Consumer Protection Laws in Australia

This assignment delves into the complexities of Australian consumer protection laws. It requires a critical analysis of the legal framework governing misleading claims in advertising and sales practices. Students are expected to examine case studies, legal precedents, and scholarly works to evaluate the effectiveness of current legislation in safeguarding consumers' rights. The analysis should consider the challenges posed by evolving business models and online transactions.

Running head: BUSINESS LAW ASSIGNMENT
Business Law Assignment
Name of the Student
Name of the University
Author Note

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Table of Contents
Question 1........................................................................................................................................2
Issue (a)........................................................................................................................................2
Rule..............................................................................................................................................2
Application..................................................................................................................................4
Conclusion...................................................................................................................................5
Issue (b).......................................................................................................................................5
Rule..............................................................................................................................................5
Application..................................................................................................................................6
Conclusion...................................................................................................................................7
Question 2........................................................................................................................................7
Reference list.................................................................................................................................12

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Question 1
Issue (a)
Whether the parties have entered into a contract with each other
Rule
An agreement that is enforceable in the court of law may be defined as a contract. The
parties to a contract are legally bound by the contractual terms of the contract. A valid contract
must include an offer, acceptance, consideration, legal intention, capacity and certainty. An offer
commences the process of formation of a contract and the terms offered must be certain and
specific in nature1. The person making an offer is called the offeror and the person accepting the
offer is known as the offeree. A valid acceptance of a valid offer is essential to render a contract
as valid and enforceable in the court of law. an offer should be accepted as per the terms
proposed by the offeror and if the offeree incorporates any new or additional terms, it is known
as counter-offer which invalidates the original offer.
An offer is said to be accepted if such acceptance is communicated to the offeror. Postal
rule is an exception to this rule of communication of acceptance. It is considered as an alternative
means of accepting an offer. According to the postal rule, when an acceptance of an offer is
communicated by post, the acceptance is complete as soon as the letter of acceptance is posted
and out of the control of the person posting such acceptance. This rule was established for the
first time in Adam v Lindsell, where the court held that after the letter is posted, even if the letter
is lost or misled, it should be considered as a communication of a valid acceptance.
1 Coteanu, Cristina. Cyber consumer law and unfair trading practices. Routledge, 2017.

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In the modern era, with the advancement of technologies, majority of communications
takes place by email, telex, telephone and other instantaneous means. The court held in Entores
Ltd v Miles Far East Corporation [1955] that postal does not applies for instantaneous
communications as the contract is complete where the acceptance is received by the offeror
which unlike the postal rule as the responsibility is on the offeree to communicate the acceptance
to the offeror effectively. Acceptance communicated through instantaneous mode of
communication must be acknowledged which is not required under the postal rule where
acceptance is communicated once the acceptance is posted.
There is no specific legislation to determine whether email is an instantaneous
communication mode to which general acceptance rule could apply. Internet and computers may
take some time to respond2. With respect to the timing issues in electronic transactions, emails
are treated differently, as compared to websites, which is considered as one of the modes of
instantaneous communication and websites unlike email, relies on actual space and time between
accepting and sending the contract.
Since email transactions involve failure and delays while sending and receiving the
messages, parties do not enjoy instantaneous communication between each other as was
observed in Chwee Kin Keong v Digilandmall.com Pte ltd [2005] SGCA 2. Therefore, postal
rules should be applied for communication made through emails. Since dispatch is a vital point
to apply the postal rule in the context of email. Since acceptance is said to be valid once it is
beyond the possession and control of the offeree under the postal rule, the acceptance message
sent through email shall be considered to be beyond the control or possession of the offeree when
the offeree connects to the computer and presses the sent button.
2 McKendrick, Ewan. Contract law: text, cases, and materials. Oxford University Press (UK), 2014.

