Impact of Consumer Law on Business Practices

The assignment delves into the significant impact of consumer law on various aspects of business operations. It examines how legal frameworks governing false or misleading representations, contract structures, and consumer rights shape ethical conduct, competitive behavior, and corporate social responsibility within organizations.

Business Law

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
(A)................................................................................................................................................1
(B)................................................................................................................................................3
TASK 2............................................................................................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Nowadays, it become essential for parties as well as organisation if they are establishing
any business or contract, then they must comply with all necessary rules and regulations. It is
important for every corporation and individuals to comply with all these rules and regulations of
laws in order to protect their rights. In addition to this, it is also crucial for them to remain
updated with these laws to get additional advantage from the same as there are different acts in
law such as contract and sales of good which have to be followed by every person while entering
into any agreement1. In this report, case study on contract has been explained in detailed where
Lianne does not make any written contract with Mary for organising her event. Further, impact
of advertisement on people of Australia has been studied here.
TASK 1
(A)
Issue: In given case study, Lianne wants to treat her friend by organising some events.
First issues arise when Mary email Lianne for quoting the amount of $10k and on that mail
Lianne reply put the quote of a price of $9,500. Mary approves this lower price but on one
condition that this offer will be valid for only seven days. Against this mail Mary replies that
Sorry, now the price is $10,000 which is due to increase in cost. However, these messages were
not read by Mary due to technical problem in computer. So, this was an issue which were arise
between them.
Rule: According to provision of Contract law, it is essential for parties that if they are
entering into any agreement, then it should be in written. Through this there are chances to get
special remedies if any injury take place. Here some essential terms which are required to be
perform by parties when they are entering into any contract or agreement.
Offer – It is an expression of willingness of contract which specified some terms and
made with some intentions2. An offer may be made expressly or by conduct. It is not essential for
first party to made offer to specific person only. It can be made to person, class of people.
1 Thomas, R. and Hardy, C., 2011. Reframing resistance to organizational
change. Scandinavian Journal of Management. 27(3). pp.322-331.
2 Carbonneau, R. A., Kersten, G. E. and Vahidov, R. M., 2011. Pairwise issue modeling
for negotiation counteroffer prediction using neural networks. Decision Support
Systems. 50(2). pp.449-459.
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Acceptance – It occurs when party is answering the offer which has been offered by first
person by the way of statement or act. An acceptance will become valid only when if offeree
knows the offer and there should be manifest intention to accept the proposal with having
unconditional terms and conditions. Where the offeror prescribes the manner in which
acceptance shall be made, then approval should be made that manner. But if, acceptance or
manner is not properly prescribed, then proposal must be created in reasonable or usual manner.
Parties – A contract between party does not exist when agreement between the parties
are not clearly defining their terms and conditions. While forming any contract it is essential for
parties that there should be legitimate intention to create legal relation with each other. Through
this both parties become bound to perform their duties with specific terms and conditions and
enforceable by court.
There is also another term which include in contract i.e. counter offer. This offer is
considered as proposal which is made as the result of undesirable offer3. This offer is conditional
and while making this proposal it automatically reject the prior deal. For example, seller wants to
sell his vehicle for $15k. A buyer arrives and offers $10k for purchasing vehicle. The offeror
provides counteroffer for taking a vehicle for $ 12,000 with the objective of obtaining higher
price. At same point of time, if offeror decline, then nobody cannot force to buyer to purchase
vehicle at $15k.
Postal rule means where contract makes exception to general rule that acceptance will
only create when it has been directly communicated to offeror. This will be considered as
binding contract when party accept the offer in mail box even when it is not reached with offeror.
Electronic Communication Regulations means that where person or organisation wishes
to send message through electronic modes such as; mail, fax, phone in order to provide better
services to customers. While following this rule, it will be beneficial for parties which saves their
time and cost both in regard to passing a necessary information to others.
Application: A contract is more important than any agreement is made between two
people. While forming any contract there must be offer and acceptance, consideration, intention
to create legal relation. If there is any duress, false statement or any unconditional dealings, then
these are making contract illegal or void.
3 Cheshin, A., Rafaeli, A. and Bos, N., 2011. Anger and happiness in virtual teams:
Emotional influences of text and behavior on others’ affect in the absence of non-verbal
cues. Organizational Behavior and Human Decision Processes. 116(1). pp.2-16.
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In given case scenario, contract between Mary and Lianne were made but it was not in
written and these are made on mail. On the basis of this, Mary agreed with Lianne to organise
her event and quoted a price for this i.e. $10,000. But on this mail, Lianne seems that the price is
bit high and she proposes a new price of $9,500. So in this situation, counteroffer had taken
place. While accepting this offer Mary put condition on that, I will work on $9,500 and this offer
is open for only 7 days and had to provide 10% non-refundable deposits which should be
received with in time framed.
