Section 18 of the Australian Consumer Law

This assignment analyzes Section 18 of the Australian Consumer Law, which prohibits misleading or deceptive conduct in trade or commerce. It examines the severity of penalties under this section, highlighting the deterrence factor. The text explains that parties cannot contractually exclude liability for misleading conduct and emphasizes the strict liability nature of Section 18. It further illustrates the wide-ranging application of this section, including false advertising, and concludes by stressing the importance of ethical behavior in business.

Part A
Derrick comes to see you for legal advice asking you whether he should pursue a claim against
CLM for the damage caused and loss of business revenue?
Issue: The issue in this case is if the clause mentioned at the sign by the gate according to which
CLM Pty Ltd is not liable for any damage caused to in a vehicle in the loading area. Similarly,
another issue that needs to be decided is if this clause can be treated as providing protection to
CLM Pty Ltd.
Rule: According to the law, exclusion clause can be described as a clause that is generally in
writing and according to which, one party to the contract cannot be held liable in case of a
particular thing happening. For example if a person joins a gym, generally it is written in the
contract that the owner of the gym cannot be held liable in case any injury is caused to any
person while exercising in the gym. In the same way, when a person is going to park his car in a
public car park after being a fee, they can be a provision mentioned in the contract according to
which the owner of the car park cannot be held liable in case any damages caused to the vehicle
or in case of any theft of goods from the vehicle while it is parked in the car park.
The law provides that an exclusion clause can be valid and the party inserting the clause may
rely on it if the following conditions are fulfilled.1 Therefore, an exclusion clause can be
considered as valid if:-
Such clause has been properly incorporated in the contract between the parties; and if the
exclusion clause is not against the law.
1 Curtis v Chemical Cleaning Co [1951] 1 KB 805

In order to be properly incorporated in the contract, the law requires that the exclusion clause
cannot be added in the contract after it has been finalized by the parties.2 Hence, once the
contract has been concluded, the exclusion clause cannot be entered in the contract.3 In case of a
signed contract, which contains an exclusion clause, generally such clause will be considered as
a part of the contract and included in the contract.4 On the other hand, if a signed contract is not
present between the parties, but there are signposts or printed documents mentioning such a term,
they can be incorporated in the contract only if they have been brought to the notice of the other
party before entering into the contract.5
In Thornton v Shoe Lane Parking Ltd.6, the court stated that the driver who enters a car park after
taking a ticket from a machine can be considered to be bound by the terms that have been
brought to the notice of such dry but before taking the ticket. The reason is that when the ticket is
taken by the driver, a contract has already been formed. Therefore, the owner of the car park
cannot be allowed to rely on such exemption clause that has been mentioned at the back of the
ticket if nothing was done by them to make the driver aware of such a clause, for example by
prominently mentioning the exemption clause before the driver takes the ticket. As a result, the
court stated that if the car receives damage due to insufficient care taken by the owner of the car
park, the owner will be held liable despite the presence of the exclusion clause.
2 McCutcheon v MacBrayne [1964] 1 WLR 125
3 Parker v South Eastern Railway (1877) 2 CPD 416
4 Olley v Marlborough Court [1949] 1 KB 53
5 Chappleton v Barry UDC [1940] 1 KB 531
6 Thornton v Shoe Lane Parking Ltd. (1971) 1 All ER 686

Application: In the present case, Derrick, runs his own transport business. For this purpose, he
has a semi trailer truck. Derrick uses the truck to deliver shipping containers from the harbor to
the businesses around Adelaide. He loads his truck at the Outer Harbor. It is owned and operated
by CLM Pty Ltd. At the entrance, there is a very large sign in which it has been clearly
mentioned in bold font that the company cannot be liable for any damage caused to any vehicle
in the loading area. Therefore all the owners of trucks entered the site at their own risk. However,
Derrick had never bothered to stop and read the sign. One day, while Derrick drives up to the
gate, and he is given a permit ticket that he is required to return to the attendant while exiting. He
parks his truck and goes for lunch, because the container he was going to pick was not yet ready.
While Derrick was away, another truck, owned by the company accidentally collides with
Derrick's truck. This accident causes damages were $3000 to his truck. After some time, while
Derrick was still enjoying his lunch, a prison escapee enters the loading bay. He drives Derrick's
truck out of the parking area. As he did not have the parking ticket, he tells the parking attendant
that he had lost his ticket. The attendant was tired of her job and she simply lifts the boom gate
and allows the drug was without a permit ticket. Under these circumstances, Derrick had to lose
the opportunity to conduct several days of work and as a result, he lost revenue. Now Derrick
wants to sue CLM for the damage caused to his vehicle and also for the loss of revenue that was
suffered by him due to the reason that he did not have his vehicle for work purposes. As
mentioned above, it is really mentioned that a party can rely on an exclusion clause only if the
clause has been properly included in the contract at the same time, it is also necessary that the
clause should be legal. In the present case, it can be said that the exclusion clause was properly
included in the contract even if Derrick had not bothered to stop and read the clause. As a result,
in the present case, CLM can rely on religion clause but only for the purpose of excluding its

