Statutory Protection Against Unethical Conduct: Chapter 11

CHAPTER
11
Statutory Protection Against Unethical

Conduct

In this chapter:
• The necessity of regulating legal transactions
• The nature and scope of the Australian Consumer Law (ACL)
• Misleading conduct
• Unconscionable conduct
• Unfair terms in contracts
• Unfair business practices
• Unsolicited consumer agreements
• Safety standards
• The enforcement of the ACL.
Copyright © 2017. Oxford University Press. All rights reserved.
[11.1] Introduction
11.1.1 The need for legislation to regulate unethical conduct
In the previous chapter the various circumstances that might, in the common law,
invalidate a legal transaction were explained. Some of these invalidating circumstances
are clearly based on ethical principles but they do not cover all of the many types of
unethical, and therefore undesirable, conduct that is likely to occur in the course of trade
and commerce. It is not surprising, therefore, that legislation has been enacted to regulate
different kinds of unwanted behaviour. Over time, this legislation has taken various forms
and the law reports contain many cases decided under the older legislation. To understand
these cases and their continuing relevance, and to appreciate the nature and scope of the
current legislation, it is helpful to briefly review the historical position before dealing with
the latest provisions.
The eStudy module Statutory protection against unethical conduct has lots of examples
and questions that will help you better understand this topic.
Lambiris, M., & Griffin, L. (2017). First principles of business law 2017. ProQuest Ebook Central <a
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244 Statutory Protection Against Unethical Conduct
11.1.2 Past regulation of unethical conduct

Past efforts to regulate unethical conduct focused on specific problems. For example:
• Suppliers of goods on credit terms often reserved their rights of ownership in the
goods until payment was made in full by the purchaser. Purchasers who failed in
making even one payment faced losing all the money they had paid, and had no rights
in the goods.
• Suppliers of goods often engaged in unfair practices calculated to encourage or
persuade unwary purchasers to buy goods or services they might later regret acquiring.
• Suppliers often put terms into their contracts excluding their legal liability for
supplying inferior goods or services.
• Suppliers often insisted on harsh and onerous terms in standard form contracts. These
terms went beyond what was reasonably necessary to protect the suppliers’ interests,
but individual purchasers had insufficient bargaining power to reject them.
Various attempts were made over the years to regulate such undesirable practices, but
on the whole, the attempts were unsatisfactory. They proved too narrow and technical to
provide adequate control. It became obvious that a more complete and uniform approach
to regulation was needed.
11.1.3 What is the Australian Consumer Law?
In a comprehensive reform, the Australian Consumer Law (ACL) came into operation
throughout Australia on 1 January 2011. The ACL replaced many provisions of the old
Trade Practices Act 1974 (Cth) and a large number of state and territory Acts that were
concerned with regulating unethical conduct, particularly in relation to consumers. It
should be noted that, despite its title, the provisions of the ACL operate more widely
than just in consumer transactions, for example, by prohibiting misleading conduct and
unconscionable conduct in trade or commerce generally.
The ACL has been enacted as a schedule (Sch 2) to the Competition and Consumer Act
2010 (Cth). The Commonwealth, states and territories have all adopted this schedule as
their law. The result of these arrangements is that the ACL applies uniformly throughout
Australia, both as the law of the Commonwealth and as the law of the states and territories.1
11.1.4 Who administers the ACL?
At the Commonwealth level, the ACL is administered by the Australian Competition and
Consumer Commission (ACCC). In each state and territory, the ACL is administered by
the relevant consumer law agency. Cases that arise under the provisions of the ACL can
therefore be heard in either Commonwealth, state or territory courts.
The ACL empowers a ‘regulator’ to carry out various functions, such as issuing public
warning notices. The ACCC is the regulator at Commonwealth level. The states and
territories are required to identify their own regulators.
1 The ACL is currently under review and it is likely that some changes will be made to its provisions as a result.
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[11.2] Protection Against Misleading Conduct

11.2.1 Misleading conduct in trade or commerce prohibited
Section 18(1) of the Australian Consumer Law (ACL) says: ‘A person must not, in trade
or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or
deceive’. The courts have held that there is no difference between conduct that is misleading
and conduct that is deceptive, so it is sufficient to use the single term ‘misleading’ conduct.
This prohibition against misleading conduct is not limited to cases involving
consumers, but certainly includes them. This provision of the ACL replaces the old s 52 of
the Trade Practices Act 1974 (Cth). Since the wording of the two sections is substantially
the same, previously decided cases that involved the older legislative provision are still
valid as precedents for interpreting and applying s 18 of the ACL.
11.2.2 The concept of ‘misleading conduct’
Conduct is misleading when it leads the persons at whom it is directed into error—that
is, to believe something that is not true. Misleading conduct can take many forms. It can
involve doing something, or failing to do something. It can also involve making, or failing
to make, a statement. Because the concept is so wide, it applies to a great many different
situations. The prohibition of misleading conduct has had a profound effect on the way
business is conducted in Australia.
There are two questions that need to be asked to decide whether or not specific
conduct is misleading. Firstly, it must be asked what group of persons (or audience) the
conduct was aimed at. Secondly, it must be able to be inferred that those persons were
likely, in the circumstances, to be misled (led to a false impression) because of the conduct
in question. The fact that someone is confused, or makes a mistake, does not necessarily
signify that the error is the result of another’s conduct: it may be their own fault, for
example, if they jump to unreasonable conclusions.
McWilliam’s Wines Pty Ltd v McDonald’s System of Australia Pty Ltd

