Building Law: ACL's Impact on Misrepresentation and Unfair Terms

This report examines the application of the Australian Consumer Law (ACL) to building law, focusing on consumer protection in land transactions. It delves into the concepts of misrepresentation under section 18 and section 30 of the ACL, exploring how misleading or deceptive conduct is determined through case law, such as Given v Pryor and the Australian Equity Investors v Colliers International case. The report also addresses unfair terms in consumer contracts, as defined by the ACL, and how they relate to the sale of land, considering the criteria for a contract to be considered a consumer contract and a standard form contract, as well as the definition of unfair terms under section 24 of the ACL. The report further discusses the implications of these provisions, providing a comprehensive overview of the legal framework governing consumer rights in the context of building law and land sales.

Running head: BUILDING LAW
Building law
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The Australian consumer law has been enacted to ensure fair trading and consumer
protection in Australia. The ACL become effective in Australia from January 1 2011. The ACL
is the result of corporation between the state governments and the commonwealth for the
establishment of a common and strong consumer law framework within the country. The sale of
land in Australia is covered under the provisions of the ACL to the extent that the purchaser has
entered into the contract for utilizing the land for a domestic or household purpose. There have
been various cases reported in Australia where fraud and misrepresentation has been involved in
the sale of land transaction. Another major problem which is faced by the consumer in contracts
related to the sale of land are unfair terms. The ACL has laid down various provisions to protect
the consumers against the misrepresentation and unfair terms in relation to consumer contracts.
The structure which has been provided by the ACL in relation to misrepresentation and unfair
terms and its effects on the sale of land transactions are discussed in this paper. The concepts
would be discussed through the use of appropriate section of the ACL as provided by Schedule 2
of the Australian Competition and Consumer Act 2010 along with specific cases related to
consumer contracts regarding sale of land in Australia.
Misrepresentation
Section 18 of the ACL states that persons while doing a transaction related to trade and
commerce must not base their conduct on any form of misleading or deceptive practices in
addition they must also not indulge in practices which they think may deceive or mislead the
consumers. A wide range of activities in businesses are covered under the section which includes
advertisements, commercial negotiations and contractual agreements. The identification of a
conduct as misleading or deceptive is based on the question of fact, which means that it is
determined by using the situation surrounding the case. In the same way the section is also

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applicable on the transactions related to the sale of land. The specific section which deals with
misrepresentation related to property transaction in Australia is governed by section 30 of the
ACL.
The section provides that in trade and commerce an individual must not with regards to
the grant or sale or possible grant or sale of a property or with respect to promoting a property
through the use of any means such as grant or sale of property indulge in an act of
misrepresentation. An act of misrepresentation may arise out of making a misleading or false
representation that a person has an approval, sponsorship or a affiliation in connection to the
land, the nature of the land, the place where the land is situated, the features of the land,
provisions related to lawful use of the land and the accessories and facilities attached to the land.
The section further reads through its note that the person breaching the section would be imposed
with a pecuniary penalty as determined by the court. No other provisions as provided by part 2-1
of the act with respect to acquisition, supply or probable acquisition or supply of an interest is
land is affected through the application of this section. along with pecuniary penalties the
contravention of the section may also initiate remedial orders, civil proceedings for damages and
injections.
The provisions of the ACL are ONLY applicable on those transactions which do not
exceed the value of 40000 or those which have been entered into only for household or domestic
purpose. Thus when the question related to the same of land arises only those contracts are
governed by the ACL which have been entered into for the household or domestic purposes.

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As provided by section 18 it is not compulsory that the actions of a person have to actual
mislead or deceive another but even if the conduct is likely to do so it is considered as a
contravention of the section.
The question which has to be addressed now is that what actions may be deemed to be
false or misleading. The courts through various cases have provided guidelines to determine
what may be considered as false or misleading. In the famous case of Given v Pryor (1979) 39
FLR 437 the judges ruled that the concept of misrepresentation is not only limiter to statements
which are verbal but also extend to gestures, plans, demeanor, pictures, written , oral or implied
actions, maps and other conducts. Moreover, not disclosing a relevant fact where such action
most probably would cause harm to the other would also be considered as misrepresentation.
In Given v CV Holland (Holdings) Pty Ltd (1977) 29 FLR 212. The court ruled that
representation is defined as an action which is not in accordance to the original facts. Thus no
intention to make actual misrepresentation is required on the part of a person providing contrary
facts. Even if there is belief that such representation is actual true they would be liable for
penalties.
The judges in the case of Latella v LJ Hooker Ltd (1985) 5 FCR 146 ruled that in order to
make a claim for misrepresentation it is not necessary that such claim only has to be brought by
the person to whom the misrepresentation is made but, the only thing which is require is that
such conduct has been engaged in and as a consequence losses have been incurred by another.
The case which has been chosen for discussion under part of the paper is the case of
Australian Equity Investors, An Arizona Ltd Partnership v Colliers International (NSW) Pty Ltd
(No 4) [2011] FCA 442. The question which was to be addressed by the court was that the

