RMIT Classification: Trusted
Week 9: Australian Consumer Law (ACL) - General Protections
Tutorial Questions:
Review questions
1. Who is a consumer under the ACL?
2. Which of the following constitutes a purchase by a “consumer”?
a. A high speed photocopying machine, costing $11,000;
Need more information -> details of all possibilities.
b. Wire rounds suitable for rural fencing, costing $300;
Yes
c. 60 solar panels, costing $102,000, for making electrical energy, including for the
purpose of selling to electrical authorities;
No
d. An electrical contractor’s services to install the 60 solar panels, costing $30,000;
Yes
e. Air conditioners, installed in a private hospital, for storing drugs and blood and tissue
samples, costing $105,000;
Yes. Traditionally, AC with household use, we do not care about other purpose.
f. Surgical gloves, costing $12 a packet;
Need more information
g. A caravan used to carry furniture in remote/country areas, costing $182,000;
Yes
h. Timber, purchased by a picture framer, for making frames, costing $11,000;
No, in a manufacturing process. -Transform production into trading commercials
3. Why do consumers need legal protections beyond those provided by contract law?
4. What is a misleading or deceptive conduct under ACL?
5. A consumer can use either ACL section 20 or ACL section 21 to sue a business that has
engaged in unconscionable conduct. True or False? Discuss.
6. Unfair contract terms are not required to be in a standard form contract in order to be void.
True or False? Discuss.
Problem-solving questions
1. Phu was living in Melbourne and the owner of a restaurant. He agreed to sell the restaurant to
Tom for $410,000 because he wanted to move to Sydney permanently. Phu informed Tom that
the restaurant could seat up to 128 people. He however did not disclose to Tom that the
restaurant was only authorised by the local authority to seat only 84 people.
Tom bought the restaurant so he could continue using it for commercial catering services and
later discovered that he was only allowed to seat up to 84 people. Tom is very aggrieved and
seeks your advice.
Is Tom a consumer under ACL?
No, (Tom did not use the restaurant for households). Traditionally, we do not buy a restaurant
to live in.
RMIT Classification: Trusted
Explain. If Tom is not a consumer, can he still be protected by the ACL in this case?
S18:
Conduct inaction (commercial catering services) + action (did not disclose)
Is the seller in trade or service? -> No, Phu was a businessman, sold it them moved
to somewhere which is different from re-supply.
Deceptive (perhaps dump consumer and buyer told lies)
Taco Bell test
2. Mamilk Ltd is a company that specialises in the manufacture and sale of baby food and infants
formula in New South Wales, Australia. Mamilk placed several advertisements on television
and billboards across NSW that its baby food is different from other brands and far more
nutritious than breastmilk. Nursing mothers are therefore strongly encouraged to use Mamilk
products for feeding their babies rather than breastfeeding them.
A group known as the Nursing Mothers Association of NSW bought Mamilk baby food for
use by members and found that it is not different from what other brands produce. They also
found that there is an overwhelming body of scientific evidence to show that the food is not
more nutritious than breastmilk. Members of the group that have already used the product
under the belief that it is better than breastfeeding have decided to bring an action against
Mamilk Ltd under the ACL.
Advise them as to the likelihood of their claim succeeding if pursued under the ACL.
i) S18: misleading or deceptive
ii) S20:
a. The business has a conduct (yes)
b. The conduct of the business is in trade or commerce (yes)
c. The conduct of the business is unconscionable within the meaning of common law (not clear)
Yes, +lack of information of Mamilk ingredients
+nursing mother is vulnerable weakness
+financial??
Terminate the contract + damages (extra protection)
3. Alice Plump needs to lose some weight. She sees a half-page newspaper advertisement by
Skinny is Cute (SIC) Pty Ltd. The advertisement reads “Lose up to 10kg of weight for a $10
program fee”. In small print, at the foot of the advertisement, are the words “Purchase of food
is an additional cost”. In the centre of the advertisement is a photo of JH, a famously skinny
model, looking very skinny and referred to as “one of the program’s ambassadors”. The
advertisement also states (again in small print) that some of the meals are gluten free. Alice is
excited and visits SIC’s city centre to sign up. To her disappointment, an employee tells her
that to join the weight loss program she will have to sign up for their weekly meals (at a
minimum cost of $150 per week). Alice is further disappointed when she discovers that none
of SIC’s meals are gluten free. She also reads in an article in the newspaper that JH is, in fact,
not an ambassador of the program.
Advise Alice of her rights under the ACL.
No contract
S18: misleading
Sub-issue-S20:
RMIT Classification: Trusted
+lack of information: business has a conduct
+trade or service
+common law: The other party is aware, or should be aware, of that special weakness or
disadvantage.
4. Mary bought a car under a 2-year contract from Maxi Motors Ltd in Western Australia for the
sum of $24,000. The money was to be paid in 24 monthly instalments at the rate of $1000 per
month and payment should be made within the first 7 days of every month. The written
contract, which contains pre-printed terms prepared by Maxi Motors, further provides that
Mary should default at any point in making the payment within the first 7 days of the month,
the company shall immediately proceed to terminate the contract, recover the car from her and
Mary would be liable to pay the outstanding balance as penalty for the default. Mary paid the
money for 18 months without defaulting. She however defaulted by failing to pay within 7
days in the 19th month of the 24-month contract. On the 8 th day of the month she defaulted,
men from Maxi Motor’s came to Mary’s house and told her that the contract had been
terminated, the car would be taken away from her and she would still have to pay the
remaining $6000 as penalty for the default.
Advise Mary as to whether she has any protection under the ACL.
S23: Unfair terms
Unfair: “immediately proceed to terminate the contract”
$24000=nothing (she had to pay the remaining and did not receive the car)
7 days payment
Term is void, remaining of contract is ok
SF (): yes
5. Two weeks ago, Thuy bought Samsung Galaxy J7 Pro from a local electronics store in
downtown Sydney. The salesperson told her that the features and applications of Galaxy J7
Pro were much advanced than those in any of its predecessors. The salesperson falsely assured
Thuy that “Galaxy J7 Pro is certified water resistant so you could drop it in the sink without
worry”.
Thuy was very excited about these features. Importantly, she could also buy the phone for an
incredible 40 percent discount price, even though in order to get this price, she had to sign a
contract prepared by the Store which stated that the sale was final, and the price was non-
refundable. Yesterday, Thuy accidentally spilled some drops of water on her new phone. She
thought that it would be fine because the phone was water resistant. However, she was wrong,
and the phone was damaged completely.
She is very disappointed and wants to know if she has any rights under the ACL.
Advise Thuy as to her rights under the ACL.
S18: misleading
Successful, reasonable person do quick research to know the pricey goods.
S20:
conduct, (yes)
trade or service (yes)
The other party takes unfair advantage of that special weakness or disadvantage
RMIT Classification: Trusted
S23: unfair terms
“even though in order to get this price, she had to sign a contract prepared by the Store which
stated that the sale was final, and the price was non-refundable.”
40%: fair /unfair discount price