(1980) 33 ALR 394

Contract; vitiating circumstances; misleading conduct
Facts: McWilliam’s Wines (McWilliams) advertised a large cask of wine under the
name ‘Big Mac’. McDonald’s System of Australia (McDonalds) marketed a large
hamburger under the same name. McDonalds claimed that McWilliams’ use of the
name ‘Big Mac’ was misleading conduct in breach of s 52 of the Trade Practices
Act because consumers might think the ‘Big Mac’ cask of wine was a McDonalds’
product.
Issue: Was McWilliams’ conduct likely to mislead consumers to believe something
that was untrue?
Decision: McWilliams’ conduct was not likely to be the cause of any confusion that
might arise in the minds of consumers.
Reason: Potential consumers of the McWilliams’ product might be confused
or wonder whether there was a business connection between McWilliams and
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McDonalds, but the advertisement did not in any way actually suggest such a
connection. If anyone did make a mistake of the type that McDonalds suggested, it
would not be because of McWilliams’ conduct. Accordingly, there was no misleading
conduct by McWilliams.
Campomar Sociedad Ltd v Nike International Ltd (2000) 202 CLR 45

Misleading conduct; likelihood of conduct causing error
Facts: The word ‘Nike’ was registered as a trade mark in different parts of the
world by two different corporations, one based in Spain, the other in the USA. The
Spanish company (Campomar) manufactured perfumes and related products. The
American company (Nike International) manufactured sportswear and related
products. Both companies marketed their goods in Australia. The Spanish company
launched a new perfume called ‘Nike Sport Fragrance’. This perfume was sold in
pharmacies and displayed next to other perfumes on shelves. One of the other
perfumes commonly sold in pharmacies was ‘Adidas’, which was manufactured
and marketed by the well-known Adidas sportswear company. Nike International
did not itself manufacture or market perfume products. Nevertheless, they argued
that Campomar was marketing ‘Nike Sport Fragrance’ in a way that was likely to
mislead or deceive prospective purchasers.
Issue: Was Campomar’s conduct likely to mislead or deceive members of the public
into thinking that their perfume was promoted or distributed by Nike International?
Decision: In the circumstances, Campomar’s conduct was likely to mislead
members of the public in this way.
Reason: Nike International itself did not produce and market perfumes, but other
sportswear manufacturers such as Adidas did so, a fact which was widely known by
members of the public. In these circumstances, placing the ‘Nike Sport Fragrance’
in the same area of pharmacies with other sports fragrances was likely to mislead
or deceive the ordinary or reasonable members in the classes of prospective
purchasers into thinking that the ‘Nike Sport Fragrance’ was in some way promoted
or distributed by Nike International, either itself, or with its consent and approval.
Australian Competition and Consumer Commission v TPG Internet

Pty Ltd (2013) 250 CLR 640
Australian Consumer Law; misleading or deceptive conduct; dominant
message in advertisement
Facts: In a series of advertisements published between September 2010 and
November 2011 on radio, television and in newspapers TPG Internet Pty Ltd
(TPG) promoted a broadband internet service with unlimited download data limit
for $29.99 per month. This offer was qualified in the less prominent parts of the
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advertisements by the condition that the broadband service was only available at
this price when bundled with a fixed-line home telephone service for an additional
$30.00 per month. A setup fee and deposit were also payable. The Australian
Competition and Consumer Commission (ACCC) brought proceedings against
TPG alleging that the advertisements constituted misleading or deceptive conduct
contrary to s 52 of the Trade Practices Act and s 18 of the ACL. The court noted that
the relevant provisions in both Acts are, in practice, the same.
Issue: Although the advertisements contained all the relevant information for
an accurate understanding of the offer, did the advertisements, as presented,
constitute misleading or deceptive conduct?
Decision: The ‘headline’ or ‘dominant’ message of the advertisements had a
tendency to lead those at whom they were directed (members of the public who
had an interest in broadband internet services) into error as regards the nature of
the offer being made.
Reasons: A person may be led into error for the purposes of the Acts even if they do
not actually enter into any legal transaction as a result of the conduct in question.
It was sufficient that the persons targeted by the advertisements were ‘enticed into
“the marketing web” by their erroneous belief’. In addition, the court found that the
likely error would not, in the circumstances, be the result of the targeted persons’
failure to attend to all the details contained in the advertisement but rather to
the way in which the dominant message was emphasised and the other details
de-emphasised. The advertisements deliberately sought to present the headline
information selectively. The court also took into account that the target audience
would consist in part of persons who were not familiar with broadband services
and who might not expect the main offer to be conditional on additional bundled
services. It was not relevant that TPG had no intention to deceive. Accordingly,
TPG had engaged in misleading or deceptive conduct and a substantial pecuniary
penalty was imposed.
Australian Competition and Consumer Commission v Coles

Supermarkets Australia Pty Limited (2014) 317 ALR 73
Australian Consumer Law; misleading or deceptive conduct;
misleading representation
Facts: The supermarkets operated by Coles Supermarkets Australia Pty Ltd (Coles)
had in-store bakeries where bread was sold. Signs were displayed on the counter
of these bakeries, with phrases such as ‘Baked Today, Sold Today’, ‘Freshly Baked’,
‘Baked Fresh’, ‘Freshly Baked In-Store’ and ‘Coles Bakery’. All in-store bread was
also labelled with a ‘baked on’ date. One of the methods used to prepare bread in
some of these in-store bakeries involved dough which had already been prepared
and partially baked elsewhere by an outside supplier, then snap frozen and stored.
The partly-baked product was then thawed in the Coles store, where the final stage
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of the baking process was completed. The Australian Competition and Consumer
Commission (ACCC) claimed that Coles was engaging in misleading conduct
because the signs and labels were making an express or implied representation
that the bread products had been entirely baked on the day they were offered for
sale.
Issue: Had Coles engaged in misleading conduct in contravention of the Australian
Consumer Law?
Decision: In the circumstances Coles’ conduct was misleading, in contravention of
both s 18(1) and s 33 of the ACL. Coles had also contravened s 29(1)(a) by making a
misleading representation that goods have a particular history.
Reason: The court noted that context in which the signs were displayed was
important because consumers buying bread are concerned about freshness and
how recently bread has been baked. The court said (at para 146):
To many reasonable and ordinary people, the phrase ‘baked today, sold today’
in the context that Coles uses it … would convey that the baking process, not
some heating or baking process, has taken place today. … [I]‌t was misleading
or deceptive, likely to mislead or deceive, and liable to mislead the public to
say to customers on the package or signage as was done, that par-baked
frozen product was ‘baked today’ if it was partly (indeed, substantially) baked
previously.
Similarly, the words ‘freshly baked’ and ‘baked fresh’ used in the displays were
also held to be misleading, as was the label showing the ‘baked on’ date on the
packaging.
Note: Coles was subsequently ordered (in Australian Competition and Consumer
Commission v Coles Supermarkets Australia Pty Ltd (2015) 327 ALR 540) to pay a
pecuniary penalty of $2.5 million for this misleading conduct.
11.2.3 No intention required for misleading conduct to occur