Afterwards, when party was conducted by Mary, Lianne delayed in paying the deposits in
time period. So, Mary replies that now price is $10k and it has been increased due rise in
expenses. But this mail was annoyed by Lianne and writes that you are actually bound by $9,500
and go ahead with 10k on which deal has been done. But after 30 minutes later, she changed the
mind and mailed again to Mary that deal is off.
Miscommunication between Lianne and Mary had taken place because there was a
technical issue which is faced by Mary in regard to reading of mails. Further the contract is made
according to postal rule and it is applied here because Lianne sends mail to Mary. Along with
this regulatory regarding electronic communication has also applied.
In this situation, both parties are not having legal intention to create relation while
forming any contract. It is just a deal which has been made between them. At the time of doing
deal with Mary, then it is responsibility of Lianne to make this agreement on written so that she
will be liable for getting remedies if any loss has taken place while conducting this place.
Case law, Carmichael V. Bank of Montreal, DLR 570, judgement of court was that
offer had been appropriately accepted because it has been properly conveyed to offender through
their agent Tilley. Further, verbal communication of acceptance is counter-offer where the
person is responsible in charge at defendant bank.
Case law, British Crane Hire v Ipswich Plant Hire [1975] QB, decision of court was
held that defendant was unaware about the risk at the time of forming contract. So court implied
the term of contract on both parties regarding the business of hiring the plant and used in terms
of trade.
Conclusion: From above case it has been concluded that both parties are having legal
intention to create contract but normal deal has been done between them. Miscommunication
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between parties had taken place and due to this contract is not created. Along with this, they are
also not held liable to perform legal obligations and rights which is written in contract of law.
(B)
Issue: In second part, it was assumed that a contract has been formed between Mary and
Lianne for $9.5k. However, issues were arising that the food and drink which was supplied by
Mary (with the help of her supplier ‘Food Organic Ltd) was entirely different from Lianne order.
Furthermore, boat also cramped and there was no space for dancing and many more issues which
was faced by client.
Rule: According to Consumer right act 2015, there are certain standards which has been
applied to every transaction for selling or suppling and goods or services4. Here is some
responsibility of seller while selling any goods or suppling services to their customers.
Goods and services should be match with description, model or sample – Whatever
goods and services are supplied by seller it should be according to description which has been
given by them otherwise it will be considered as an offence.
Must be of satisfactory quality – Goods must be standard and should be quality which
includes safety, free from danger, durability. If all these things are not included in suppling
goods or services, then buyer is having right sue against them to recover loss amount.
But there are some remedies are also available if seller breach contract under Sale of
Good and Supply of Services Act 1982.
Suit for damages for non-delivery – When seller wrongfully neglect or refuses to
deliver best quality of services or goods to customers. Through buyer is having right to recover
the price, which has been paid by them already.
Suit for specific performance – When the goods or services are ascertained, then buyer
is having authority to sue against seller for specific performance where they are complying with
that to perform for the same 5. In this seller become bound to perform all duties which has been
written in agreement.
4 Whish, R. and Bailey, D., 2015. Competition law. Oxford University Press, USA.
5 Rogers, B., 2015. The social costs of Uber. U. Chi. L. Rev. Dialogue. 82. p.85.
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Suit for interest – Buyer is also having opportunity to recover such interest amount for
not providing appropriate services to them6. They can also recover the paid money if
consideration of payment is failed by seller.
Apart from this seller become liable for paying all damages amount which has been
caused them.
Application: As per provision of Consumer Right Act 2015 and; Sale of Good and
Service Act 1982, they had framed many rules and regulations for defending the rights of
consumers. These rights and obligation were arising when seller are not performing their duties
which had been specified in contract.
In given case scenario, Lianne is having so many rights against Mary because she had not
perform her duty very well. Below mention are some rights which are available for her;
Damages in regard to providing services – As per case scenario, Mary have to provide
high quality of services to Lianne because so many issues were faced by her at the time event.
For example, food or drink which was supplied by Mary was completely different from order
which had been made by Lianne. So, she is having authority to suit against Mary for recovering
amount which was paid by Lianne.
Specific performance – In this, Mary is liable for performing her duty which has been
specified in contract. Specific performance has been executed by Mary so ultimately Lianne get
right to case against her. Specific performance generally when goods or services are of special
significance or in value7.
Further, it is responsibility of seller to serve services according to customer need. If they
found with any guilty, then they are liable for compensating loss amount to injured party. In
given case, Mary is liable for providing loss mount which has been faced by Lianne while
conducting the event. Apart from this, Lianne is also having right under consumer act to recover
the amount if any damages had been caused by Mary.
Conclusion: It has been concluded from above report, that Lianne is having rights which
has been defined in Consumer Right Act 2015. She is having authority to recover remedy from
Mary because due to her she had suffered from loss of $9.5k.
6 Hoye, R. and et. al., 2015. Sport management: principles and applications. Routledge.
7 Vitell, S. J., 2015. A case for consumer social responsibility (CnSR): Including a
selected review of consumer ethics/social responsibility research. Journal of Business
Ethics. 130(4). pp.767-774.
