University Commercial Law 1 Assignment: Australian Consumer Law Issues

This report examines several critical issues within the Australian Consumer Law (ACL). It discusses the ambiguity surrounding 'unconscionable conduct,' the appropriateness of the $40,000 threshold for consumer purchases, the adverse impact of the dispute resolution process, and the lack of financial penalties for unfair contract terms. The report highlights problems such as the difficulty in resolving disputes, the unclear definition of unconscionable conduct, and the potential for vulnerable consumers to be exploited. It recommends solutions like adopting an external dispute resolution process, replacing 'unconscionable conduct' with a clearer term like 'unfairness,' and extending ACL protections to small businesses and implementing financial penalties for unfair contract terms. The report emphasizes the need for improved consumer protection and fair trading practices within the Australian legal framework.

Running head: COMMERCIAL LAW
Commercial law
Name of the Student
Name of the University
Author Note

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Current Issues in the Australian Consumer law
The Australian government recognized the necessity of safeguarding the consumer and
financial rights as these rights are essential to secure the other freedoms and rights such as secure
housing, social, economic participation and effective education. The Australian Consumer Law
(ACL) is the national law for consumer protection and fair-trading. It protects the rights of the
consumers to receive goods that are of merchantable quality and is appropriate for the purpose
for which such goods were sold. The obligation of the suppliers towards the consumers is
referred to as statutory Consumer Guarantees. This implies that the supplier shall not be able to
exempt from their responsibilities for the goods.
In general, the Australian Consumer Law (ACL) has been ontinued to strike a balance
between the business compliance costs and the redressal of the issues faced by the consumers,
since the commencement and implementation of the statute. However, several issues persists in
its application which requires to be resolved to ensure fair trading and protection of the rights of
the consumers (Pearson, 2017. ). The most significant issues that arises from the Australian
Consumer Law are:
 the ambiguity of the term ‘unconscionable conduct’;
 whether $40000 threshold for consumer purchases is appropriate threshold;
 adverse impact of the dispute resolution process;
 lack of financial penalty on inclusion of unfair contract terms;
Adverse impact of the dispute resolution process

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Firstly, the dispute resolution process under the statute has an adverse impact and in some
cases, it becomes difficult to resolve issues related to the dispute resolution process and calls for
improvement. The alternative dispute resolution process could be used in a much improved
manner to provide assistance to the businesses and consumers with a view to resolve disputes
more efficiently. The lack of enforceable alternative dispute resolution process persists to be a
significant hindrance with respect to accessible remedies and acts as a barrier in redressing the
issues through the legal framework of the Australian Consumer law (Hunt, 2015).
In the present day, in New South Wales, if a consumer is unable to resolve any consumer
dispute through negotiation and by agreement with a trader, the only alternative options that are
available is to request for assistance from the NSW Fair Trading. Now, the NSW Fair Trading is
under-resourced and is unable to impose a binding resolution on the parties. The other option is
to take the matter before the NSW Civil and Administrative Appeals Tribunals but this process
would result in substantial anxiety for the vulnerable consumers on the grounds of time, cost, and
overall complex nature of the process.
Recommendation
In order to deal with the issues arising from the dispute resolution process, there are two
options that may be adopted to resolve the issue. An external dispute resolution process governed
by the Retail Ombudsman scheme or the adoption of an enforceable conciliation scheme
governed by the consumer protection agencies may enhance the efficacy and improve the
enforceability of the alternative dispute resolution results. It would further lessen the present
hindrances towards the customers, thus, enforcing their rights to seek for remedies under the
ACL framework.

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A consumer Ombudsman should be free for consumers and should be able to conduct
conciliations and investigations, thus, enabling to make decisions that could be enforced and
would have a biding effect upon the parties to the dispute. A retail ombudsman in the United
Kingdom is the best instance of a overseas consumer dispute resolution initiative that could be
adopted and followed in Australia (Markham & Khare, 2014). It provides an independent dispute
resolution process that aims at resolving the complaints and issues between the consumers and
the traders. The retailers and the traders are obligated to pay £25000 to the consumers who are
affected due to failure or breach on part of the traders or retailers.
Unconscionable conduct
Secondly, statutory provisions relating to ‘unconscionable conduct’ in the ACL persists
to be uncertain and enforcement of the provision is equally intricating. Consequently, the
deterrent effect against the businesses and the benefits of the protections for the vulnerable
consumers decline largely. In order to address and improve the systematic misconduct, it is
important to introduce a general ‘unfair trading’ provision and reframe the term
‘unconscionable’ as ‘unfairness’. The general prohibition on unsolicited sales such as cold call
tele-marketing and door-to-door sales as these sale methods involves elements of
misrepresentation, coercion and undue influence (Paterson, 2015)
The provisions related to the unfair contract terms should be applicable to insurance
contracts and the ACL protections for financial and insurance services has often resulted in the
wide scale unfair practices that ultimately, affects the vulnerable consumers disproportionately.
The ACL must extend its protection to the Conventional financial services and insurance
contracts as they are considered as ordinary consumer services and should be safeguarded by the