liability for the damage caused to the truck of Derrick. So far as the damage suffered by Derrick
due to his loss of work is concerned, the company can be held liable for the fact that a prison
escapee had taken the vehicle without showing the parking ticket. In this case, there is a clear
case of negligence by the parking attendant. Such negligence cannot be excluded by the
company by inserting an exemption clause in the contract.
Conclusion: In this case, it can be concluded that Derrick can bring a claim against CLM for the
loss of business revenue even if he may not be able to claim damages that were caused as a result
of the accident which took place while his truck was parked in the parking bay.

Part B
Issue: The issue in this case is related with the damages that can be legally claimed by Zen as a
result of the fact that Bo had delayed the delivery of the required part by seven days.
Rule: The rule of law that can be applied to the effects of the present case provides that in case of
a contract, a non-breaching party can recover damages that are said to be reasonably foreseeable
to the parties when they were going to enter into a contract.7 In the same way, the law of contract
allows the non-breaching party to recover damages that have been caused as a result of the
circumstances that have been communicated to the other party at the time of the formation of the
contract.8 The leading case in this regard is that of Hadley v Baxendale.9 In this case, the
crankshaft of the claimant's mill had broken down. The claimant got the services of the defendant
for the purpose of delivering the crankshaft to the place where it was going to be repaired and
subsequently returned the crankshaft after its repair. However as a result of the defendant's
negligence, the crankshaft was returned with a delay of seven days. During this time, the
claimant could not use the mill and brought the claim for loss of profit. It was argued by the
defendant that he was not aware of the fact that the mill was closed during the delay and as a
result, the loss of profit needs to be considered as too remote.
Application: Zen can only be allowed to claim the damages that can be fairly and reasonably
treated as a natural result of the breach of contract, and also the damages that can be reasonably
supposed to be in the contemplation of both the parties when they have entered into the contract.
In the present case, Zen had not informed Bo that without that particular path, he will not be able
to conduct his business. These special circumstances have not been communicated to Bo. In the
present case, the failure of Zen to disclose the special circumstances to Bo prevents them from
7 Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1948] 2 KB 528
8 Koufos v Czarnikow Ltd or The Heron II [1969] 1 AC 35
9 Hadley v Baxendale [1854] EWHC

claiming damages from Bo caused as a result of the delay in the delivery of the part. Zen had not
informed Bo that the operation of his business was completely dependent on receiving the new
part.
Conclusion: Zen cannot be allowed to claim damages for lost three of $7000 or a missed delivery
contract of $10,000.

Part C
Section 18 of the Australian Consumer Law was earlier present as section 52 of the Trade
Practices Act provides that in context of trade or, as, any person should not be involved in
conduct that can be described as misleading or deceptive or conduct that is likely to mislead or
deceive the consumers. Apart from a client to the persons in general, this section is also
applicable to the conduct of corporations as a commonwealth law.10 In this way, section 18
imposes a standard on the market. The remedies for such misleading conduct have been
mentioned in other parts of the legislation. These remedies include damages, injunction or the
recession of contract, as well as some other measures. There has been a significant impact of
section 18 on trade and commerce in Australia. The result is that a vast case law has been
generated as a result of this section. Even if section 18 is a part of the Australian Consumer Law,
the application of the provisions of this section is not confined to consumer transactions only.
There are several cases related with misleading conduct that has taken place in business-to-
business transactions. Apart from it, section 18 can also be described as a very significant law for
the consumers. It is available when the consumer has been persuaded by an over-enthusiastic
salesman to buy a particular product by making statements that are later found to be untrue. The
remedies that are available in case of such misleading conduct are apart from an independent of
the remedies that may be available to the consumer for the breach of statutory guarantees
provided to the consumers.
The courts have taken the concept of misleading or deceptive conduct at face value. In order to
be deceptive, it is necessary that there should be an intention to deceive or fraud. Therefore it has
little relevance because it is very difficult to prove fraud.11 On the other hand, misleading
10 Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54
11 ACCC v Valve Corporation (No 3) [2016] FCA 106

