Legislation and Case Law on E-commerce, Consumer Rights, and Business Competitions in Australia

This document discusses the legislation and case law related to e-commerce, consumer rights, and business competitions in Australia. It covers topics such as electronic contracts, consumer guarantees, competition laws, and the misuse of the internet. The document provides insights into the essential elements of electronically made contracts, the legislation governing such contracts, and relevant case laws. It also explores the rights and protections available to consumers and businesses under the Australian Consumer Law.

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Legislation and Case Law on E-commerce, Consumer Rights, and Business Competitions in
Australia
Student’s Name
Institutional Affiliation

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Table of Contents
Introduction......................................................................................................................................3
Electronic Contracts and Transactions (e-commerce).....................................................................4
Types and elements of e-commerce contracts.................................................................................5
Offer and acceptance.......................................................................................................................6
Electronic Signatures.......................................................................................................................7
Misuse of the Internet......................................................................................................................8
Consumer Rights.............................................................................................................................9
Consumer guarantees.....................................................................................................................10
Competition laws in Australia.......................................................................................................13
Conclusion.....................................................................................................................................14
References......................................................................................................................................15
Articles, Books, and Journals....................................................................................................15
Cases..........................................................................................................................................15
Legislation.................................................................................................................................16
Websites.....................................................................................................................................16

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Introduction
The formation of a legally enforceable contract in Australia must satisfy six necessary elements:
 Offer: There must be an offer made by one party (offeror) to another (offeree);
 Acceptance: The person to whom the offer is made (offeree) has to accept the offer made
by the offeror;
 Consideration: Both parties must pay the price as proof that a promise was made;
 Intention: Mutual intention to constitute a contract must exist between both parties for it
to be legally binding;
 Terms: The terms of the contract must be clear and precise; any ambiguity is ruled
against the person who inserts the clause (contra preferentum rule);
 Capacity: Both parties must have the required capacity to enter into a contractual
agreement (McKendrick & Liu, 2015).
“The Property Law Act 1974” in Queensland states that contracts regarding the transfer
(sale) of land must be put in writing for it to be legally enforced by both parties. There are
minimum standards set by “National Employment Standards” that contracts of employment must
meet in compliance with “Section 61 of the Fair Work Act 2009”. However, e-commerce has
taken over business transactions. People no longer have to meet face to face to make contracts.
This research paper seeks to highlight the essential elements of electronically made contracts, the
legislation that governs such contracts, and the relevant case laws.
Question 1

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Electronic Contracts and Transactions (e-commerce)
Businesses and consumers are transiting from the traditional paperwork and face to face
contract formation habits. Automated means and technology have taken over business
transactions; business owners and consumers are trying to adapt to the new means of business
transactions. ATMs, EFTPOS, and Internet Banking, replaced the falling cheque payment
method between 2002 and 2014. The use of cheques reduced by 14% in 2014; the general
decline between 2002 and 2014 was 71% (Gillies, 2016). The Australian government came up
with the “Electronic Transactions Act 1999” which provides the legal requirements that have to
be met for electronically made contracts. The law that not discriminate between contracts made
in writing and those made through electronic means. In 1999 the “Standing Committee of
Attorneys-General” met to discuss the necessary parallel legislation the “Electronic Transactions
Act 1999”:
The legislation on electronic transactions are: “
 Electronic Transactions Act 2001 for the Australian Capital Territory;
 Electronic Transactions Act 2000 for New South Wales
 Electronic Transactions (Northern Territory) Act 2000 for the Northern Territory
 Electronic Transactions (Queensland) Act 2001 for Queensland
 Electronic Transactions Act 2000 for South Australia
 Electronic Transactions Act 2000 for Tasmania
 Electronic Transactions (Victoria) Act 2000 for Victoria
 Electronic Transactions Act 2003 for Western Australia.” (ACCC, 2012)

