Analysis of Remedies under Australian Consumer Law

1. There are two issues that arise in this scenario. First, whether Justin has a remedy against the Winery Equipment Specialists for the commercial transaction under the Australian Consumer Law (ACL). Second, whether Justin has a remedy against Agricultural Industry Construction Company for misleading or deceptive conduct in trade or commerce.

With respect to the question of whether Justin has a remedy against the Winery Equipment Specialists, the question that arises is whether the transaction is a consumer or a business transaction. The significance of the transaction being a consumer transaction is that the provisions of the ACL that are meant for consumer guarantee become applicable. Also important to this point is that the seller cannot “contract out” of consumer guarantees under ACL, Section 64(1). This means that any clause in the contract with the effect of excluding, modifying or restricting any consumer guarantees will be considered to be void. This becomes relevant to the clause in the contract between Justin and Winery Equipment Specialists, which says: ‘All statutory provisions which would otherwise apply to this transaction are hereby expressly negated’. If the contract for purchase of tractor will be treated as a consumer contract, then Justin can claim the protection of ACL, Section 64(1) and the clause that excludes the statutory protections may be argued to be void. In that case, the protections of the consumer guarantee provisions in the ACL will be applicable to the contract between Justin and Winery Equipment Specialists.

Under the ACL, a business is treated to be a consumer if the purchase of the goods or services does not exceed $40,000; the goods or services are ‘ordinarily acquired for personal, domestic or household use’; or the goods are a vehicle or trailer. Two judgments exemplify how courts interpret consumer transactions. In Carpet Call Pty Ltd v Chan, the sale of industrial-strength carpet to a nightclub came under consumer transaction. In Atkinson v Hastings Deering (Qld) Pty Ltd, the sale of a tractor was held to be a commercial product even though it was meant for domestic purposes.

What these cases demonstrate is that when it comes to assessing whether the goods are commercial or consumer, the assessment will be based on the kind of product, and not the purpose of the goods. On the basis of these judgments, it can be argued that the sale of the tractor is a commercial transaction and not a consumer transaction. Consequently, the protections of ACL for consumer guarantees are not applicable in this case. By extension, what this means is that Justin may not be able to argue under ACL, Section 64(1) that clause that excludes the statutory protections is void.

As the transaction is more likely commercial and not consumer, Justin would have remedies under the ACL which are applicable to commercial transactions. The purchaser has the right to repair, replacement, refund, cancellation or compensation if the goods are worth less than $40 000. For goods that are more than $40 000 and are for business use, such as machinery or farming equipment, this remedy is not available. Remedies are available to purchasers if the goods or services for their business are bought under the representations suppliers about these goods that are not accurate or honest.

With respect to the Agricultural Industry Construction Company, Section 18 of the ACL (schedule 2 of the Competition and Consumer Act 2010) is applicable. Under Section 18, there is a prohibition on engaging in misleading or deceptive conduct in trade or commerce, which includes prohibition on the misleading or deceptive conduct in supply of goods or services. In order to establish that the conduct involved was misleading or deceptive conduct, Justin would have to establish that the conduct was done in trade or commerce setting, and was misleading or deceptive, and was relied on by Justin leading to a suffering of a loss based on such reliance. In this case, Justin needed a tractor for harvesting grapes for commercial purposes, but also to handle his property for which it was to have capacity to negotiate its way on hills. The tractor that Justin chose had a logo on the side door that said: ‘Super Tractor designed for the hills’. Based on this description, Justin bought the tractor.

The misleading description happened in the setting of trade and commerce (Houghton v Arms). It can be said that the statement made on the side of the tractor that it was designed for the hills is conduct that has real and not remote chance of misleading the consumer because it gives the impression that the tractor is specially designed to negotiate hills (Butcher v Lachlan Elder Realty Pty Ltd). There was reliance placed on this statement by Justin and it is not necessary that the conduct was intended to mislead or deceive (Yorke v Lucas) as long as there was reliance. Therefore, there was a misleading description on the tractor, which became the basis for Justin’s decision to purchase the tractor and which led to the loss suffered by Justin as the tractor was not able to negotiate the hills and stalled on many occasions. Justin was not able to harvest the grapes in a timely manner and is now worried they will not have enough quality grapes to make wine this year. However, this also raises the possibility that Justin may not have suffered the loss as there is at this time a likelihood of loss. What is required here is the actual loss suffered by the claimant (HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd). On this point therefore, unless Justin can establish actual loss, he may not be able to claim damages or compensation from Agricultural Industry Construction Company.

To conclude, Justin may not have a statutory remedy against the Winery Equipment Specialists as this is a commercial transaction. Second, Justin has to establish actual loss in order to get a remedy under Section 18 against Agricultural Industry Construction Company for misleading or deceptive conduct.

2. The issues in this scenario are as follows. First, whether Cameron can seek damages against Smart Phones Australia under the principles of negligence for the loss from the defective smartphone. Second, whether Cameron can seek damages from Smart Phones Australia for breach of contract.

In Australian law, consumers can seek damages from the seller of a defective product under the principles of negligence if they have suffered any loss or damage from a defective product. Liability under the common law is based on the principle of fault. Therefore, in order to establish the liability of Smart Phones Australia, Cameron will have to establish that there is wrongdoing on the part of the Smart Phones Australia. Furthermore, Cameron will have to establish that Smart Phones Australia owed a duty of care to him, which they breached as they did not comply with the requisite standard of care, and that the breach caused him loss or injury (Donoghue v Stevenson; Grant v Australian Knitting Mills). Therefore, the elements that are discussed here specifically with respect to Smart Phone Australia’s conduct are duty of care, breach of duty of care, and loss to Cameron.