Because s 18 of the ACL does not make any reference to the intention of the person
responsible for the misleading or deceptive conduct, there is ‘strict liability’ for such
conduct. This means that it is not necessary to show that the conduct occurred with
deliberate or careless intent. Even if the conduct in question took place without any such
intent, it may constitute a breach of s 18.
Yorke v Lucas (1985) 158 CLR 661

Contract; vitiating circumstances; misleading conduct; liability of
principal and agent
Facts: Yorke entered into negotiations to purchase a record shop from Treasureway
Stores Pty Ltd. Treasureway appointed a company, Ross Lucas Pty Ltd, to act as
its agent in the negotiations. Ross Lucas Pty Ltd sought and obtained financial
information about the record store from Treasureway and passed this information
on to Yorke. However, some of the information given by Treasureway and passed
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on to Yorke by Ross Lucas was wrong, in particular, a statement that the weekly
turnover of the record shop was $3,500. Yorke relied on this information and
suffered loss as a result. Yorke sued Treasureway and their agent, Ross Lucas Pty
Ltd, for conduct in breach of s 52 of the Trade Practices Act.
Issue: Were both Treasureway and Ross Lucas Pty Ltd liable for misleading
conduct?
Decision: The court held both Treasureway and Ross Lucas Pty Ltd liable for a
breach of s 52.
Reason: In the case of Ross Lucas Pty Ltd, it was no defence to claim that the
misleading information was given to Yorke without negligence and in the belief that
it was true. The court considered the comments of Gibbs CJ in Parkdale Custom
Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at p 197, where he said at
[7]‌:
A corporation which has acted honestly and reasonably may therefore
nevertheless be rendered liable to be restrained by injunction, and to pay
damages, if its conduct has in fact misled or deceived or is likely to mislead or
deceive. The liability imposed by s 52, in conjunction with ss 80 and 82, is thus
quite unrelated to fault …
Note: To avoid liability, Ross Lucas could have disclaimed responsibility for the accuracy
of the information when he passed it on to Yorke.
11.2.4 Intention as evidence of misleading conduct
Although intention is not required for a breach of s 18, the existence of a deliberate
or careless intention to mislead may be relevant to establishing that the conduct was
misleading or likely to mislead.
Twentieth Century Fox Film Corp v The South Australian Brewing Co

Ltd (1996) 66 FCR 451
Misleading conduct; relevance of intention of defendant

Facts: The Twentieth Century Fox Film Corporation was the producer of ‘The
Simpsons’, a well-known and highly successful television series. The creator of
this series, Matt Groening, had invented the name ‘Duff Beer’ for a fictional brand
of beer often referred to in the series. In 1995, South Australian Brewing began
producing and marketing beer under the name ‘Duff Beer’. Twentieth Century Fox
brought an action against South Australian Brewing, to stop them from marketing
their beer as ‘Duff Beer’, on the grounds that this constituted misleading conduct
in breach of s 52 of the Trade Practices Act.
Issue: Was marketing beer as ‘Duff Beer’ without the permission of Twentieth
Century Fox conduct likely to mislead members of the public?
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Decision: Members of the public, many of whom were familiar with ‘The Simpsons’
television series, would likely be misled by South Australian Brewing using the
name ‘Duff Beer’.
Reason: Before launching the beer, South Australian Brewing conducted market
research into consumer reactions to the name ‘Duff Beer’. They found the name to
be widely recognised and strongly associated with the popular Simpsons program.
It was on this basis that South Australian Brewing decided to launch their beer
as ‘Duff Beer’. In a deceptive conduct case, where conduct may cause wonder or
confusion as to the true facts, a court will more readily conclude there has been
a misrepresentation or deceptive conduct where the conduct is accompanied by
an element of intention by the defendant. The evidence showed that the brewery
had intended to persuade consumers that there was a strong association between
their product and ‘The Simpsons’, and in this way obtain the full benefit of that
association. As a result of this, members of the public would likely assume that
Twentieth Century Fox had allowed the manufacture and marketing of the beer,
which was untrue.
11.2.5 Disclaimers
Liability for potentially misleading conduct can be avoided if the person engaging in the
conduct makes it clear that they take no responsibility for what may be said or done, for
example by issuing a disclaimer.
Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592
Contract; vitiating circumstances; misleading conduct
Facts: Lachlan Elder, a real estate agent, published a two-page brochure describing
a waterfront property in Sydney that was for sale. The brochure contained a
survey diagram, provided by the seller’s solicitors. On both pages of the brochure,
Lachlan Elder inserted the following statement in small print: ‘All information
contained herein is gathered from sources we believe to be reliable. However we
cannot guarantee it’s [sic] accuracy and interested persons should rely on their
own enquiries’. Butcher was given the brochure and relied on the information it
contained without checking it. After agreeing to purchase the property, Butcher
found that the survey diagram was inaccurate in a way that seriously affected how
he could develop the property. Butcher wanted to avoid the contract and recover the
deposit paid, relying on a breach of s 52 of the Trade Practices Act.
Issue: Had the real estate agent engaged in misleading or deceptive conduct or
conduct ‘likely to mislead or deceive’?
Decision: In a majority decision, the court held that Lachlan Elder had not engaged
in conduct that amounted to a breach of s 52 of the Trade Practices Act.
Reason: The disclaimer was printed in small writing, but it was clear and legible,
and there was not a great deal of other information on the brochure. The disclaimer
would have been noticed by anyone who had taken the trouble to read the brochure
carefully. In such circumstances, the survey diagram should not have been relied
on by Butcher. The court said (at [51]):
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[I]‌t would have been plain to a reasonable purchaser that the agent was not
the source of the information which was said to be misleading. The agent did
not purport to do anything more than pass on information supplied by another
or others. It both expressly and implicitly disclaimed any belief in the truth or
falsity of that information. It did no more than state a belief in the reliability of
the sources.
11.2.6 Conduct must take place ‘in trade or commerce’