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achievement of gross realization with respect to the development of land would be considered as
a misleading or deceptive conduct under the provisions of section 52 of the Trade Practices Act
1974 (Cth) (which is now section 30 of the ACL) . Another question which the court had to
determine was that whether the representation which was made was false related to price for the
land in relation to the breach of the section 53A of the TPA (which is now section 30 of the
ACL).
It was held by the court that the first respondent engaged in a conduct which could likely
deceive or mislead the applicant by make a representation with respect to a gross realization
which could be achieved and breached the provisions of section 52 of the TPA. In addition the
court also ruled that the respondent breached section 53A by providing false representation in
relation to the price payable for the property.
It was further ordered by the court that the respondent was to pay the cost of appeal
incurred by the applicant. In addition a fine of $100,000 was imposed on the respondent. The
court also provided leave to the applicant to file a notice of motion to seek further security in
relation to the cost.
The court in relation to this case referred to the case of Australian Competition and
Consumer Commission v Gary Peer & Associates Pty Ltd (2005) 142 FCR 506 in which it was
found by the court that a person who had been provided authority to act as a vendor provided a
misleading price guide towards the auction of the premises. The court found the action in breach
of section 53A of the TPA.
Unfair terms

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The prevention upon the inclusion of unfair contract terms in relation to a standard form
of consumer contract also has the potential to extend to transactions which are related to the sale
of land. Consumer contracts as defined in the ACL also cover contracts which are entered upon
to affect a grant or sale of an interest which exists in a land to a person predominantly or wholly
for domestic or household use. Thus as opposed to the purchase of land for the purpose of
investigation, the purpose of land for residential purpose would come under the scope of
consumer contracts and could have a term which may be declared as unfair. In addition it has to
be noted that the provisions f unfair terms are only applicable to consumer contract which are
fixed from contract. This part of the paper discusses the structure of unfair terms provisions in
relation to the ACL and the effect of such provisions on sale of land transactions (Griggs 2011).
The ACL has taken into account application to legal practitioners and their clients related
with property contracts which includes leasing or sale of land to individuals. The three main
issues which determine whether a a contract would come under the scope of unfair terms are that
whether the contract is a consumer contract, is the consumer contract is a standard form of
contract and whether the contract contains any unfair terms (Kolivos and Kuperman 2012).
The initial issue is to determine whether a sale of land contract is a consumer contract or
not. According to the ACL a consumer contract is a contract for the grant or sale of a interest in
land, to a person who is acquiring such land predominantly or wholly for household, personal or
domestic use. Through the notes it has also been added that the scope of the definition extends to
a lawful or equitable benefit in land or any power, right or privilege in connection or over the
land. It also includes purchase of “off the plan” and completed developments. Rights related to
occupancy with respect to a company title which includes land ownership are also covered by the
definition.

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If it has been found that the contract is within the scope of consumer contract it has to be further
analyzed that whether such contract is a standard term contract or not. Matters which has to be
considered by the court in relation to determining a standard form or contract may be what the
court finds relevant in accordance to the circumstances of the case however the court has to take
into account certain factors such as:
Negotiation powers: This means that whether the bargaining power in a contract is vested wholly
or predominantly in only one party.
Preparation of contract: whether the contract was prepared by one party without indulging in any
discussion with the other.
Accept it or leave it: whether one party was offered the contract in such a way as to either accept
it or reject it with no scope of any negotiation.
Particular characteristics: Whether the provisions consider the particular features of another party
in relation to a particular transaction along with any other matter which is prescribed by the
existing law.
Once it has been analyzed by the courts that the contract for the particular land is a “Standard
Form of Consumer Contract” the provisions of unfair terms would be applicable. What are unfair
terms are provided by Section 24 of the ACL.
For a term to be declared as unfair in relation to a sale of land contract three provisions have to
be satisfied. Firstly there would be a significant imbalance with respect to the parties’ rights and
obligations in relation to such contract. secondly, the inclusion of the term is not necessary for
providing protection to the rights of a party who has included such term and is provided benefits

