LAWS20058: Australian Commercial Law Assessment 1 - Legal Analysis

This assignment analyzes the Australian and United States legal systems through the lens of HLA Hart's three-part legal system, examining rules of recognition, change, and adjudication. It then addresses a consumer rights issue, assessing whether a consumer, Sandra May, has grounds to claim damages against jjNet for false advertising regarding an internet and phone package. The analysis references the Competition and Consumer Act 2010 (Cth), the Sale of Goods Act 1896 (Qld), and relevant case law like ACCC v H.J. Heinz Company Australia Limited and ACCC v TPG Internet Pty Ltd, to determine if jjNet violated consumer protection laws by making misleading claims about its services and whether a legally binding contract was formed. The document explores the rights of consumers under Australian law, providing a detailed application of legal principles to the given scenario.

Australian Commercial Law

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Question 1
Introduction
In this paper, the Australian legal system and the legal system of the United Kingdom will be
analysed to determine whether they comply with the three-part legal system developed by Herbert
Lionel Adolphus Hart.
Australian Legal System
The legal system of Australia is similar to the English legal system, and both of them include primary
and secondary rules. The Constitution of Australia is referred as the supreme law, and it also governs
the relationship between different states in the country. The Commonwealth of Australia
Constitution Act 19001 is the key act based on which the Constitution was formed. The actions taken
by the government, organisations, and individuals are governed based on the primary and secondary
rules which are issued by the Constitution.
Rules of Recognition
The rules of recognition apply on the legal system of Australia because the laws are included in the
public documents which are accessible by everyone. The primary rules of obligation are formally
recognised, and they combined with secondary laws. These rules are given in both statute law and
common law which governs the actions of individuals in the country; therefore, the Australian legal
system complies with this principle. 2
Rules of Change
The rule of change is another fundamental rule which provides how the rules included in the legal
system are altered. As per HLA Hart, the primary laws included in the legal system must be subject to
identification and change by secondary rules. In this scenario, the rule of change provides key
1 Commonwealth of Australia Constitution Act 1900
2 Stephen Gageler, ‘Chapter IV: The Inter-State Commission and the Regulation of Trade and Commerce under
the Australian Constitution,’ (2017) 28 (3) Public Law Review 205-218.

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provisions regarding how regulations are altered and repealed. In the case of Australia, the
Parliament is given the right to make changes in the current regulations.3 The changes are made in
the statutory law after a bill is proposed by the government in which the changes are proposed. The
amendment, removal and changes in the statutory laws are made through this process after which
they either apply to the whole country or a particular state. Majority votes are taken to decide
whether a bill is passed or not in the House of Parliament.4 In the case of common law, the courts
are responsible for applying the relevant laws in particular cases. However, they also have the right
to amend certain laws and guidelines to fit a particular scenario.
United States Legal System
The legal system implemented in the United States complies with both primary and secondary rules.
Laws are made by both federal and state levels similar to the Australian legal system. The laws and
regulations are adopted by legislative bodies such as state legislatures and Congress which are
referred as ‘statutes’.5 Both the federal and state courts are responsible for enforcing the key
legislation and regulations in the country. These are the basis of the legal system in the United
States, and it complies with the principles of the three-part legal system given by HLA Hart.
Rules of Recognition
The rule of recognition assists in differentiating the legal rules from non-legal norms; these policies
assist in distinguishing the primary rules which are responsible for governing the legal system from
the secondary rules which ensures that the primary rules are enforced on parties. The Constitution
of the United States of America provides key provisions regarding separation of powers between the
federal and state government which avoids ambiguity.6 These are public documents which are
recognised by everyone, and they govern the actions of the citizens of the United States. In case
3 David Lowe and Dilip K. Das, Trends in the Judiciary (CRC Press, 2016).
4 John Halligan and Richard Reid, ‘Conflict and Consensus in Committees of the Australian Parliament,’ (2015)
69 (2) Parliamentary Affairs 230-248.
5 Charles Beard, An economic interpretation of the Constitution of the United States (Routledge, 2017).
6 Seymour Martin Lipset, Continental divide: The values and institutions of the United States and Canada
(Routledge, 2013).

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when uncertainty arises regarding application of a particular law, then the federal law prevails.
Therefore, the rule of recognition principle is present in the case of the United States.
Rules of Change
The process of forming new laws in the United States is similar to the process followed in the
Australian legal system; therefore, the elements of the rules of change are present as well. The
process begins with introduction of a bill in either the House of Congress or in the House of
Representative. These bills are introduced by the government in the interest of the public to address
major issues.7 The bill can also be introduced to remove, amend or change current laws. The bill goes
to a committee of representatives and senators who debate on the validity of the bill. Based on the
debates, necessary changes are made in the bill. Votes are made by the representatives and
senators on the bill, and it is important that both houses must be agreed on the final bill before it
goes to the President. Lastly, the President is responsible for signing the bill and gives affirmation
after which the bill becomes a law.
Rules of Adjudication
The rule of adjudication provides that the mechanism of determining whether a valid rule has been
violated by the parties or not should be established. In the case of the United States, the federal and
state courts are responsible for evaluating different cases to determine whether primary or
secondary laws are violated by the parties or not. The civil and criminal cases are handled by
different courts and parties have the right to appeal against the order of the court.8 The judgement
of higher courts is enforceable on smaller courts. The Supreme Court is the highest court in the US,
and it has the right to conduct investigation on the judgements of smaller courts to ensure that they
did not act outside their scope.
Conclusion
7 Cherif Bassiouni, International extradition: United States law and practice (Oxford University Press, 2014).
8 Gary B. Born and Peter B. Rutledge, International civil litigation in United States courts (Wolters Kluwer Law &
Business, 2018).

