Business Ethics and law Assignment PDF

BUSINESS ETHICS AND LAW
AUSTRALIA CONSUMER LAW
STUDENT ID:
[Pick the date]

Question 1
For a transaction to be considered under the ambit of Australian Consumer Law (ACL), it is
essential that there must a consumer present in accordance with the definition outlined in
s.3(1) ACL. With reference to this section, a consumer may be one who is able to fulfil
atleast one of the conditions outlined below (Austlii, 2017).
 The buying price of the goods that the buyer pays must not exceed $ 40,000; or
 The underlying goods that have been purchased by the buyer would be utilised for
personal or domestic usage and not for commercial purposes
The transactions that have been enacted by Sangita need evaluation based on the above
definition of consumer which would highlight if Sangita for the underlying transaction can be
labelled as a consumer or not. This would further provide clarity on whether these
transactions would fall within ambit of ACL or not.
Transaction A: In the given transaction, a rice cooker has been bought by Sangita which
would be used by her Aunt, Shindu. Further, relevant details about the transaction clearly
highlight that the use of rice cooker would be to prepare food for the family and not any
commercial use. Besides, the price paid by the buyer Sangita for this product is $ 59.95. In
wake of the domestic use and price not exceeding $ 40,000, it would be fair to conclude that
Sangita is categorised as consumer for the purposes of ACL.
Transaction B: In the given transaction, an electric drill has been bought by Sangita which
would be used by her uncle, Ramdas. Further, relevant details about the transaction clearly
highlight that the use of electric drill would be for normal household repairs and not any
commercial use. Besides, the price paid by the buyer Sangita for this product is $ 69.95. In
wake of the domestic use and price not exceeding $ 40,000, it would be fair to conclude that
Sangita is categorised as consumer for the purposes of ACL.
Transaction C: In the given transaction, an electric toothbrush has been bought by Sangita
which would be used by her cousin, Pooja. Further, relevant details about the transaction
clearly highlight that the use of electric toothbrush would be for personal use of Pooja and not
any commercial use. Besides, the price paid by the buyer Sangita for this product is $ 49.95.

In wake of the domestic use and price not exceeding $ 40,000, it would be fair to conclude
that Sangita is categorised as consumer for the purposes of ACL.
Therefore in accordance with the discussion carried out above, it can be concluded that for
the purposes of the three transactions highlighted, Sangita would be labelled as consumer and
therefore the ACL provisions would apply to these trasnactions.
Question 2
In accordance with ACL, there are a host of implied consumer guarantees that are extended to
consumers and are contained in s. 51 to s. 59. However, all these are not relevant to the
underlying transactions. The relevant ones are briefly discussed as follows.
 The goods that are supplied by the supplier should be of acceptable quality as per s.
54, ACL (Austlii, 2017). This would mean that the underlying goods must be of
merchantable quality which has been explained during the case commentary related to
Medtel Pty Ltd v. Courtney [2003] FCAFC151 case. The various aspects of this are
that good must not have any defect, must be safe, appropriate for the purpose the
underlying good is normally used and must be acceptable in finish (Gibson and
Fraser, 2014).
 In accordance with s.56, the suppliers and manufacture must ensure that the goods
must adhere to the underlying description that is contained in the product catalogues
and advertisements (Austlii, 2017). If there is any deviation with regards to colour or
size from the description that has been mentioned, then the consumer can get it
remedied. Further, the manufacturer or supplier cannot limit their liability by citing
that it was the responsibility of the consumer to physically inspect and verify if the
product matches with the description or not (Davenport and Parker, 2014).
 In accordance with s. 55, the good sold must be fit for any specified purpose that the
consumer may have highlighted while making the purchase (Austlii, 2017). In line
with the verdict in the Ryan v Great Lakes Council [1999] FCA 177 case. There exists
an implicit consumer guarantee on the part of the supplier so supply goods that are fit
for consumer usage when there is fulfilment of the conditions highlighted below.

1) There has been an express statement by the consumer directed towards the
supplier or agent in relation to the good being suitable for a given use.
2) While making the purchase, the consumer tends to rely on the knowledge or
expertise that the supplier has in judging if the chosen product is suitable for the
intended use or not.
3) Under the given circumstances, the consumer can reasonably rely on the
supplier’s knowledge.
The transactions enacted in this case would have to be analysed keeping the above consumer
guarantees into consideration.
Transaction A: In the given transaction, a rice cooker has been purchased by consumer
Sangita. However, on the delivery of the parcel, it was found out that despite the outside
cover describing the product insider as “rice cooker”, the actual product insider was an
electric fry pan. As a result, there has been a breach of the implied consumer guarantee
dealing with the goods complying with their underlying description. In the given situation,
the product ordered was a rice cooker and the parcel also allegedly contained the same.
However, the contents inside did not comply with the description outside and that of the
product demanded by the customer. Hence, in accordance with s. 56, there has been a breach
in relation to the given consumer guarantee.
Transaction B: In the given transaction, an electric drill has been purchased by consumer
Sangita. However, the product does not functional properly which is apparent from the details
highlighted whereby on usage there is a burning smell coupled with drill becoming hot and
essentially dysfunctional. Considering the relevant details, it seems that the product provided
in this case does not have merchantable quality. There seem to be inherent technical issues
with the drill owing to which it malfunctions from the first instance itself. Hence, in
accordance with s. 54, there has been a breach in relation to the given consumer guarantee.
Transaction C: Based on the given facts, it is apparent that an electric toothbrush has been
purchased by Sangita for her cousin Pooja. While interacting with the assistant during the
online sales, Sangita enquired as to whether the toothbrush model chosen by her can be
operated through both main power and battery. This was an essential feature for Sangita to
make the purchase since she is aware that Pooja would like to take this around with her.
Sangita received assurance from the assistant that the chosen model could be operated in both
modes. The product when actually received highlighted that it could only operate on main