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The legislation is based on neutral terms; stating the specific electronic media would
force the legislators to constantly amend the laws to keep up with the ever advancing technology.
The laws majorly intend to put up the legal requirements that electronic transactions must satisfy
to be legally binding. The laws do not compel people to transact using electronic means; they
provide the legal avenues for those who consent and opt to engage in electronic transactions.
Types and elements of e-commerce contracts
Electronically made contracts are existent in three forms: these are browse-wrap, click-
through, and shrink-wrap (Gotocourt.com.au., 2019). All the forms have independent contractual
principles that consumers have to conform to. Many online shoppers are familiar with click-
through method and not the other two. This type of contract formations requires consumers to
read through a list of requirements made by the seller. At the end of the list, there is always a
button written “I agree” or “I accept” that the buyer has to click to make the contract enforceable.
Businesses that engage in online transactions are still bound by the industry codes of
conduct, Australian laws, and International standards of e-commerce. Offer and acceptance,
consideration and capacity are still part of the contractual elements to be satisfied. However,
there are more specific elements of an enforceable electronic contract:
 The seller must indicate that the online transaction is subject to the contractual
obligations of Australian laws of contract
 The consumer must be allowed to go through the T&Cs before he or she is bound by the
contract

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 The seller must make it clear what will amount to acceptance of the offer he or she has
made (Gotocourt.com.au., 2019).
Offer and acceptance
The essential parts of any contract are the offer and acceptance of the offer; whether it is
an electronic or paper-based contract. The offer constitutes a party’s interest to contract with
another while acceptance is the other party’s agreement to be subject to the terms and
requirements of the contract that make it existent. The case of Smythe v Thomas [2007] provides
an insight into how an electronic offer and acceptance is constituted. The defendant was selling a
Wirraway aircraft on eBay; he listed it on a minimum bid of $150,000 for ten days. The plaintiff
bided for the aircraft at $150,000 (which was the minimum price) in compliance with eBay’s
bidding rules. However, the defendant refused to complete the transaction stating that it was a
mere invitation to treat. The issue at hand is whether the advertisement on eBay placed by the
defendant was an offer or an invitation to treat. The court held that by listing the aircraft on eBay
for $150,000 implied that:
1. The defendant would sell to the person who made a bid within the period given
2. He would sell to the bidder who offered at least $150,000
3. The seller would contract with the highest bidder (in compliance with the first two
requirements)
4. The defendant would also sell to the bidder who did not impose his qualifications to the
ones already listed by the seller

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The court reviewed the laid down facts and concluded that a contract already existed
between the two parties. The court also noted that both parties had signed up to comply with the
terms and conditions of eBay; the fact that they accepted the T&Cs meant that they had agreed to
the contractual principles of that site and were bound by them. Common law dictates that a
contract is constituted when communication is instantaneously made and received
(Gotocourt.com.au., 2019). The contract is formed when the offeree communicates via fax or
telephone, and the offeror receives it. A seller should include a customized list of the elements he
or she intends the offeree to satisfy; for instance, the mode of payment or any exclusion clauses
that the law allows. The records of the communication between the two parties must also be
kept; they can be used as business records. The standards required to form paper-based contracts
apply to electronic contracts (Gotocourt.com.au., 2019). Business owners are required to adhere
to the Australian Consumer Law (ACL) to ensure that fair contractual terms are given to the
consumer.
Electronic Signatures
These are signatures used on electronic documents and are as effective as handwritten
signature governed by certain requirements. "They are:
 There must be consent by the recipient to receive information electronically
 the method of signing must identify the person sending the information, and indicate that
this person approves of the content of the electronic document signed
 having regard to all of the circumstances of the transaction, the method of signing must
be as reliable as is appropriate for the purposes for which the electronic document was
generated. Alternatively, evidence of the identity of the signor and their approval of the

