrain from making any such claims which could
possibly be in breach sections 18 of the ACL. Section 29 of ACL, provides that the individuals
need to refrain from making any false or misleading representation during trade or commerce in
context of goods or services4.
1 Competition and Consumer Act, 2010 (Cth)
2 Competition and Consumer Act 2010, sch 2
3 ACL, s18
4 ACL, s29
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Australian Consumer Law
Australian Competition and Consumer Commission v Kingisland Meatworks and Cellars Pty
Ltd5 is a case which provides importance guidance in context of place of origin of company or its
brand name, and the manner in which it could be deemed as deceptive and misleading, along
with being a false representation of the place of origin of goods. This issue stated that when the
place of origin is made use of by brand name or the company, a representation is put forth that
the product belongs to that place. As a result of this, there is a need for the majority part of goods
to be sourced from a single place. An obiter was given in this matter by Murphy J in which it
was provided that to hold a particular product to be sourced from a particular location, there was
a need for the same to be 70% of the product to come from such place. As a result of this,
breaches of the two quoted sections were upheld. This resulted in the court giving a declaration
of contravention, three year restricting, publishing of the corrective notice, and payment of
pecuniary penalty and ACCC’s costs6.
Application
In the given case study, the issue relates to the newspaper advertisement being misleading or
deceptive in order to breach section 18 of the ACL. In this context, the key matter is whether the
products of Kristof and that of Cameron could be deemed as local, in order to save penalties for
breach of the quoted section. In this context, 70% of the food of Kristof is sourced locally, and
90% of Cameron is sourced locally. Applying the obiter given by Murphy J in Australian
Competition and Consumer Commission v Kingisland Meatworks and Cellars Pty Ltd, it can be
stated that there was sufficient portion of the product being produced locally, as the mark of 70%
was attained by both of them.
5 [2012] FCA 859
6 Laura Hartley and Erin McGushin, Misleading company and brand names – ACCC v Kingisland Meatworks and
Cellars Pty Ltd – is your use of a place of origin in your company or brand name allowed? (28 November 2013)
<https://www.lexology.com/library/detail.aspx?g=227e4cfa-da8e-4b25-aae4-eb3c844fe601>
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Australian Consumer Law
Conclusion
Thus, from this discussion, it can be concluded that there was no breach of the quoted sections of
ACL due to the limit of 70% as given through a precedent being satisfied.
Question 2
Heading
Section 20 Australian Consumer Law- Unconscionable Conduct
Issue
Whether the provisions of ACL were breached by in this case by ‘Vultures Inc’ and Edward, or
not?
Law
Under section 20 of ACL, the individuals are prohibited from engaging in, during commerce or
trade, unconscionable conduct which is covered under the unwritten law7. In supply of goods or
services, or in the acquisition of these, section 21 prohibits unconscionable conduct8.
Unconscionable conduct is held where the dominant individual takes advantage of a weaker
party, owing to their special disability9. In this matter, the case of Australian Competition and
7 ACL, s20
8 ACL, s21
9 Australian Contract Law, Unconscionable Conduct (2018)
<https://www.australiancontractlaw.com/law/unconscionable.html>
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Australian Consumer Law
Consumer Commission v Phoenix Institute of Australia Pty Ltd (Subject to Deed of Company
Arrangement)10 proves to be of assistance11.
In this case, joint investigation was initiated by the NSW Fair Trading and the ACCC in the
conduct of Commonwealth for the Department of Education and Training, private colleges and
ACCC. These proceedings were made in the Federal Court against Community Training
Initiatives Pty Ltd and Phoenix Institute Australia Pty Ltd. The course had been conducted by
Phoenix through different marketing techniques which included door to door sales, propagated
this course. Due to these techniques, Phoenix was able to enrol 9,000 students in the 17,000
courses. And it was alleged that Phoenix was paid $100 million in excess for these enrolments by
the Commonwealth. The proceedings were made against Phoenix for their misleading or false
representations and for being a part of unconscionable conduct. It was earlier promised that the
students would be given free laptop and the course would be free where the earnings were not
more than a particular sum. However, this laptop in reality was a loan and the students took a
part of the courses which resulted in a debt payable to Commonwealth Government. All this led
to unconscionable conduct being made as an allegation12.
Application
In the present case, assistance needs to be taken from the case of Australian Competition and
Consumer Commission v Phoenix Institute of Australia Pty Ltd. Here, Adam was a weaker party
due to his special disability of his worries on education and employment. This allowed Edward
10 [2016] FCA 1246; 116 ACSR 353
11 Jade, Australian Competition and Consumer Commission v Phoenix Institute of Australia Pty Ltd (Subject to Deed
of Company Arrangement) [2016] FCA 1246 (21 October 2016) <https://jade.io/article/498048>
12 ACCC, ACCC takes action against Phoenix following joint investigation with NSW Fair Trading (24 November
2015) <https://www.accc.gov.au/media-release/accc-takes-action-against-phoenix-following-joint-investigation-
with-nsw-fair-trading>
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Australian Consumer Law
to take advantage of him. Further, the education promised by Edward through Vultures Inc
promised a number of things, which were not kept. As per the quoted case, this would not only
be deemed as presence of unconscionable conduct, but also the presence of false or misleading
representation, where Adam was led to believe that he would be given quality education and
employment opportunity, but he was merely taken advantage of and misrepresented about the
real facts.
Conclusion
Thus, from this discussion, it can be concluded that the sections of ACL were breached by in this
case by ‘Vultures Inc’ and Edward owing to the unconscionable conduct and for false
representations made to Adam.
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Australian Consumer Law
Bibliography
Cases
Australian Competition and Consumer Commission v Kingisland Meatworks and Cellars Pty Ltd
[2012] FCA 859
Australian Competition and Consumer Commission v Phoenix Institute of Australia Pty Ltd
(Subject to Deed of Company Arrangement) [2016] FCA 1246; 116 ACSR 353
Legislations
Competition and Consumer Act, 2010 (Cth)
Others
ACCC, ACCC takes action against Phoenix following joint investigation with NSW Fair Trading
(24 November 2015) <https://www.accc.gov.au/media-release/accc-takes-action-against-
phoenix-following-joint-investigation-with-nsw-fair-trading>
Australian Contract Law, Unconscionable Conduct (2018)
<https://www.australiancontractlaw.com/law/unconscionable.html>
Hartley L, and McGushin E, Misleading company and brand names – ACCC v Kingisland
Meatworks and Cellars Pty Ltd – is your use of a place of origin in your company or brand name
allowed? (28 November 2013) <https://www.lexology.com/library/detail.aspx?g=227e4cfa-
da8e-4b25-aae4-eb3c844fe601>
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Jade, Australian Competition and Consumer Commission v Phoenix Institute of Australia Pty Ltd
(Subject to Deed of Company Arrangement) [2016] FCA 1246 (21 October 2016)
<https://jade.io/article/498048>
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