Refund Rights of Consumers under Australian Consumer Law

The company failed to communicate the exclusion clause to Rachael before contract enactment, rendering it unenforceable. The company's decision to replace Metalurgica with Hayweeds may not be liked by ticket purchasers, including Rachael. As a result, the company is liable to make a refund to Rachael. It is essential for sellers to highlight exclusion clauses to buyers before contract enactment to ensure enforceability.

Introduction to Law
Contract Law & ACL
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Question 1
Issue
The pivotal issue of interest for the given scenario relates to the validity of the exclusion
clause aimed at excluding liability of a contractual party.
A company named Rocky Pop Pty Ltd is planning to organise a rock concert where it is
expected that a Metalurgica (a famous heavy metal band) would turn up as has been listed in
the various promotional materials put on the internet and the newspaper. The advertisement
highlights the price of each ticket as $ 150 and also mentions the manner in which the ticket
can be bought. One customer Rachael books the ticket and makes the requisite payment and
as promised gets the physical ticket delivered within five days. The ticket mentions exclusion
clause related to no liability of the company in the event Metalurgica cannot take
participation in the event. The band members of the Metalurgica band are arrested in drug
case and therefore are not able to participate in the concert. As a result, the company invites
Hayseeds whose genre of music is quite different from Metalurgica and hence Rachael
claims refund to which the company cites the exclusion clause printed on the ticket and
therefore denies refund. The likelihood of Rachael’s claim being successful needs to be
determined.
Relevant Rules
Exclusion clause refers to a term inserted in the contract with the objective of limiting or
exempting one of the contracting parties from the liability arising due to enactment of a
particular situation which is foreseeable (Paterson, Robertson and Duke, 2015). The
exclusion clause tends to be enforceable only if the following conditions are met by the party
inserting the term.
 Communication of the exclusion clause to the contracting party before the contract
enactment
In line with the common law, the applicability of exclusion clause is dependent whether
reasonable effort was undertaken by the party inserting the same to bring to notice the clause
so that informed consent of the other contractual party can be gained. It is noteworthy that
actual informed consent is not required as the only requirement is that exclusion clause

INTRODUCTION TO LAW
communication was carried out in a reasonable manner before contract enactment (Latimer,
2005).
A pivotal case highlighting the importance of prior communication is Thornton v Shoe Lane
Parking [1971] 1 All ER 686. This case relates to the use of commercial parking space by the
plaintiff where it was clearly mentioned that for the vehicle the risk would be solely borne by
the owner. Despite this, Mr.Thornton decided to park his car and thereby accepting the
vehicle risk. However, he got injured in the process and hence asked for damages from the
company managing the parking space. The company cited the exclusion clause printed on the
parking ticket which highlighted that the company owes no liability of any damage to the
driver. The matter landed in court where it was brought to notice that the exclusion clause
was not communicated before contract enactment as the parking ticket was issued after the
car was parked. Therefore, the issuance of ticket happens after contract enactment and hence
it was decided by the honourable court that the exclusion clause would not be considered as
Valid (Carter, 2012).
Another case where this aspect is visible is Olley v Marlborough Court [1949] 1KB 532 case.
Here, the plaintiff suffered a stolen musk coat from a hotel room and the hotel cited the
exclusion clause which was cited in the bedroom and not told to them at the reception when
the contract was being enacted. Hence, the honourable court rendered the exclusion clause as
invalid and put the damages suffered by the customer on the hotel (Lindgren, 2011).
 An additional requirement is that exclusion clause must be legal and hence should not be
inserted with the intention to deceive or misguide the consumers. Any such exclusion
clauses inserted with the intent to cheat customers are void irrespective of the prior
communication or not (Harvey, 2009).
Application
The given case facts hint towards presence of exclusion clause by the company in order to
evade any liability in the absence of Metalurgica from the grand event planned by the
company. Since the exclusion clause highlighted on the physical ticket cannot be considered
as explicit, hence for ensuring the enforceability of the clause, the company should have
communicated the same to the potential customers before they paid for the ticket. However,
the advertisements put by the company through different media fail to mention this particular