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Once acceptance is communicated to the offeror the offerree cannot revoke the
acceptance provided the revocation is communicated to the offeror before the communication of
acceptance reaches the offeror.
Application
In the given scenario, Lianne email Mary on 10 June, to organize a party for her and the
Mary emails about the information related to the party along with the quote for $10000. Lianne
proposes a lower price of $9500, which Mary approves with the condition that the reduced price
offer shall remain open for seven days and 10% non-refundable deposit should be provided
within the stiulayed time. Here, the original offer of $10000 made on 10 June becomes invalid as
Lainne proposed a reduced price of $9500, which amounts to a counter offer.
Further, if the offeror stipulates a particular time within which the offer must be accepted,
the offeree is required to accept such offer within such stipulated time3. However, on the facts
here, Lianne was required to accept the offer with reduced price within seven days from 10 June.
However, Lianne failed to accept the offer within the stipulated time, which implies that the offer
was revoked, and cease to be effective.
On 20 June, Mary offers that since Lianne failed to accept the offer of $9500 within 7
days, the price of the party is now $10000. Mary accepts the offer by sending a mail, thus,
communicating her acceptance of the offer of $10000. As discussed in the Chwee Kin Keong’s
case, email is not considered as an instantaneous communication mode owing to the absence of
any legislation establishment regarding the time of dispatch and receipt because of which postal
rule will apply under such circumstances.
3 Hunter, Howard. "Modern Law of Contracts." (2017).

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According to the postal rule, an acceptance is said to have been communicated after it has
been posted and it become out of the possession and control of the offeree4. Similarly, in case of
an acceptance communicated by email, the message is said to be out of possession and control of
the offeree, once the offeree connects the internet and presses the send button. Lianne
communicated her acceptance of the offer of $10000 by mailing such acceptance to Mary, and
the acceptance is said to be communicated as it was beyond her control or possession. It is
established that a contract was formed between Mary and Lianne with a valid offer and
acceptance made between each other.
Thirty minutes after the acceptance was communicated, Mary mailed her revocation of
the offer. However, such revocation of the offer shall not be considered as valid, as once an
acceptance of offer is communicated to the offeror it cannot be revoked unless the
communication of revocation reaches the offeror before the communication of acceptance.
Conclusion
A contract was formed between Mary and Lianne as there was a valid offer made by
Mary and the Lianne had made a valid acceptance of such offer.
Issue (b)
Is Lianne entitled to bring a claim against Mary on the grounds of her consumer rights?
Rule
In Australia, the Australian Consumer law (ACL), Schedule 2 to the Competition and
Consumer Act 2010 has been enacted to safeguard the consumers rights with respect to goods
and services obtained in relation to trade or commerce. The ACL sets out consumer guarantees
4 Poole, Jill. Textbook on contract law. Oxford University Press, 2016.

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that ensures protection of consumer rights with respect to the goods and services provided by the
businesses5.
According to section 61, the services specified for the purpose must be fit for such
purpose and the consumer must have relied on such skill and statement made by the suppliers.
According section 62, the services shall be supplied within the stipulated or reasonable time6.
According to section 268 of the ACL, a failure to act in accordance with a consumer
guarantee with respect to services is a major failure when such services are not fit for the purpose
and such failure cannot be remedied within a reasonable time to make it fit for the purpose for
which the consumer had obtained it. Further, the non-compliance would amount to major failure
if the services were not of the nature, condition, state or quality as was promised by the supplier
and was reasonably expected by the consumer. Furthermore, such failure cannot be remedied
within a reasonable time to achieve the expected result7.
The consumer is entitled to compensation for damages and loss from the suppliers in case
the supplier has breached a consumer guarantee, which resulted in a major failure of the products
and services.
Application
In the given scenario, Lianne had entered into a contract with Mary for organizing a boat
party for her friends. Mary promised Lianne that the cuisine she ordered for her party shall be
provided which is Malaysian cuisine. However, Mary’s suppliers had provided Russian foods
and the boat was congested and was not at all spacious as was promised by Mary. Consequently,
5 Pearson, Gail. "Further challenges for Australian consumer law." Consumer Law and Socioeconomic
Development. Springer, Cham, 2017. 287-305.
6 https://www.accc.gov.au/consumers/misleading-claims-advertising/false-or-misleading-claims
7 Corones, Stephen G., Sharon A. Christensen, and Nicola Howell. "Submission to Australian Consumer Law
Review Issues Paper." (2016).