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The legal system of Australia and the United States comply with the three-part legal system
developed by HLA Hart. There are many similarities between both of these legal systems which are
formed based on primary and secondary rules.

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Question 2
Issue
In this case, the issue is related to violation of consumer right of Sandra May. The objective is to
determine whether she has any right against jjNet in order to claim damages by holding the
corporation liable for making false claims regarding its products. Whether the contract formed
between the parties is legally binding based on the provisions of the Sale of Goods Act.
Rule
Consumers have various rights which are protected under the Competition and Consumer Act 2010
(Cth)9 which allow them to hold those parties liable that violate the guidelines mentioned in this
legislation. As per this act, the rights of customers are protected under section 29 from misleading or
deceptive claims which are made regarding products and services of a company. The businesses
operating in the country have to ensure that they did not violate their duties which are included in
this act by violating the rights of customers.10 These rights are protected to ensure that businesses
did not conduct fraud with customers while dealing or advertising to them. As per section 29 (1) (a),
the businesses have to ensure that they must not make any claims regarding their products or
services quality, value, style or standard which are misleading or deceptive or which are likely to
mislead or deceive customers.11 The Australian Consumer Law (ACL) has given these guidelines with
the objective to ensure that companies are not able to use illegal activities to conduct fraud with
customers. The application of these policies is identified in many cases in which the companies were
held liable for violating their principles.
9 Competition and Consumer Act 2010 (Cth)
10 Gail Pearson, Consumer Law and Socioeconomic Development (Springer, 2017).
11 Austlii, Competition and Consumer Act 2010 - Schedule 2 (2018) <
http://classic.austlii.edu.au/au/legis/cth/consol_act/caca2010265/sch2.html#_Toc529456054>.

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A recent example was shown in the judgement of ACCC v H.J. Heinz Company Australia Limited12
case. In this case, a penalty of $2.25 million was imposed by the court on Heinz for posting
misleading advertisements to its customers. The Federal Court found that the claims made by the
company regarding its products that it is beneficial for young children aged 1-3 years were false
since the products contained two third sugars.13 Another good example was given in ACCC v TPG
Internet Pty Ltd14 case. In this case, an advertisement was posted by TPG in which it was mentioned
in large letters that customers can purchase an unlimited broadband connection by paying $29.99 a
month. However, it was further included in small letters in the advertisement that this offer is
available for those customers who have a home rental line which requires them to pay additional
$30 for acquiring these services. The court provided that the company has included a hidden cost in
the advertisement based on which it is considered as misleading and deceptive.15
Moreover, the rights of customers are also protected under the Sale of Goods Act 1896 (Qld).16 One
of the key contributors in this legislation is their implied terms which provide that the goods must be
merchantable quality. This is given under section 17 (c) of this act which provides that the goods
must maintain merchantable quality and fitness when they are brought as per the description of the
seller. As per this section, if the products or services did not match merchantable quality as sold by
the business, then the customer has the right to hold the company liable for violating the implied
terms.17 It resulted in violating the sales contract which forms between the parties, and it is
considered as void based on which the parties are not bound by its term. The parties can claim for
remedies such as specific performance, damages, and others, however, damages are the standard
remedy in case the terms of the contract are violated by a contractual party.
12 [2018] FCA 360
13 CMO, Heinz hit with $2.25m in penalties for misleading advertising claims (2018)
<https://www.cmo.com.au/article/645769/heinz-hit-2-25m-penalties-misleading-advertising-claims/>.
14 [2010] FCA 1478
15 Caron Beaton-Wells and Julie Clarke, ‘Deterrent penalties for corporate colluders: Lifting the bar,’ (2018) 37
U. Queensland LJ 107.
16 Sale of Goods Act 1896 (Qld)
17 Dane Weber, ‘Tech neutrality in Australian signature law,’ (2015) 24 JL Inf. & Sci. 101.

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Application
Sandra purchased an internet/phone package after seeing the online brochure posted by jjNet in
which it was mentioned that the customers would get an internet speed up to 100 megabits per
second and 10GB data per month. Along with the internet connection, the company also bundled
this offer with a phone and modem for $59.99 for 12 months. It was mentioned that the customers
could make unlimited calls from the phone. However, Sandra realised that the Internet speed
reduces as per data usage reaches 10GB limit. She also found out that the speed of 100 megabits per
second is only available at certain times in the morning. Since the advertisement posted by the
company was false, Sandra has the right to hold the company liable for violating the provisions given
under section 29(1) (a) of ACL (ACCC v H.J. Heinz Company Australia Limited).
The advertisement was misleading and deceptive since Sandra did not receive the services as
provided by the company in the advertisement (ACCC v TPG Internet Pty Ltd). Moreover, the phone
provided by the company did not look new, and its keys were getting stuck during usage. The battery
of the phone dies after a few hours as well, but, the company refuses to replace the same. Sandra
can make a claim under section 17 (c) of the Sale of Goods Act to claim that the product which she
purchased as per the description of the seller did not meet merchantable quality. She can claim that
the phone given by the company did not meet the merchantable quality since it was old and its keys
did not work properly, and its battery was defective as well. Sandra is not bound by the contract, and
she can claim remedy for the breach of the contract in which she can claim damages from the jjNet.
Conclusion
Sandra can hold jjNet liable for violating section 29 (1) (a) of ACL and 17 (c) of Sale of Goods Act. She
can claim damages from the company for the loss suffered by her.