INTRODUCTION TO LAW
clause. Also, there is no mention of any other measure that the company took to inform
customers like Rachael about the existence of the clause.
Thus, the exclusion clause was communicated to Rachael only after the receipt of physical
ticket while the contract was enacted when the payment for the ticket was made by Rachael.
Hence, the above observations clearly highlight the lack of any effort on the part of the
company to communicate the exclusion clause before contract enactment. Further, a critical
parameter is that after the Metalurgica band members were prisoned, the company brought in
a band (Hayweeds) whose genre was quite different from Metalurgica and hence may not be
liked by a sizable ticket purchasers including Rachael. Considering the above discussion, it is
apparent that the exclusion clause inserted by the company would not apply and the company
would have to make the refund to Rachael.
Conclusion
On the basis of relevant rule along with the case facts highlighted above, it would be
appropriate to consider that the company failed to communicate the exclusion clause to the
customer in time i.e. prior to contract enactment. Thus, it would be not considered
enforceable and the order to refund the money to Rachael would be given by the Court acting
on the similar cases in the past. As a future advice, it is imperative for the sellers to take all
reasonable efforts to highlight the exclusion clauses to the buyers before the contract is
enacted so that these can be enforced at a later stage if required.
Question 2
In order to protect the interests of the consumer, the Australian Consumer Law or ACL was
enacted in 2001. One of the most often used provisions of ACL is s.18 which aims to
safeguard the consumer interests against any wrong conduct which could mislead or deceive
customers. This section prohibits any “deceptive or misleading conduct” on the part of any
entity or person having involvement in commerce or trade. The section as part of the
objective to safeguard consumer also extends to any activity when may not be directly
deceptive but can has potential to act against consumer interests (Davenport and Parker,
2014). One of the ways to deceive customer is through the use of misleading advertisements
in order to increase the business while jeopardising the consumer interest. A leading case in
this regards is Australian Competition and Consumer Commission v TPG Internet Pty

INTRODUCTION TO LAW
Ltd [2013] HCA 54. This case involved misleading advertisements where the conditions
were written in very small letters while the headline was so prominent that any reasonable
customer could potentially be misled. As a result, it was highlighted that focus of the
advertisement must not be limited to only headlines but should extent to all pivotal aspects
including terms and conditions (Gibson and Fraser, 2014).
The advertisement in the given case which the company has highlighted on the internet and
newspaper does not mention that the ticket is non-refundable and also exclusion clause which
is highlighted in the physical ticket. However, in such events, this is normally present and
also the failure to mention the same would not have a defining impact on the decision making
of the potential customers. Further, the company was not misleading the customers by citing
that Metalurgica band would be present in the event. Infact had the band members not been
arrested, in all likelihood, they would have turned in for the event. Thus, there was no
intention to mislead the customers and also the impact on the decision making would be
limited which implies that no violation of s.18 has been done by the company.
Section 64 tends to safeguard the interests of the buyers by restricting the right of the sellers
to insert various terms limiting the guarantee of key pivotal rights which ought not be
exempted. The advertisements on internet and newspapers can be termed as display notices
and hence only those provisions which are clearly highlighted and hence accepted by the
client may apply depending on the exact content (Lindgren, 2011). The non-refunding nature
of the tickets was not mentioned coupled with safeguarding itself from any potential liability
if Metalurgica band did not turn up. Thus, the basic guarantee of product or service coupled
with refund right especially when the attributes of the service alter cannot be taken away.
Thus, the conduct of the company is in violation of s.64 and also the various provisions to
limit liability and not refund the money would not be considered as valid (Gibson and Fraser,
2014).

INTRODUCTION TO LAW
References
Carter, J. (2012) Contract Act in Australia. 3rd edn. Sydney: LexisNexis Publications.
Davenport, S. and Parker, D. (2014) Business and Law in Australia. 2nd edn.. Sydney:
LexisNexis Publications.
Gibson, A. and Fraser, D. (2014) Business Law. 8th edn. Sydney: Pearson Publications.
Harvey, C. (2009) Foundations of Australian law. 3rd edn. London: Tilde University Press.
Latimer, P. (2005) Australian business law. 24th edn. Sydney: CCH Australia Ltd.
Lindgren, K.E. (2011) Vermeesch and Lindgren's Business Law of Australia. 12th edn.
Sydney: LexisNexis Publications.
Paterson, J. Robertson, A. and Duke, A. (2015) Principles of Contract Law. 5th edn. Sydney:
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