Section 18 prohibits misleading conduct only if it takes place ‘in trade or commerce’. It
does not apply to transactions that are not part of business dealings. The words ‘trade or
commerce’ are defined in the ACL. Section 2(1) states that the phrase includes trade or
commerce within Australia, as well as trade or commerce between Australia and places
outside of Australia. The phrase includes ‘any business or professional activity (whether
or not carried on for profit)’. This definition seems consistent with what the courts have
previously said about the meaning of the phrase. In summary, the courts have said that
conduct takes place ‘in trade or commerce’ when it involves selling or dealing, particularly
for purposes of business or as a livelihood.
Note: The requirement that regulated conduct has taken place in trade or commerce
is a component of other sections of the ACL. The meaning of the phrase explained here
applies also to those other provisions.
O’Brien v Smolonogov [1983] FCA 305

Misleading conduct; meaning of ‘in trade or commerce’
Facts: O’Brien advertised in a newspaper that he wished to sell some land.
Smolonogov telephoned O’Brien to make inquiries. O’Brien made various untrue
comments about the land, in particular that the land was good land with a permanent
creek running through it and that a building permit had been issued. Smolonogov
bought the land but later repudiated the contract on the basis of having been
induced to enter it by the seller’s misleading representations. Smolonogov argued
that these representations amounted to a breach of s 53A of the Trade Practices
Act, which prohibited misleading conduct in the form of representations made in
relation to the sale of land ‘in trade or commerce’.
Issue: Had the sale taken place ‘in trade or commerce’?
Decision: The transaction had not taken place in trade or commerce: it was a
private sale and therefore not subject to s 53A of the Trade Practices Act.
Reason: Despite using a classified advertisement in the newspaper (an invitation
to the public at large to deal), the seller was not involved in the commercial selling
of land. An isolated sale of property by its owner does not constitute the conduct
of trade or commerce. To be so, the sale must be part of the business, vocation or
occupation of the seller.
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Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594
Facts: Concrete Constructions was a company engaged in constructing a building
in Sydney. The foreman of the company gave misleading information to Nelson,
an employee of Concrete Constructions who was working on the site, about how a
grate at the entrance of a shaft was secured. As a result of this wrong information,
Nelson fell down the shaft and was injured. Nelson wished to claim damages from
Concrete Constructions for a breach of s 52 of the Trade Practices Act. He argued
that the company had, through its foreman, engaged in misleading conduct in trade
or commerce.
Issue: Did the act of giving misleading information to the employee take place ‘in
trade or commerce’?
Decision: Giving the information was not part of the company’s commercial or
trading activities; it was only something incidental to those activities. Accordingly,
the conduct in question did not take place ‘in trade or commerce’.
Reason: The phrase ‘in trade or commerce’ can be interpreted narrowly. This
includes only conduct that is itself an aspect or element of activities or transactions
which, of their nature, bear a trading or commercial character. It can also be
interpreted more widely, so as to include activities that are merely incidental to the
carrying on of an overall trading or commercial business. In the narrower sense,
driving a truck to deliver goods to a buyer would be conduct ‘in trade or commerce’,
whereas the failure of the driver of the truck to give a correct hand signal while
driving would not be. The wider interpretation goes beyond what was intended by
the legislature.
Taylor v Crossman (No 2) (2012) 199 FCR 363


Facts: While Taylor and Crossman were engaged to be married and were considering
buying a marina business to operate together, Taylor made a series of statements
to Crossman to convince her to provide the initial finances required. These
statements concerned how both would share the expenses in buying and setting
up the business, how they would make decisions about the business, and how
the marina business would be run. Taylor later admitted that his statements had
been misleading, but argued that they had not been made ‘in trade or commerce’
because the statements had been made before the parties formed a company and
trust to purchase and run the marina business.
Issue: Had the statements been made ‘in trade or commerce’, for the purpose of
liability under s 56 of the Fair Trading Act 1987 (SA) (equivalent to s 18 of the ACL)?
Decision: The statements had been made ‘in trade or commerce’. They were not
merely in connection with trade or commerce and were not of a private nature.
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Reason: Cowdroy and Flick JJ said (at [47], [49], [52]):

[T]‌he representation[s] fell within trade or commerce, in that they related to
conduct of a business, of its financing and of its operation, even though the
business had not yet commenced in the name of the company …
In these circumstances it is immaterial that the company did not exist at
the time that the representations were made …
Further, it is not determinative that the parties were engaged to be
married and proposed to live together. The focus must be directed to the
statements concerning the business operations which the appellant made to
the respondent concerning its establishment, operation and financing. Such
statements were not of a private character but related to the business venture.
11.2.7 Application to natural persons, artificial persons and information

providers
Under the provisions of the ACL, misleading conduct is prohibited whether engaged
in by corporations or individuals. But s 18 generally does not apply to publications by
‘information providers’. The Australian Broadcasting Corporation (ABC), the Special
Broadcasting Service Corporation (SBS) and the holders of a broadcasting licence are
also ‘information providers’ when they publish material using radio or television. However,
there are some exceptions. For example, s 18 does apply to advertisements. This means that
an information provider can breach s 18 if their conduct in publishing an advertisement is
likely to mislead or deceive their audience.
11.2.8 Remedies for a breach of s 18
See below (at 11.8) for a general description of the remedies available for a contravention
of s 18 (injunctions, damages, compensation orders, non-punitive orders and other orders,
such as declaring a transaction void). A contravention of s 18 does not incur fines or civil
pecuniary penalties.
[11.3] Protection Against Unconscionable Conduct