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Lianne found it very difficult to accommodate her guests and the musicians. Furthermore, there
was no space for dancing and the food supplied was insufficient.
Here, Mary had failed to comply with the service that she promised Mary to provide and
which was reasonably expected by Lianne from Mary. According to section 61, Mary was
required to provide services that were fit for the purpose for which she was engaged by Lianne.
Lianne wanted Mary to organize a boat party for her, asked her to arrange Malaysian cuisine, and
wished to have some space for dancing8.
Mary failed to arrange Malaysian food and ordered Russian Food, which was insufficient,
had finished, there was insufficient space for accommodating the guests, and no space for
dancing, which establishes the fact that Mary had failed to comply with section 62 of the ACL.
Conclusion
Lianne can claim compensation for breaching her consumer guarantee protection, which
is a major failure of services and cannot be remedied within reasonable time under section 268 of
the ACL.
Question 2
Most of the Australian Businesses use advertising for the promoting their goods and
services. The advertisement is made through television, internet, print media or radio and it is
imperative to ensure that such advertisements are published in compliance with the Australian
Consumer Law (ACL)9. The Australian Consumer Law is laid down in the Schedule 2 of the
Competition and Consumer Act 2010 that aims at safeguarding the consumers and ensuring fair-
8 Svantesson, Dan, and Roger Clarke. "The Trade Practices Act: A Hard Act to Follow: Online Consumers and the
New Australian Consumer Law Landscape." James Cook UL Rev. 20 (2013): 85.
9 Star, Dan. "Federal court: Federal court casenotes." Proctor, The37.8 (2017): 41.

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trading in the country. Selling and Advertisements practices have undergone rapid development
and do not take place only through television or print media. It takes place through social media,
email, online shopping sites and other search engines.
Businesses that use newspapers, radio, television and other online websites for
advertising their products and services must not use misleading or deceptive statements10. The
businesses are prohibited from making statements that are false or are likely to create false
impression. Under section 18 of the Australian Consumer Law forbids businesses from
engaging in conduct that is misleading and deceptive in nature. Misleading conduct in
advertisements causes or is likely to cause harm to consumers by distorting the purchasing
choice of the consumers. The businesses are prohibited from making false claims with respect to
the style, quality, benefits, accessories, benefits, use, and exclusions of the goods and services
that are advertised by the businesses.
Misleading or deceptive conduct in advertisements reduces competition in the market by
making consumers demand products that does not possess the features that are promoted while
advertising. It further leads to an increase in the expenses incurred by the consumers while they
enter into contracts that are contrary to the interest of the consumers. It also increases the
expenses incurred in search costs, which is ultimately wasted when the product does not include
the features that was shown in the advertisement.
This rule has also been observed in the case Australian Competition and Consumer
Commission v TPG Internet Pty Ltd [2013]11, where the High Court of Australia has confirmed
the significance of section 18 that safeguards the consumers interests from the advertisements
10 Brody, Gerard, and Katherine Temple. "Unfair but not illegal: Are Australia's consumer protection laws allowing
predatory businesses to flourish?." Alternative Law Journal 41.3 (2016): 169-173.
11 [2013] HCA 54.

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that are misleading or deceptive in nature. In this case, the court held that ‘headline advertising’
may also be considered as misleading or deceptive despite the presence of fine print disclaimer
that qualified the representations in the headline statement12.
The decision made in the TPG’s case, is a landmark decision which established that to
determine whether an advertisement is deceptive and misleading under section 18 of the ACL,
the impression conveyed by the advertisement in the circumstances it had been published or
aired, should be taken into consideration. It cannot be determined by merely relying on the
existence of technically correct information that is available to the customers who followed the
advertisement or on the presumed fact that the consumers had background knowledge about the
advertisement. The penalty stipulated for businesses that contravenes section 18 of the ACL by
making false claims in the advertisements that are either misleading or deceptive or is expected
to mislead or deceive the consumers, deters the offending behavior and such provision complies
with the consumer purpose of the Australian Consumer law13.
The Australian Consumer Law incorporates statutory provisions that prohibit persons
from engaging into any form of unconscionable conduct that may affect the consumers as well as
the businesses. As it is discussed above that advertising products or services by making false
claims that tends to deceive or mislead the consumers about such products or services, it is also
equally important to refrain from breaching any of the consumer guarantees stipulated by the
ACL14. A failure to recognize the implementation of consumer guarantees with respect to
contract and express exclusions shall amount to deceptive and misleading conduct, which attracts
severe penalties. It is further evident from the case Trade Practices Commission v Radio World
12 Howells, Geraint, and Stephen Weatherill. Consumer protection law. Routledge, 2017.
13 Wee, Chiew Shi, et al. "Consumers perception, purchase intention and actual purchase behavior of organic food
products." Review of Integrative Business and Economics Research 3.2 (2014): 378.
14 Twigg-Flesner, Christian. Consumer product guarantees. Routledge, 2017.