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contents of the electronic document must be self-evident in the document or otherwise
available in some other manner. This reaffirms the need as stated above to ascertain the
identity of the signor and concretely prove same.” (Findlaw.com.au., 2019)
The Australian govern instituted a validation process to verify the “Australian Business
Number Digital Signature Certificates (ABN-DSC). Knowing the identity of the electronic is
difficult; digital signatures are a remedy to this problem since they are linked to the signatory’s
information. The information linked to the signature can easily be verified to prove the
signatory’s identity. There are, however, many risks associated with the verification of the
private key linked to the digital signature; anyone can purport to own a digital signature.
Keeping the private key secret is also difficult thus raising the question of privacy (Tasneem,
2011). The Privacy Act 1988 bars business enterprises from disclosing personal information
without consent. Retaining the information linked to the digital signature subjects the
information to possible disclosure risks that contravene the privacy act. However, an individual
can negotiate with the institution to ensure that personal data is kept safe.
Misuse of the Internet
E-commerce is also governed by the “Cybercrime Act 2001” and the “Criminal Code Act
1995” which bar: “
 unauthorized access, modification or impairment with intent to commit a serious offense
—an example of this offense would be hacking into a bank computer and accessing credit
card details to use them to obtain money;

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 unauthorized modification of data where the person is reckless as to whether the
modification will impair data—an example of this offense would be hacking into a
computer system and impairing the data even if the impairment of data wasn’t the
intention
 unauthorized impairment of electronic communication—an example of this offence
would be ‘denial of service’ attacks; that is, where a website is inundated with a large
volume of unwanted messages, which results in overloading and crashing of the
computer system
 unauthorized access to, or modification of, restricted data
 unauthorized impairment of data held on a computer disk
 possession or control of data with the intent to commit a computer offense
 producing, supplying or obtaining data with the intent to commit a computer office.”
(Findlaw.com.au., 2019)
The “Spam Act 2003” bars commercial entities from sending messages to and from
Australia without the intended individual’s consent. Using unlawful software to gain access to
addresses form the internet is also illegal as stipulated by the act (Giancaspro, 2017).
Question 2
Consumer Rights
The Australian Consumer Law (ACL) has several definitions of who a consumer is; the
relevant definition to Pepper’s situation is “anyone who acquires goods or services that are
priced at less than $40,000” (Pearson, 2017). Pepper bought the “SamSmart” photocopier at

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$15,000 and is, therefore, a consumer. The definition of a consumer extends to people who
purchase goods or services for commercial purposes. The rights and protection according to
consumers also extend to businesses that purchase goods for resale. Pepper’s bookkeeping
business is located at Ultimo in New South Wales; the local trading legislation in New South
Wales are applied in this case. It is necessary to discuss the scope of rights available to Pepper as
a consumer and determine whether there was a breach of any obligations owed to him by Office
Express Limited.
Consumer Guarantees
According to the ACL, there are automatic guarantees on the goods and services that the
consumer purchases. The seller has to guarantee that the goods purchased are what you asked for
and that they conform to your requirements. If the goods are inconsistent with what you asked
for, there are specific provisions that can help you seek compensation. Since it has already been
established that Pepper is a consumer, what are the automatic guarantees entitled to him? Is
Pepper entitled to a refund, repair, replacement, or compensation for damages?
The guarantees are that the products must be of acceptable quality, durable, and properly
functioning. According to ACL, the goods must: “
 match descriptions made by the salesperson, on packaging and labels, and in promotions
or advertising
 match any demonstration model or sample you asked for
 be fit for the purpose the business told you it would be fit for and for any purpose that
you made known to the business before purchasing