11.3.1 Unconscionable conduct prohibited
Sections 20 and 21 of the Australian Consumer Law (ACL) prohibit ‘unconscionable
conduct’ in trade or commerce.2 These statutory provisions do not replace the general law
doctrine of unconscionable dealing that has been developed by the courts (see Chapter 9).
They exist alongside the general law doctrine and, to a certain extent, they depend on the
continued existence and development of the general law.
Statutory provisions prohibiting unconscionable conduct were originally contained in
s 51AA, 51AB and 51AC of the Trade Practices Act 1974 (Cth). These provisions have now
been relocated to Ch 2 of the ACL. Following amendments at the beginning of 2012, the
structure and wording of the original provisions have changed but, where these changes
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2 See 11.2.6 above for the definition of the phrase ‘in trade or commerce’.
are not material, decided cases that involved the older legislative provisions remain valid
as relevant precedents.
11.3.2 The scope of unconscionable conduct in the ACL
Section 20(1) states: ‘A person must not, in trade or commerce, engage in conduct that is
unconscionable, within the meaning of the unwritten law from time to time’. This means
that conduct that would amount to unconscionable dealing in the general law (that is, the
rules of common law and equity) is also a breach of s 20 of the ACL. This creates an overlap
between the general law and the statutory law. The purpose of the overlap is to make the
various statutory remedies created by the ACL available for unconscionable conduct.
Australian Competition & Consumer Commission v CG Berbatis

Holdings Pty Ltd (2000) 96 FCR 491
Contract; vitiating circumstances; unconscionable conduct
Facts: The owners of a shopping mall made the renewal of a tenant’s lease
conditional on the tenant withdrawing legal proceedings it had begun against the
owners. The ACCC alleged that this amounted to unconscionable conduct in breach
of s 51AA of the Trade Practices Act.
Issue: What conduct is prohibited by s 51AA?
Decision: The section prohibits conduct that is unconscionable according to the
common law meaning of unconscionability.
Reason: French J said (at [26]):
Section 51AA prohibits corporations from engaging in conduct which is
unconscionable within the meaning of the common law of Australia. … What
the unwritten law does presently is to confine its operation to certain classes
of case. The reference in s 51AA to the ‘meaning of the unwritten law’ is a
reference to the classes of case in which the unwritten law will award remedies
for unconscionable conduct assessed by a court.
On this basis … the rules governing the relevant application of the term
‘unconscionable conduct’ and therefore the application of s 51AA are judge-
made rules that can change from time to time.
Note: To review the unwritten law, as found in reported cases, see Chapter 10, section 4.
Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392

Contract law; vitiating factors; unconscionable conduct
Facts: Harry Kakavas (HK), a wealthy Gold Coast businessman, was a recreational
gambler who frequented various casinos. In 2004 the executives of Crown Melbourne
invited HK to return to their casino, having excluded him in 1998 because of certain
charges involving HK that were being investigated. At Crown’s request, HK provided
psychological reports that stated that he was able to properly regulate his gambling
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behaviour. HK also negotiated with Crown to obtain favourable terms as a ‘high

roller’ including the use of Crown’s private jet, free accommodation and free food
and drink. Between June 2005 and August 2006, HK lost over $20 million to Crown.
He sued to recover these losses on the basis that, while gambling, he was subject to
a pathological urge that made him unable to make worthwhile decisions in his own
best interests, that Crown was aware of this, and took unconscionable advantage of
his situation by allowing him to gamble.
Issue: Had Crown engaged in unconscionable conduct under the provisions of the
general law that underpin s 51AA of the Trade Practices Act (now s 20(1) of the
ACL)?
Decision: Taking account of the overall facts of the case, Crown had not engaged
in unconscionable conduct by allowing HK to gamble and accumulate substantial
losses.
Reason: In deciding whether there has been unconscionable conduct, account
must be taken of the whole course of dealing between the parties. In the present
case, HK had decided to attend Crown on many occasions over many months.
When so deciding, he was not affected by any pathological addiction. Further, both
HK and Crown were fully aware of the possibility that losses might be the result
of gambling. HK was a ‘high roller’ who bet significant sums and who at times
won significant amounts, even though in the end he lost more than he won. The
court found that ‘high rollers’ typically have a heightened interest in gambling
and are willing to risk substantial losses. HK appeared to have the resources to
gamble to the extent he did and did not complain of financial difficulty. He was able
to stay away altogether from Crown when he chose to do so. Crown had gone to
reasonable lengths to determine that HK had no psychological gambling problems.
HK’s behaviour was confident and charming. In these circumstances, HK was not
suffering from any special disability which was apparent to Crown and of which they
took unconscionable advantage. The gambling losses were not recoverable by HK.
11.3.3 Additional circumstances giving rise to unconscionable conduct