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through it. Lastly, any amount if detriment would be caused to one party if such term is added
and relied upon by the parties (Lawson 2011).
When the court are provided with a question to determine an unfair term they have to take into
account all the provisions of the contract that is the contract as a whole. The need of transparency
is related to presentation, availability, legality and the use of plan language in relation to the
term. Examples Non-exhaustive in nature have been provided by the ACL in relation to unfair
terms. The following acts which party can do unilaterally may account to unfair terms. The
limitation or avoidance related to the performance of contract, termination of contract, variation
in relation to the terms of the contract, renewal or non renewal of the contract, variation of the
upfront price where the other party does not have right to terminate and the variation of the
features of the benefits in land to be granted or sold through the contract (Webb 2016).
In addition specific provisions have been provided by the ACL setting out exclusion of a
term from being declared as unfair. The provisions state that terms setting out price payable
upfront in relation to the contract but not considerations which depends of contingencies are not
unfair. For instance the price to be deposited or the selling price of the land would be considered
as a upfront price but not the payable interest on defaults. The terms setting out the terms of the
contract are also not considered as unfair terms. These terms include the description of the land
being sold, leased or granted. However, the same provisions would not be applicable on “off the
plan” sales which could be varied in terms of completion. Any provisions which would allow the
builder to change the property to be sold would be considered as unfair terms. Lastly the terms
where it is expressly provided by existing legal provisions to be added are also not considered as
unfair terms.

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A term which is declared as an unfair term is void and is removed from the contract for the sale
of land. However, if after the removal of the unfair term the contract can be continued than the
contract is still regarded as legally binding. The other consequences which may be applicable on
the breach of ACL provisions are a civil pecuniary penalty which includes $1.1 Million fines for
Corporations and $220000 for natural persons. Unfair terms may also result in disqualification
orders preventing managers from managing the corporation. Infringement and substantiation
notices may also be provided for such terms. Notices to issue warnings to the public in relation to
the conduct of the corporations may also be issues if these provisions are breached. Lastly, court
may order the wrongdoer to compensate the aggrieved party for any losses incurred by them
(Corones 2011).
The property businesses and the individuals engaging in the sale of property must balance
with other provisions which provided them unilateral and discretionary rights. For instance
limiting permitted changes to small variation and ensuring further disclosures. They must also
make sure that well structured and clear documentation is initiated. The documents have to
outline the legitimate interest of the purchasers. The businesses must also keep records of
business rationale in relation to verdicts including key terms which might be subjected to
challenges latter (Competition 2011).
Since the ACL has been initiated from January 1, the ASIC has been able to successfully
procure penalties in a few cases. One of such cases is the case of ACCC v Bytecard Pty Ltd 2013
where the new ACL provisions related to unfair terms had been analyzed by the court. In this
case the ASIC was able to procure penalties from the company for the inclusion of unfair terms.

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References
ACCC v Bytecard Pty Ltd 2013
Australian Competition and Consumer Act 2010
Australian Competition and Consumer Commission v Gary Peer & Associates Pty Ltd (2005)
142 FCR
Competition, A., 2011. Green marketing and the Australian Consumer Law. Commonwealth of
Australia.
Corones, S.G., 2011. The Australian Consumer Law. Thomson Reuters Lawbook Co.
Covell, W., Lupton, K. and Forder, J., 2012. Covell and Lupton: Principles of Remedies.
DIETRICH, J., 2015. Liability arising from contract and under the australian consumer law.
Given v CV Holland (Holdings) Pty Ltd (1977) 29 FLR 212
Griggs, L.D., 2011. Australian Consumer Law-An overview, unfair contracts, consumer
guarantees and remedies. In Australian Consumer Law (pp. 1-9).
Kolivos, E. and Kuperman, A., 2012. Consumer law: Web of lies-legal implications of
astroturfing. Keeping good companies, 64(1), p.38.
Latella v LJ Hooker Ltd (1985) 5 FCR 146
Latimer, P., 2012. Australian Business Law 2012. CCH Australia Limited.
Lawson, R.G., 2011. Exclusion clauses and unfair contract terms. Sweet & Maxwell.

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Webb, E., 2016. Unfair terms and small businesses. Australian consumer law, 31(1).