In this scenario, as Smart Phones Australia are not the manufacturers of the phones, but are the retailers, with the manufacturers being a Korean company, Cameron cannot use negligence law to claim damages from Smart Phones Australia. This is because liability of negligence is applicable to the manufacturer of a defective product and not the retailer. The retailers, importers and distributors of products cannot test or inspect products that are to not normally be opened until they reach the ultimate consumer. The retailer’s duty is to only guard against dangers known to it. In this case, Cameron can seek damages in negligence because the phones are being sold in Australia by Smart Phones Australia without undergoing any safety tests.

Cameron can also seek damages from Smart Phone Australia under the principles of contract for breach of contract. Breach of contract arises from breach of implied or express terms of a contract between the retailer and the consumer. In this case, Mia told Cameron that they “sell the number one smart phone on the market, and the phone has coverage all over the world”. However, the phone caught fire when Cameron pressed the power button, damaging the kitchen bench and also severely injuring Cameron. Moreover, the phone is not the number one smart phone on the market, and does not have coverage all over the world. With respect to the first claim made that is that the phone is the number one phone, this can be said by the seller to be a puffery or an exaggerated claim presented without evidence and not meant to be taken seriously. With respect to the second claim however, the question is whether parol evidence rule will apply to make oral statements made by the salesperson as extrinsic to the actual written contract.

The parole evidence rule provides that once contract is in the written form, parties cannot bring extrinsic evidence to add to, vary, or contradict the written terms of the contract. However, it has been held in City and Westminster Properties (1934) Ltd v Mudd, that even if the written contract specifies something written from an oral assurance given by the seller, then the oral assurance can be considered to be a part of the contractual terms as well. The assurance given by the salesperson that the phone has coverage all over the world can be seen to be a warranty in this case, which has been breached and therefore breach of contract has happened (Murray v Sperry Reed Corporation). Looking for further insights on Evolution of Legal Ethics? Click here.

A consumer can sue for a damages if he can establish that there was a breach of contract and that such breach of contract led to loss to the consumer. The loss suffered by the consumer should be such that can be reasonably expected by the seller (Victoria Laundry v Newman Industries Ltd). Every kind of damage that is suffered by the claimant may not be reasonably expected or contemplated by the parties or as arising naturally (Hadley v Baxendale). Therefore, damages for breach of contract can only be limited to the damages that can be reasonably expected or contemplated by the parties. The purpose of awarding damages to the claimant is to put them in the position that they would have been in had the breach not occurred (Robinson v Harmon). Damages can also not be claimed for disappointment and distress. In this case, Cameron can seek damages for burn injuries because such an injury can be reasonably expected where the product has not been made to undergo safety tests in Australia. The smart phone was built and manufactured in Korea and did not pass any safety tests. As Smart Phones Australia was selling these phone to Cameron knowing that they had not passed safety tests, then they can be made liable for damages for personal injury to Cameron.

To conclude, Cameron cannot take action under negligence law because Smart Phones Australia is not a manufacturer. But he can take action under contract law for damages for breach of contract as there is a breach of warranty in this case.

3. “Judges don’t make law, they only apply it”.

In common law countries like Australia, the question of whether judges do make the law is an important and at times a contentious question. In common law, judgments of the courts have precedent value which leads to the contentious issue of whether judges should make law when it is the task of the legislator. As held in Farah Constructions Pty Ltd v Say-Dee Pty Ltd, an intermediate court of appeal is required to apply an existing High Court decision as well as decision of another intermediate court of appeal. This means that the judgments of the court has precedent value. This leads to the question of whether the courts should make new principles of law which are not made by the legislature. The principle of separation of powers applies to mean that courts and legislatures have different and separate domain of operation. The domain of legislature is to make the law, while the domain of the court is to apply the law (DPP of Jamaica v Mollison).

Despite the separation of powers principles, judges in Australia have from time to time laid down principles of law that are original. There are two theories of precedent, and as Australia too has a common law system, these theories are applicable to this question as well. These theories are the original and declaratory theories of precedent. William Blackstone was a famous proponent of the declaratory theory, as he argued that judges do not make the law, but they merely declare it. On the other hand, the proponents of the original theory of precedent have argued that judges do make the law especially when the legislature is silent on the issue. In Australia, the High Court has the greatest capacity to make law and there are times when the judgments of the High Court can be said to be original and not merely declaratory precedents. This can be exemplified by the decision of the High Court in Mabo v Queensland when the Court held that native title survived the coming of the new British sovereign in Australia from 1788 onwards. This meant that the High Court negated the understanding that indigenous rights were not recognised under the common law of England as was received in Australia. This case is an example of an original precedent by the court where the court has laid down a principle of law that is not as yet recognised by the legislature. Indeed, the court decided the case against a existing understanding that the common law did not recognise the rights of the native Australian population.

The issue of whether judges ought to make law or not also depends on the place that courts have in the society with respect to the development of the law in common law countries like Australia. Oliver Wendell Holmes Jnr had argued that common law develops to meet the circumstances of each generation. Thus, not just the legislators, even the courts have the responsibility for development of the law in common law contexts. Reliance cannot be placed only on the legislature to develop the law. It is also important to note that as the ultimate interpreter of the constitution, the High Court has responsibilities to interpret the constitution sometimes in a way that meets the demands of the modern society. This was also argued in State Government Insurance Commission v Trigwell by Sir Anthony Mason who said that the High Court can and should vary or modify settled rule or principle of the common law on the ground that it is ill-adapted to modern circumstances.

In conclusion, while the principle of separation of powers does demand that legislature make the law while the courts apply it, at times original law making has to be done by the higher courts so that they can adapt the settled common law to more appropriate standards in the modern contexts. At times, judges do make the law as they are responsible for the development of the common law, which can be done through original precedents at appropriate times.