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Pty Ltd [1989]15, where the court construed that a sign stating conditions of purchase was
misleading and deceptive despite the fact that person who committed such breach was aware of
the provision that prohibits misleading and deceptive advertisements16.
From the above discussion, it can be inferred that the two most essential rules of
advertising and selling that is stipulated under the Australian consumer law is that the seller or
the businesses must not engage in any form of unconscionable conduct. The other essential rule
is that their advertisements should be free from any form of false claims or statements that is
misleading or deceptive or is likely to deceive or mislead it targeted audience. In order to
determine whether a conduct is misleading or deceptive, it is necessary to consider what impact a
business behavior has on its targeted audience. The impression of a good or services advertised
on its targeted audience is essential to determine whether a particular advertisement had misled
and deceived its audience.
Although a business is not required to disclose all information under every
circumstances, but there are circumstances when it becomes important to provide relevant
information with a view to avert in any engagements that is misleading or deceptive in nature. In
the event, it is important to disclose any additional information with respect to the goods and
services to the customers and its targeted audience. This becomes important when the seller and
the businesses are aware of the fact that if such additional information is not provided, the
conduct is likely to deceive or mislead the customers or the targeted audience. Further, when it is
reasonably expected from the seller or business engaged in the sale of products and services to
15 [1989] 16 IPR 407.
16 Sparks, Beverley A., et al. "Cooling off and backing out: Understanding consumer decisions to rescind a product
purchase." Journal of Business Research 67.1 (2014): 2903-2910.

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disclose such additional and relevant information to its customers, non-disclosure shall amount
to misleading and deceptive conduct on part of the businesses.

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Reference list
Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54,
Brody, Gerard, and Katherine Temple. "Unfair but not illegal: Are Australia's consumer
protection laws allowing predatory businesses to flourish?." Alternative Law Journal 41.3
(2016): 169-173.
Corones, Stephen G., Sharon A. Christensen, and Nicola Howell. "Submission to Australian
Consumer Law Review Issues Paper." (2016).
Corones, Stephen. "Misleading premium claims." Australian Business Law Review 44.3 (2016):
188-203.
Coteanu, Cristina. Cyber consumer law and unfair trading practices. Routledge, 2017.
Howells, Geraint, and Stephen Weatherill. Consumer protection law. Routledge, 2017.
https://www.accc.gov.au/consumers/misleading-claims-advertising/false-or-misleading-claims
Hunter, Howard. "Modern Law of Contracts." (2017).
McKendrick, Ewan. Contract law: text, cases, and materials. Oxford University Press (UK),
2014.
Paterson, Jeannie Marie, and Gerard Brody. "“Safety Net” Consumer Protection: Using
Prohibitions on Unfair and Unconscionable Conduct to Respond to Predatory Business
Models." Journal of consumer policy 38.3 (2015): 331-355.

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Paterson, Jeannie Marie. "Developments in consumer protection law in
Australia." Legaldate 25.2 (2013): 2.
Pearson, Gail. "Further challenges for Australian consumer law." Consumer Law and
Socioeconomic Development. Springer, Cham, 2017. 287-305.
Poole, Jill. Textbook on contract law. Oxford University Press, 2016.
Sparks, Beverley A., et al. "Cooling off and backing out: Understanding consumer decisions to
rescind a product purchase." Journal of Business Research 67.1 (2014): 2903-2910.
Star, Dan. "Federal court: Federal court casenotes." Proctor, The37.8 (2017): 41.
Svantesson, Dan, and Roger Clarke. "The Trade Practices Act: A Hard Act to Follow: Online
Consumers and the New Australian Consumer Law Landscape." James Cook UL Rev. 20 (2013):
85.
Trade Practices Commission v Radio World Pty Ltd [1989] 16 IPR 407
Twigg-Flesner, Christian. Consumer product guarantees. Routledge, 2017.
Tynan, Daniel. "Australian consumer law [Book Review]." Bar News: The Journal of the NSW
Bar Association Summer 2015 (2015): 78.
Wee, Chiew Shi, et al. "Consumers perception, purchase intention and actual purchase behavior
of organic food products." Review of Integrative Business and Economics Research 3.2 (2014):
378.

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