Section 21(1) of the ACL says that a person must not, in trade or commerce, and in
connection with the supply or acquisition of goods or services to a person (other than a
listed public company), engage in conduct that is, in all the circumstances, unconscionable.
This section is of wide application. It does not distinguish between ‘consumer’ and
‘commercial’ transactions. Nor does it make any distinctions on the basis of the type of
goods or services being acquired, or the purpose for which they are acquired, or their price.
Section 21(1) simply prohibits unconscionable conduct that occurs in trade or commerce
in connection with the supply or acquisition of goods or services.
The prohibition against unconscionable conduct contained in s 21 is intended to apply
in a much wider range of circumstances than the general law doctrine of unconscionable
conduct, including circumstances that may fall outside the definition of unconscionable
according to the ‘unwritten’ law. 11
Section 22 lists specified matters which a court may take into account when deciding
whether there has been a breach of s 21, either by a supplier or an acquirer of goods or
services. In outline, the specified factors are:
• the relative bargaining position of the parties
• whether, by their conduct, a party imposed conditions that were not reasonably
necessary to protect their interests
• whether a party was unable to understand any documents relating to the transaction
• whether any undue influence or pressure or any unfair tactics were used by a party
• the circumstances under which, and the amount for which, a party could have acquired
or supplied identical or equivalent goods or services from or to another person
• the extent to which a party’s conduct was consistent with their conduct in similar
transactions
• the requirements of any applicable industry code, or other relevant industry code
• the extent to which one party unreasonably failed to disclose their intention to engage
in conduct that might affect the interests of the other and any foreseeable risks to the
other party arising from that conduct
• in the case of contracts for the supply of goods or services:
– the extent to which a party was willing to negotiate the terms of any contract
– the terms and conditions contained in the contract
– the conduct of the parties in complying with the contract, and
– any conduct of the parties, in relation to their commercial relationship, engaged
in after entering into the contract
• whether a party has a contractual right to vary unilaterally a term of a contract, and
• the extent to which the parties acted in good faith.
Section 21 grants the court a very broad discretion to decide whether, in ‘all the
circumstances’, conduct is unconscionable. A court is not limited to the factors listed in s
22, and even when a listed factor is shown to exist, the court can exercise its discretion in
deciding whether or not it gave rise to unconscionable conduct in the circumstances of the
particular case.
Garry Rogers Motors (Aust) Pty Ltd v Subaru (Aust) Pty Ltd (1999)
ATPR 41-703
Contract; vitiating circumstances; unconscionable conduct
Facts: In 1991, Garry Rogers Motors (GRM) was appointed under a franchise
agreement with Subaru as an authorised dealer of Subaru cars for three years.
In 1994 the appointment was renewed. GRM indicated an unwillingness to comply
with some new requirements imposed by Subaru. As a result, Subaru decided to
terminate GRM’s appointment as a dealer. When informed of this decision, GRM
then said it would do whatever Subaru wanted, but Subaru refused to change its
mind.
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Issue: Was Subaru’s decision to terminate the appointment a breach of s 51AC of

the Trade Practices Act?
Decision: There was no unconscionable conduct in breach of s 51AC.
Reason: Section 51AC listed failure to comply with an industry code of conduct
as a factor which may indicate unconscionable conduct. The relevant code in this
case required a franchisor to provide written reasons when terminating a franchise
agreement. In this case, Subaru had not provided written reasons. However,
despite the reasons for the termination not being put into writing, they were well-
known to the parties. The court held that while an aspect of the industry code had
not been complied with, this was insufficient in the circumstances to amount to
unconscionable conduct by Subaru.
Failure to comply with the requirements of an industry code of conduct may also give
rise to illegality. See 10.7.4 and Master Education Services Pty Ltd v Ketchell (2008) 236
CLR 101.
11.3.4 Enforcement
See below (at 11.8) for a general description of the remedies available for contraventions
of s 20 and 21 (injunctions, damages, compensation orders, non-punitive orders and other
orders, such as declaring a transaction void). A contravention of these sections does not
incur fines, but civil pecuniary penalties can be imposed.
[11.4] Protection Against Unfair Terms in Contracts

11.4.1 Regulation of terms in consumer contracts
When suppliers of goods or services have greater bargaining power than the individuals
or businesses they are contracting with, the suppliers might insist on terms in the contract
that are unduly harsh or burdensome. In such circumstances, the disadvantaged party needs
to be protected against ‘unfair’ terms. The provisions of Ch 2, Pt 2-3 of the Australian
Consumer Law (ACL) achieve this by invalidating ‘unfair’ terms within specially identified
contracts. There are two such contracts: ‘consumer contracts’ and ‘small business contracts’.
11.4.2 Identifying contracts that are regulated
For the purpose of regulating unfair terms in contracts. consumer contracts and small
business contracts are defined in s 23 of the ACL.
Consumer contracts are contracts for the ‘supply of goods or services’, or for a ‘sale
or grant of an interest in land’, to an individual who is acquiring them predominantly
for their own personal, domestic or household use or consumption. The price paid by the
consumer is irrelevant for the purposes of defining a consumer contract.
Small business contracts are contracts for a ‘supply of goods or services’, or a ‘sale
or grant of an interest in land’, where at least one party to the contract is a business
that employs fewer than 20 persons (excluding irregular casual employees) and either the
11
upfront price payable under the contract does not exceed $300,000; or the contract has a
duration of more than 12 months and the upfront price payable under the contract does
not exceed $1,000,000.
The ACL only protects a party to a consumer contract or small business contract from
being bound by an unfair term, if the contract in question is a ‘standard form’ contract.
A standard form contract is one in which one of the parties has most of the bargaining
power, and prepares the terms on which they are willing to deal, without giving the other
party any reasonable opportunity to discuss or negotiate the terms. The terms are presented
on a ‘take it or leave it’ basis, with no account being taken of the individual circumstances
of the particular transaction. If one party alleges that the contract they entered was a
standard form contract, it is up to the other party to disprove that fact.
11.4.3 Unfair term is of no legal effect
Section 23 of the ACL makes void any term in a consumer contract or small business
contract that is found to be an unfair term. Provided that the contract can continue
operating without the unfair term (ie if its remaining terms are sufficiently complete) then
the contract continues to bind the parties.
11.4.4 Defining ‘unfair term’
Section 24 of the ACL says that a term of a consumer contract or small business contract
is unfair if the term in question:
• would cause a significant imbalance in the parties’ contractual rights and duties
• are not reasonably necessary to protect the legitimate interests of the party who would
be advantaged by the term, and
• would cause a financial or other detriment to one of the parties if relied on.
These provisions do not apply to terms that define the price and subject matter of the
contract.
In deciding whether a particular term is unfair, the court must consider the contract
as a whole, and the extent to which the terms in question are transparent, that is, presented
clearly and legibly, in plain language, and made available to the disadvantaged party.
Section 25 sets out a number of examples of terms that are likely to be considered unfair.
One example is a term that permits one of the parties, but not another, to avoid or limit
the performance of the contract. Another example is a term that allows one party, but
not another, to vary the terms of the contract. The unfairness of such terms is obvious,
particularly when they are included in standard form agreements.
NRM Corporation Pty Ltd v Australian Competition and Consumer