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TASK 2
Most Australian businesses are using advertising strategies in order to promote their
goods and services. There are many sources which are using by them such as; television, radio,
print media, internet and these ensure about that advertising is complying with regulatory rules
and regulations.
Australian Consumer Law is a national law whose aim is to protect consumer rights
against trading in country8. Advertising and selling practices have been evolved rapidly.
Nowadays, these advertisements are occurred widely in online environment because many of the
organisation are using social media apps, online shopping sites, search engines and many more.
Those business which are operating at online are also having same rights and obligations as
compared with who are performing their activities in traditional bricks or mortar stores9. But it is
essential for entities to ensure about that whatever sales practices are done by them should be
comply with act which has been framed by government. ACL provides guidelines regarding
misleading or deceptive conduct, consumer guarantees, false or ambiguous of claims.
There is some obligation which has been applied to organisation when they are
conducting different advertisement or promotional techniques to increase the brand awareness of
their product and services. Some of them are enumerated as below.
Bait advertising is the practices where organisation is offering goods and services at low
price in order to attract large number of customers towards them. However, while conducting
this type of event is considered as illegal because those goods which are advertised by
organisation are not available by them in quantity10. In short, it is responsibility of organisation to
clearly state that if goods are available on short supply.
Most of the organisation are offering rebates, gifts or redemptions which are considered
as illegal. If these are not provided according to promised, then these activities are considered as
8 Fulcher, G., 2015. Disabling policies?: A comparative approach to education policy and
disability. Routledge.
9 Malhotra, D. and Lumineau, F., 2011. Trust and collaboration in the aftermath of
conflict: The effects of contract structure. Academy of Management Journal. 54(5).
pp.981-998.
10 Wang, L., Yeung, J. H. Y. and Zhang, M., 2011. The impact of trust and contract on
innovation performance: The moderating role of environmental uncertainty. International
Journal of Production Economics. 134(1). pp.114-122.
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unlawful. So, it is their responsibility if they are offering rebate or gifts, then it should be
provided with in time period only.
Apart from this, Consumer Protection from Unfair Trading Regulation is stopping to
organisation in misleading or harass the consumers by providing them false or wrong messages;
using aggressive sales technique to attract customers. Advertising of business is covered
Business protection from Misleading Marketing Regulations11. As these includes that trade mark
or logo of company which are of similar; comparing of products with their competitors which
should not be same. If any organisation is advertising their products or services, then it is
essential for them to see that these should not include misleading of any information. Those
advertisements which are given by organisation should not exploit any religion of person.
It is essential for every individual or corporation, if they are advertising any product or
services in order to increase their brand awareness by giving false information, then it will give
negative impact on their reputation12. Further, they will become liable to pay penalty which has
been imposed by authorised body or government. If in case of Mary advertise about her products
and services and these are giving false information to customers, then she is liable for paying
penalty amount as well as fines which will imposed by government or court.
Case law, Australian Competition and Consumer Commission v Reckitt Benckiser
(Australia) Pty Ltd [2015] FCA 1408, decision of court was held that the products which were
contained in same active ingredient (with same quantities) and with similar formulation, from
that none of the four goods was more or less effective than others which are treating of particular
symptoms. This decision was held that because on the following things false representation were
made by Reckitt Benckiser; each and every product which were of Nurofen specific Pain Range
are specifically formulated to treat under particular type of pain which specified on packaging of
relevant product.
Case law, Australian Competition and Consumer Commission V A Whistle & Co
(1979) Pty Limited [2015] FCA 1447, judgement of court was that Whistle had authorised
agent in order to publish false testimonials and its franchisees were also publishing similar false
11 Howells, G., 2011. European Contract Law Reform and European Consumer Law–Two
Related But Distinct Regimes. European Review of Contract Law. 7(2). pp.173-194.
12 Cheng, Z., Smyth, R. and Guo, F., 2015. The impact of China’s new Labour Contract
Law on socioeconomic outcomes for migrant and urban workers. Human relations. 68(3).
pp.329-352.
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testimonials. So on the basis of this court decision held that; Whistle had to pay pecuniary
penalty of $2, 15,000, he his restrained for a period of three years from making false or
misleading statement.
CONCLUSION
It can be concluded from above report that while doing any deal with other person, then it
is essential for both parties that it contract should be framed. So while forming this both parties
will get right to get remedies if any one of them get injured. Further, if anyone found with that
false or misleading of representation has been publish by them through advertisement, then they
are liable for compensate the amount to those who has affected from this.
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REFERENCES
Books and Journals
Online
Australian consumer law update: accc cases targeting false or misleading representations. 2017.
[Online]. Available through: <http://www.davies.com.au/ip-news/australian-consumer-
law-update-accc-cases-targeting-false-or-misleading-rep>. [Accessed on 15th September
2017].
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