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 come with full title and ownership
 not carry any hidden debts or extra charges
 come with undisturbed possession, so no one has a right to take the goods away or
prevent you from using them
 meet any extra promises made about performance, condition, and quality, such as lifetime
guarantees and money back offers
 have spare parts and repair facilities available for a reasonable time after purchase unless
you were told otherwise.” (ACCC, 2012)
The exceptions of the requirements are the knowledge that the product was faulty,
alteration of the good’s structure, and misuse of the product.
Section 18 of the ACL prevents traders from issuing misleading information during
business transactions. Pepper asked for a photocopier that could be used frequently; the
salesperson recommended the “SamSmart” photocopier. Does the product meet Pepper’s
description? The photocopier’s reliability ended up being poor; unlike what the salesperson said.
The salesperson had assured Pepper that “SamSmart” was the “best in the market” and that it had
been inspected and cleared by the Australian Bookkeeping Collective (ABC). The manufacturer
had warned against its frequent use, and ABC had not endorsed it. Office Express Limited seems
to have violated the regulations of the ACL. The machine sold to Pepper did not meet his desired
features. The fact that the salesperson makes a false statement amounts to fraudulent
misrepresentation. What are the facts for proving that there was false representation?
In the case of Derry v Peek [1889], the court established steps to identify fraudulent
misrepresentation during contract formation. The defendant company released a brochure

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indicating that it had permission to steam-powered trams rather than those powered by horses. In
reality, the company was not permitted to do so as the Board of Trade had not yet approved it.
The Board later on rejected the company's right to use steam-powered trams. The claimant thus
sued the company for deceit upon liquidation of the company. The underlying issue was to
determine whether there was a false statement made or an incorrect statement. What constitutes a
false misrepresentation? The elements of fraudulent misrepresentation are: "
 The defendant made a false representation or lied
 The misrepresentation is material to the transaction
 The defendant made the misrepresentation with malice (the defendant made the statement
with knowledge that the statement was false or the defendant made the statement with
reckless disregard as to the veracity of the statement)
 The defendant made the misrepresentation intending to induce the other party to enter
into a contract
 The other party reasonably relied on the misrepresentation
 The defendant’s lie was the proximate cause for the plaintiff’s injury.” (Minclaw.com.,
2019)
The House of Lords refuted any claims of deceit as the defendant had not made any false
statement considered to be dishonest. The statement has to be carelessly or recklessly made.
In the Pepper v Office Express Limited case, the defendant seems to have lied to the
plaintiff about the reliability of the photocopier. The statement is malicious, material to the
business transaction, and is made with the intent to induce the claimant to buy the photocopier.
As a result, the photocopier led to facial injuries to the claimant. The available remedies for

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fraudulent misrepresentation are payment of damages and a full refund of the cost of the
photocopier.
Question 3
Competition laws in Australia
The “Australian Competition Consumer Commission (ACCC)” has laid down certain
guidelines that prohibit anti-competitive practices. The penalties for violation of the guidelines
include:
 10% levy on the company’s annual turnover
 Ten million dollars on every contravention (Stellios & Richman, 2016).
“The contravening behaviors are:
 sharing with your competitor's pricing and competitively sensitive information and data
(sales revenues; changes in product design or availability, location of customers,
quantities sold, future restrictions in output), including via third parties;
 signaling to your competitors the timing or size of future price increases or reductions in
discounts;
 discussing with competitors your business concerns or challenges to industry profitability
(that margins are low or discounts need to be "reined in"); and
 sharing details of proposed tender responses with a competitor before the tender
completing” (Claytonutz.com, 2018).