Commission [2016] FCAFC 98
Australian Consumer Law; consumer contracts; unfair terms
Facts: Advanced Medical Institute (AMI) offered treatments for premature
ejaculation and erectile dysfunction, using nasal sprays and oral strips. Doctors
were employed as ‘independent consultants’ to prescribe these treatments and
were effectively directed to recommend treatment for 12 to 18 months. AMI’s
contract with customers who purchased the treatment included a term which
stated:
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‘Sexual dysfunction is a chronic condition and treatment can take some time.
For this reason, we stipulate that your contract with us [is] for the period
decided in the first consultation with the AMI doctor. You may cancel your
treatment program with AMI at any time by giving AMI not less than 30 days’
notice. Cancelling your treatment program you will be entitled to a refund for
the unexpired period of your treatment program less an administrative fee
of 15% and less the cost of any medication already provided to or prepared
for you. No refund will be provided for the expired period of the treatment
program or the 30 day notice period. All cancellation must be communicated
to AMI in writing signed by you. Oral cancellation will not be accepted in any
circumstances.’
The NRM Corporation (NRM) purchased the AMI business. The ACCC brought
an action against NRM, arguing that the term in question was an unfair term as
defined in section 24 of the Australian Consumer Law (ACL).
Issue: Was the refund term an unfair contract term within the meaning of section
24 of the ACL?
Decision: Yes, the refund term was an unfair contract term, and was therefore void.
Reason: The term met all the requirements for unfair terms set out under section
24 of the ACL. It caused a significant imbalance in the parties’ rights and obligations
and was detrimental to the patient if relied upon by AMI. This was ‘self-evident from
the manner in which the term operated and was enforced’, including the fact (which
was not disclosed to customers) that the 15% administrative fee was calculated
on the basis of the entire program cost. The term also operated ‘irrespective of
whether the reason for the termination was a change of mind, a severe adverse
side effect, or where the medication proved ineffective.’ The term also appeared
unfair when viewed in the context of the contract as a whole; the context in which
patients entered into the agreements; and the manner in which the medications
were prescribed. The term was not brought to patients’ attention in a way which
practically informed them of its contents, being communicated by way of a lengthy
recorded message being read softly, monotonously and at a rapid pace. (Note: NRM
later changed the contractual terms offered to its customers.)
11.4.5 Enforcement
The inclusion of unfair terms in a consumer contract does not incur either fines or civil
pecuniary penalties. See below (at 11.8) for a description of the other remedies that are
available (injunctions, damages, compensation orders, non- punitive orders and other
orders, such as declaring a whole transaction void).
[11.5] Protection Against Unfair Business Practices

11.5.1 The regulation of business practices
11
In addition to targeting broad types of unethical conduct in trade or commerce, such as
misleading conduct and unconscionable conduct, the Australian Consumer Law (ACL)
identifies particular kinds of conduct which may occur in the competitive business of
selling goods and services to consumers, and prohibits them. There is often an overlap
between the broader provisions of the ACL and these more specific prohibitions, but they
are not inconsistent with each other, and the advantage of the specific provisions is that
they give a clear indication to everyone of what particular kinds of unethical behaviour are
not permitted. The following provisions are found in Ch 3, Pt 3-1 of the ACL.
11.5.2 False or misleading statements
Section 29 of the ACL prohibits the making of false or misleading statements in connection
with the supply of goods or services. For example, a person must not falsely represent that
goods are of a ‘particular standard, quality, value, grade, composition, style or model’, that
they have a particular history, that they are new, that they have been given some approval
or sponsorship, that they have particular performance characteristics, that they came from
a particular place of origin, or that they cost a particular price.
11.5.3 Offering gifts and prizes
Offering gifts and prizes or cash rebates to encourage consumers to acquire goods or
services is a common practice. According to s 32, such practices are only prohibited as
unfair if the offer is made without any intention of providing the gift, prize or rebate.
If this prohibition is breached, a pecuniary penalty can be imposed on the supplier. In
addition, if an offer of a gift, prize or rebate is made and what was promised is not actually
provided to the consumer within a reasonable time, a pecuniary penalty can be imposed
on the supplier. A failure to provide a gift, prize or rebate can be excused if the failure is
due to circumstances beyond the supplier’s control, and provided that the supplier took
reasonable precautions to avoid the failure.
11.5.4 Misleading conduct as to the nature of goods or services
Sections 33 and 34 of the ACL prohibit conduct that is likely to mislead the public as
to the nature, characteristics, suitability for purpose or quantity of particular goods or
services. Conduct that misleads the public as to the manufacturing process of particular
goods is also prohibited.
11.5.5 Bait advertising