conduct does not need any intention or a particular state of mind to be established. The
prohibition that has been placed on misleading conduct imposes strict liability, according to
which the other person should not be led into error, while dealing in commercial or consumer
transactions. It has been established by the case law that liability may be created even in case of
an innocent statement that is non-negligent and non-fraudulent.12
The alleged misleading conduct may take place in context of trade or commerce. A very wide
interpretation has been given to this done by the courts. Therefore, it includes any type of
commercial activity, which includes the dealings before the parties have entered into a contract.
Therefore it can be easily stated that the application of this section can be made even in case of
private, one off sales. Similarly it is also applicable to the regulatory activity by the government
agencies and the provision of information by the government even in non-commercial context.
It has been stated it has been stated by the courts that section making plays an important role in
protecting the interests of the consumers. In this regard, it has been held that the deterrence needs
to play a major role while deciding the appropriate penalty that is going to be imposed on a
trader for the breach of the provisions of section 18. For this purpose, particularly the court is
required to consider the need for deterring the offender from similar conduct in future. Therefore
any penalty that has been imposed on agenda for the breach of section 18 needs to be significant
enough so that it not treated by the gender as a mere cost of doing business. Another point that
needs to be mentioned in this regard is that a clause cannot be inserted in a contract which
effectively removes the potential liability of one party for misleading conduct. Although, a
number of attempts have been made in this regard but they have not proved to be successful.
This is not due to the reason that there is any provision presented legislation, which prohibits the
exclusion of such laws, but our view has been adopted by the courts that a standard of conduct
12 Google Inc v Australian Competition and Consumer Commission [2013] HCA 1

has been set by the Parliament through legislation and therefore it is not possible to contract it
out by inserting the clause in the contract. Therefore, if a person has been misled in case of a
transaction related with trade or commerce, there is no contractual device that can remove this
fact. It will be applicable, no matter what form the clause is. But there is a possibility to qualified
information so that it becomes not misleading. In case information turns out to be incorrect.
Straight liability is one of the most significant things about the legislation. As a result, a person
who has been accused of misleading conduct cannot claim in the court that he or she was not
aware of the fact that the information was not true or that all reasonable care has been taken by
such person while preparing the information. Therefore, in context of section 18, the only
question that needs to be considered is if the information was misleading or not. Has the other
party been led into error by the information? The result is that even an innocent person can also
be found guilty of misleading conduct.
Therefore it can be said that the effect of section eating is very vast. For example, the provisions
of this section also cover false advertising. As a result, this provision can be used by a person to
stop any misleading advertisement issued by a company. However, generally this responsibility
has been left to the ACCC or in some cases, a rival trader. Under these circumstances, it can be
clearly stated that section eating is a very significant provision that has been mentioned in the
Australian consumer law. This section supports ethical behavior and in this way, it also supports
business because good ethics is good business.

References
ACCC v Valve Corporation (No 3) [2016] FCA 106
Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54
Chappleton v Barry UDC [1940] 1 KB 531
Curtis v Chemical Cleaning Co [1951] 1 KB 805
Google Inc v Australian Competition and Consumer Commission [2013] HCA 1
Hadley v Baxendale [1854] EWHC
Koufos v Czarnikow Ltd or The Heron II [1969] 1 AC 35
McCutcheon v MacBrayne [1964] 1 WLR 125
Olley v Marlborough Court [1949] 1 KB 53
Parker v South Eastern Railway (1877) 2 CPD 416
Thornton v Shoe Lane Parking Ltd. (1971) 1 All ER 686
Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1948] 2 KB 528