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The fact that Roberts and Brown discuss the possible market challenges and the future
pricing of their services is a contravention of the guidelines of ACCC. The secret meeting of the
CEOs of Australia’s largest accounting firms is itself a concerted practice; prohibited by the
guidelines of ACCC. In the case of ACCC v Flight Centre Travel Group Limited [2016], the
defendant was accused of trying to induce its competitors (Emirates, Malaysian Airlines, and
Singapore Airlines) to enter into an arrangement to control the air traveling prices. Were the four
airline companies in competition with each other? All the judges (except Chief Justice French)
held that the fact that the four companies provided a similar service (selling air tickets) meant
that they were competing in the same market. The act of trying to arrange to decide on the right
cost of tickets was an unlawful act that contravened the "Trade Practices Act 1974".
The act prohibits companies from fixing prices in their favor to lessen competition (Webb
& Burton, 2017). Roberts Smith and Brown Wright secretly met to discuss an arrangement on
how the two companies can fix the prices after every 12 months. Are the two companies
competitors? The two companies are Australia’s largest accounting firms; they are major
competitors in the finance industry. Arrangement and the meeting contravene the guidelines set
by ACCC and the “Trade Practices Act 1974”.
Conclusion
To conclude, certain legislations regulate electronic contracts, outline the rights of
consumers and proper competition practices. E-commerce has proven to be the new trend in the
business industry; the ACL highlights consumer rights and guarantees; the ACCC has laid out
the required competition guidelines for businesses.

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References
Articles, Books, and Journals
Giancaspro, M. (2017). Is a ‘smart contract ‘really a smart idea? Insights from a legal
perspective. Computer law & security review, 33(6), 825-835.
Gillies, L. E. (2016). Electronic commerce and international private law: A study of electronic
consumer contracts. Routledge.
McKendrick, E., & Liu, Q. (2015). Contract Law: Australian Edition. Macmillan International
Higher Education.
Pearson, G. (2017). Consumer sales law in Australia. In Comparative Consumer Sales Law (pp.
23-38). Routledge.
Stellios, K., & Richman, A. (2016). Competition law: Extending the reach of Australia's cartel
laws. Governance Directions, 68(8), 494.
Tasneem, F. (2011). The Legal Issues of Electronic Contracts in Australia. International Journal
of Management and Business Research, 1(2), 85-92.
Webb, K., & Burton, P. (2017). Are you ready? Amendments to the competition laws will
enhance the misuse of market power prohibition. Governance Directions, 69(9), 556.
Cases
ACCC v Flight Centre Travel Group Limited [2016] HCA 49 (14 December 2016)

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Derry v Peek (1889) 14 App Cas 337
Smythe v Thomas [2007] NSWSC 844
Legislation
Australian Consumer Law (ACL)
Criminal Code Act of 1995
Cybercrime Act 2001
Electronic Transactions Act of 1999
Section 61 of the Fair Work Act 2009
Spam Act of 2003
The Privacy Act 1988
The Property Law Act 1974
Trade Practices Act 1974
Websites
ACCC Guidelines on Concerted Practices outline the new risks for interactions with competitors
‒ is your business ready? - Knowledge - Clayton Utz. (2018). Claytonutz.com. Retrieved
11 May 2019, from https://www.claytonutz.com/knowledge/2018/october/accc-

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guidelines-on-concerted-practices-outline-the-new-risks-for-interactions-with-
competitors-is-your-business-ready
Consumer Guarantees. (2012). Australian Competition and Consumer Commission. Retrieved
11 May 2019, from
https://www.accc.gov.au/consumers/consumer-rights-guarantees/consumer-guarantees
Contracts in Australia | Go to Court Lawyers. (2019). Gotocourt.com.au. Retrieved 11 May
2019, from https://www.gotocourt.com.au/civil-law/contracts/
Electronic signatures and their legal validity in Australia. (2019). Findlaw.com.au. Retrieved 11
May 2019, from https://www.findlaw.com.au/articles/5777/electronic-signatures-and-
their-legal-validity-in-.aspx
Internet Shopping and Contract Law: How are contracts created in e-commerce transactions?
(2019). Findlaw.com.au. Retrieved 11 May 2019, from
https://www.findlaw.com.au/articles/4367/internet-shopping-and-contract-law-how-are-
contrac.aspx
What is Fraudulent Misrepresentation? - Minc Law. (2019). Minclaw.com. Retrieved 11 May
2019, from https://www.minclaw.com/legal-resource-center/what-is-fraudulent-
misrepresentation/