power and had no supporting mechanism for battery operations. This leads to a breach of the
consumer guarantee as per s. 55, ACL. It is apparent that during the interaction with the
assistant, Sangita clearly or explicitly highlights the desired use for which it was imperative
that the brush could be operated on battery. Also, considering an online sale and limited
knowledge of various electric toothbrush models, it was appropriate for Sangita to act on the
advice of the assistant. Therefore, the consumer guarantee extended through s. 55 has been
breached.
In line with the discussion carried out above, it would be appropriate to conclude that in
every transaction, a breach of the provision of ACL has taken place and hence the next
question would focus on remedies that are available.
Question 3
For the violation of the ACL provisions, consumer can avail remedies which are driven by
whether these breaches can be remedied or whether these can be categorised as major failure
as highlighted by s. 260, ACL (LegalVision, 2016). If breach belongs to type which can be
remedied, the in such a case statutory right is available to the consumer to demand that the
produce be repaired, replaced or refunded. When there is a major failure, then a statutory
right is extended to the consumer whereby he/she potentially reject the product or choose an
option between refund and replacement (Austlii, 2017).
The below mentioned scenarios would constitute as a major failure (LegalVision, 2016)
 The consumer would have not gone ahead with the purchase had the issue been
known
 There is significant deviation of the actual good from their underlying description.
 The underlying product is not safe to use and thereby poses a safety hazard.
It is noteworthy that the remedies highlighted above are available to use only when the
damage is not caused by the consumer or when the good has been passed into the possession
of the consumer.
The transactions undertaken by Sangita need to be analysed considering the remedies
available for breach of consumer guarantees.

Transaction A: In the underlying transaction, it can be concluded that the good actually
provided to the consumer differs greatly from the description highlighted on the box used to
carry the same. On the box, it was written that there was a rice cooker inside but instead an
electric fry pan was contained. The given situation would fall within the ambit of major
failure. As a result, a refund can be demanded by Sangita or she may replace the electric fry
pan with the rice cooker.
Transaction B: In the underlying transaction, it can be concluded that the product i.e. electric
drill fails to comply with minimum quality standards since it has manufacturing defects
owing to which it does not function properly. The given situation would fall within the ambit
of major failure. As a result, a refund can be demanded by Sangita or she may replace the
current electric drill with a new electric drill of merchantable quality.
Transaction C: In the underlying transaction, the electric toothbrush that has been provided
does not serve the purpose. Also, it does seem appropriate to infer that Sangita would not
have purchased the current electric toothbrush model if the online sales assistant had told her
that the brush cannot operate with batteries. The given situation would fall within the ambit
of major failure. Therefore, Sangita can ask for refund or a replacement for the current
electric toothbrush with a model that can run on batteries also.
Question 4
With regards to validity of any exclusion clause, the relevant clause is s. 64. This section
highlights that a particular contractual term which seeks to either exclude, restrict or modidy
the underlying liability that seller has to bear in case of breach of consumer guarantees
extended by ACL, will be considered as void and hence non-enforceabe (LSCSA, nd).
The exclusion clause that is highlighted on the Myers sale receipts is indicated below.
“Myers Stores offer no refund, exchange or replacement for items purchased online.”
It is pertinent that the exclusion clause printed on the ticket aims to waive the liability of the
seller (Myers) in relation to any potential breach of consumer guarantees. Provided by ACL
and hence would be considered as void. Hence, the presence of the above clause on the online
receipts would make no difference to the applicability of remedies discussed in question 3.

References
Austlii (2017) COMPETITION AND CONSUMER ACT 2010 - SCHEDULE 2 The Australian
Consumer Law [online] Available at
http://www7.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/caca2010265/sch2.html
[Accessed May 10, 2018]
Davenport, S. & Parker, D. (2014) Business and Law in Australia 2nd ed. Sydney: LexisNexis
Publications.
Gibson, A. & Fraser, D. (2014) Business Law 8th ed. Sydney: Pearson Publications.
LegalVision (2016) What Happens if I Don’t Meet the Consumer Guarantees? [online]
Available at https://legalvision.com.au/breaching-consumer-guarantees/ [Accessed May 10,
2018]
LSCSA (nd) Exclusion Clauses and the Australian Consumer Law [online] Available at
https://www.lawhandbook.sa.gov.au/ch10s02s06s01.php [Accessed May 9, 2018]