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ACL. The consumer lease products and funeral insurance that are targeted at vulnerable
consumers persist to exploit the uncertainty and intricacy that is associated with the protection of
consumers for financial services. These products usually affect the vulnerable consumers
disproportionately.
Issues related to interpretation of “unconscionable conduct’
As mentioned above, the provisions stipulated in the ACL with respect to unconscionable
conduct is complex and it becomes difficult to construe and understand for both the business and
the consumers. In the absence of a clear definition for the term ‘unconscionable conduct’ neither
through precedent nor statute, there remains a significant gap, which restricts the effectiveness of
this provision under the ACL. The most significant instances of the unconscionable conduct is
evident from the egregious violations of the rights conferred by the ACL, which is not only
difficult to prosecute but it is also difficult to enforce (Smith, 2014).
The consumers who are affected by the unconscionable conduct are already in a
disadvantageous position and are seldom capable to asset their rights. In the absence of a clear
definition of the term ‘unconscionability’ it gives rise to several misconducts which re-
establishes the fact that a clearer and comprehensible definition should be provided in the ACL
so as to construe the term ‘unconscionable conduct’. Under the present ACL, in order to enforce
the prohibition against exhibiting misconduct, the regulators are dependent upon the evidence
adduced by the witnesses, which varies from one case to another case (Malbon, 2013).
However, the issue arises when the consumers who are affected because of misconduct are
inherently vulnerable or are subject to any form of special disadvantage, under such

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circumstances, it becomes difficult for those witnesses to present or adduce appropriate evidence
before the regulator to establish their claim.
It is less likely to expect that such disadvantaged or vulnerable consumers would have
retained documentary evidence of such misconduct and there are fewer chances that they are
confident about their recollection. Hence, under such circumstances, it is easy to confuse them as
they get intimidated owing to their vulnerability. Therefore, they usually feel reluctant to lodge
any compliant against the misconduct that they have been subjected to and consequently, they
are incapable to assert their rights. This is one of the significant issues that is associated with the
Australian Consumer law.
In Blomley v Ryan [1956] 99 CLR 362 and Commercial Bank of Australia v Amadio
[1981] 151 CLR 447, the courts have found it difficult to interpret the common law concept of
‘unconscionable conduct’ and the term still, persists to be an issue. The courts have different
opinions about the interpretation of the term and are confused whether to apply ‘moral obloquy’
and if it is applied in order to construe the term then to what extent should it be applied.
There has been an adverse impact of the confusion related to the interpretation of
unconscionable conduct on businesses and consumers. The lack of the comprehensive definition
or interpretation of unconscionable conduct has impacted the businesses and the consumers as
well, profoundly. Businesses do not have any knowledge about the manner and the extent to
which the Australian Consumer Law governs the business operations carried out or the manner
in which the businesses interact with the clients or potential customers. With regards to the
customers, the vulnerable consumers, in particular, are ignorant about their rights under the ACL
(Yip, 2017).

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As a result, in the event they face and unconscionable dealings, they are likely to protest
or lodge any complaint against the same and neither it would be aware of the remedies that they
are entitled to claim against such unconscionable conduct or dealings. Hence, the replacement of
the term unconscionable conduct with that of unfairness or any more accessible term would
enable the consumers understand whenever they are being subjected to any unconscionable
conduct.
Recommendation
The uncertainty that is associated with the ‘unconscionable conduct’ may be addressed
through a general unfair trading prohibition that empowers the regulators to intervene and
address the systematic misconduct at the initial stage. As discussed earlier, the term
unconscionable conduct should be replaced with the term unfair commercial practice or
unfairness. The regulator should introduce business models that is inherently fair in its structure
and aims at redressing the issues of the vulnerable consumers.
Is the threshold of $40000 appropriate for small consumer purchases
Thirdly, issues have been arising with respect to the threshold for the consumer purchases
that had not been changed since the implementation of the Australian Consumer Law. The
threshold of $40000 has not changed since the commencement of the statute and considerations
must be made with a view to enhance the threshold that would reflect the increase in the cost and
inflation since that time (Hing, et al., 2017). The Common Consumer purchases over the $40,000
threshold include motor vehicles and building works. There is an element of uncertainty with
respect to the application of the ACL protections towards these purchases. Furthermore, there is

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an uncertainty with respect to the protections that ACL extended towards small business owners
who purchase services and goods for their businesses around the $40000 threshold. Since there is
no ‘contracting in’ specific warranties or guarantees, the small business owners shall be deprived
of the same kind of protection that is extended by the ACL in relation to their goods and services
that they obtain for their business.
Recommendation
Moreover, it can be observed that the workplaces have undergone changes in that several
ordinary people who were initially employees have now acquired the position of contractors and
small business owners. Under such circumstances, it is important that the Secretariat have regard
to extending ACL protections beyond domestic, household or personal items to the purchases
that were made by the business within the specified threshold. This would be in alignment with
the protection extended by the ACL with respect to the unfair contract terms protections in
relation to small businesses.
Lack of penalty on inclusion of unfair contract terms
The present ACL regime is advantageous to consumers who are aware of their right to
challenge any contractual terms that amounts to an unfair contractual term. This due to the fact
that there is a lack of financial penalty for persons who includes an unfair contractual term in the
contract as a result of which, the term shall be considered as void and no penalty shall be
imposed on the person who incorporates such term (Bailey, 2014). This cannot be considered as
an adequate prevention of the misconduct in carrying out business activities. Several clients,
especially the vulnerable consumers, who are unable to read or don not even have copy of their
contract fail to understand as to why they cannot repudiate the contract without paying financial

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penalties. This way they would incur substantial debts without the capacity to challenge the
ground based on which they are being charged.
Recommendation
The ACL Secretariat is recommended to develop and implement a broader scheme
related to financial penalties and introduce financial penalties as a remedy for those consumers
who are affected by the inclusion of the unfair contractual terms in their contract. While the fees
imposed on termination of the contract amounts to unfair penalties, the law should develop a
broader preventive measure and empower the tribunals and courts beyond declaring such unfair
contractual term as void (Latimer, 2016. ).
To sum up the issues that arise in the ACL, the effectiveness of the ‘unconscionable conduct’
could be enhanced with the replacement of the term with more accessible terms that is
comprehensible to the consumers, especially the vulnerable consumers. The purpose and the
main objective of the Australian Consumer law is to ensure fair trading and that the consumers
are provided with good quality items and services which fits their purpose for which they enter
into the contract with the traders. The traders or businesses must exhibit the professional
standard of special skill and care while dealing with the customers.
They are required to ensure honest market practice and maintain the good faith in the
trader’s field of activity. The incorporation of any contractual terms that is contrary to the
standard of fair practice, which places the consumers in a disadvantageous position or disentitles
the consumers from exercising their legal rights, such terms shall be considered as unfair
contractual terms. The Secretariat must incorporate provisions, which would enable the
consumers to claim compensation from the trader for incorporating such unfair contractual

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terms. The recommendations suggested would enable the legal framework of ACL to ensure fair
and honest trading between the traders and the consumers.

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Reference list
Bailey, J., 2014. Construction Law., s.l.: Crc Press..
Hing, N., Sproston, K. & Brook, K. a. B. R., 2017. The structural features of sports and race
betting inducements: issues for harm minimisation and consumer protection.. Journal of
gambling studies, , pp. 33(2), pp.685-704..
Hunt, K., 2015. Gaming the system: Fake online reviews v. consumer law.. Computer Law &
Security Review, , pp. 31(1), pp.3-25..
Latimer, P., 2016. . Protecting Consumers from Unfair Contract Terms: Australian
Comparisons.. s.l.:s.n.
Malbon, J., 2013. Taking fake online consumer reviews seriously.. Journal of Consumer Policy, ,
pp. 36(2), pp.139-157..
Markham, D. & Khare, A. a. B. T., 2014. Greenwashing: a proposal to restrict its spread..
Journal of Environmental Assessment Policy and Management, , pp. 16(04), p.1450030..
Paterson, J. a. B. G., 2015. “Safety Net” Consumer Protection: Using Prohibitions on Unfair and
Unconscionable Conduct to Respond to Predatory Business Models.. Journal of consumer
policy,, pp. 38(3), pp.331-355..
Pearson, G., 2017. . Further challenges for Australian consumer law. In Consumer Law and
Socioeconomic Development. Springer, Cham., pp. pp. 287-305..
Smith, R. a. D. A., 2014. Agreements and competition law in Australia.. Competition and
Consumer Law Journal, , pp. 22, pp.54-79..

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Yip, M. a. G. Y., 2017. Convergence between Australian common law and English common law:
The rule against penalties in the age of freedom of contract.. Common Law World Review, , pp.
46(1), pp.61-68..