Section 35 of the ACL prohibits advertising goods or services at specified prices if the
supplier has reasonable grounds for believing that they will not be able to supply those
things for reasonable periods of time and in reasonable quantities, taking into account the
nature of the market and what was said in the advertisement.
11.5.6 Wrongly accepting payment
Sections 36(1), (2) and (3) of the ACL say that a person shall not accept payment for
goods or services if, at the time of accepting payment, they do not intend to supply them at
all, or if they intend to supply something materially different from what is being paid for,
or if they have reasonable grounds to believe that the goods or services cannot be supplied
within the agreed time or within a reasonable time. Section 36(4) says that once payment
is accepted for goods or services, they must be supplied within the agreed time (or within
a reasonable time if no particular time was agreed). Failure to do so is a breach of s 36(4),
unless the failure was due to circumstances beyond the supplier’s control and the supplier
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had taken reasonable precautions to avoid the failure, or unless different goods or services
are offered to the consumer as a replacement and are acceptable to the consumer.
11.5.7 Unsolicited cards
Under s 39 of the ACL, cards that can be used as credit cards must not be sent to persons
who have not requested them in writing. A credit card is any card that enables a consumer
to obtain goods, services or cash on credit terms, or a card which is commonly issued by
businesses to their customers to enable them to obtain goods or services from that business
on credit terms. No exceptions to the prohibition are made for cases where the person to
whom the card is sent must do something to accept or activate the card. Similar restrictions
are placed on debit cards, which are cards used to access money held in an account.
11.5.8 Unsolicited goods
Section 40 of the ACL prohibits a person from demanding payment for goods that have
been sent to a person who did not ask for them. The same prohibition applies to unsolicited
services. It is a defence for the person who is demanding payment to show that they had a
reasonable belief that they were entitled to payment. Section 41 states that a person who
receives unsolicited goods is not liable to pay for them. Nor are they liable for any loss of
or damage to those goods, unless that loss or harm results from a wilful and unlawful act
by that person (for example, deliberate destruction of the goods). Further, s 41 provides
that three months after the delivery of unsolicited goods, the person who sent them is not
entitled to recover them (and this period can be shortened by a recipient who gives the
sender written notice to remove the goods).
11.5.9 Pyramid schemes and referral selling
Participation in pyramid schemes is prohibited and penalised by s 44 of the ACL.
A pyramid scheme is defined by s 45 as a scheme whereby all persons joining the scheme as
a participant must provide a benefit of some sort to another participant, in the expectation
that, as new people join the scheme in the future, they will receive benefits from those new
participants.
Referral selling, which is also prohibited, occurs when a supplier persuades a consumer
to buy goods or services by promising them a reduction of the price, or some benefit, if
the consumer assists them in finding further customers and if the delivery of the rebate or
other benefit depends on events that will occur after the consumer has agreed to buy the
goods or services.
11.5.10 Multiple pricing
If more than one price is displayed for the same goods, the supplier should supply them
at the lowest price. Section 47 of the ACL prohibits the supply of goods, in trade or
commerce, at the higher of the displayed prices. Section 48 requires that, where goods
or services are supplied that are ordinarily acquired for personal, domestic or household
use or consumption, and the prices of the component parts of these goods or services are
displayed separately, the single price for the goods or services must also be prominently
displayed (excluding the cost of delivery). The single price is the minimum combined price
of the goods or services including all charges and taxes payable. 11
11.5.11 Harassment or coercion

Section 50 of the ACL prohibits the use of physical force, undue harassment or coercion in
connection with the supply of, or payment for, goods or services, or the sale of interests in
land. This section overlaps to an extent with the general law doctrine of duress but provides
a broader range of remedies and penalties.
11.5.12 Enforcement
A civil pecuniary penalty can be imposed for engaging in prohibited business practices,
and such conduct is also made a criminal offence, punishable by a fine. See below (at 11.8)
for a general description of the private remedies that are available in such circumstances
(injunctions, damages, compensation orders, non-punitive orders and other orders, such as
declaring a transaction void).
[11.6] Unsolicited Consumer Agreements

11.6.1 Regulating marketing by suppliers to consumers in their home
One approach to selling goods or services is to call in on consumers in their homes, either
by telephone or in person, to tell them about the goods or services in question and to
persuade them to enter into a contract. From the supplier’s point of view, the best time to
make such calls is after working hours or on weekends, when the consumer is most likely to
be at home. There is nothing inherently wrong with this approach to marketing, provided
that certain standards of conduct are observed. In particular, it is important to ensure that
calls are not made at inappropriate hours, that the caller is not overly persistent, that the
consumer is given adequate information to properly evaluate the transaction, and that they
are not rushed into a binding agreement that they later regret. Chapter 3, Pt 3-2, Div 2 of
the ACL regulates unsolicited consumer agreements.
11.6.2 Identifying unsolicited consumer agreements
Section 69 of the Australian Consumer Law (ACL) states that an agreement is an
unsolicited consumer agreement when:
• it involves the supply of goods or services to a consumer by a dealer. Section 71 says

that a ‘dealer’ is a person who enters into negotiations with a consumer with a view
to making an agreement for the supply of goods or services, even if they are not the
actual supplier
• the negotiations were conducted either by telephone or at a place that was not the
supplier’s place of business
• the consumer did not invite the dealer to visit or telephone them for the purposes of
supplying the goods or services in question, and
• the total price to be paid by the consumer under the agreement is either more than
$100 or cannot be ascertained at the time the transaction was entered into.
11.6.3 Restricted times for calls

Under the provisions of s 73, a dealer must not call on consumers in their homes to
negotiate an unsolicited consumer agreement on a Sunday or a public holiday. Nor are
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they allowed to call before 9 am on other days, after 5 pm on a Saturday or after 6 pm on

weekdays.
11.6.4 Obligation on supplier to provide specified information
A dealer who calls on a consumer to negotiate an unsolicited consumer agreement must, as
soon as practically possible and before beginning to negotiate the contract, clearly advise
the consumer that their objective is to seek agreement for the supply of goods or services.
In addition, the dealer must inform the consumer of their right to ask the dealer to leave
the consumer’s premises immediately. The dealer must also provide the consumer with
their name and address (and the name and address of the supplier, if the dealer is not the
supplier).
11.6.5 Compliance with request to leave
Section 75 of the ACL empowers a consumer to end negotiations with a dealer by asking
the dealer to leave their premises. The dealer is required to comply immediately with this
request. The occupier of the premises is also entitled to ask the dealer to leave, even if
they are not the prospective consumer. A dealer who has been asked to leave a consumer’s
premises is not allowed to contact that consumer again for at least 30 days for the purpose
of negotiating an unsolicited consumer agreement.
11.6.6 Written copy of agreement to be supplied
Section 78 requires that a copy of any unsolicited consumer agreement that is entered into
must be given to the consumer. If the agreement is reached by telephone, the copy must be
sent to the consumer within five business days (or within any longer period agreed to by
the consumer). If the agreement is not entered into by telephone, the copy must be given
to the consumer as soon as it is signed by the consumer.
Section 79 says that the written agreement must include all the terms of the agreement.
Specifically, the agreement must include the total amount to be paid, the amount of postal
or delivery charges, and the supplier’s name, Australian Business Number (ABN) and
contact details. The agreement must be clearly set out. It must also inform the consumer
of their right to terminate the agreement and include a notice that can be filled out by the
consumer to terminate the agreement.
11.6.7 Enforcement
In addition to the general remedies that are available for a breach of a provision of Ch 3
of the ACL (injunctions, damages, compensation orders, non-punitive orders and other
orders), s 82 gives a consumer who has entered into an unsolicited consumer agreement
the right to terminate that agreement within specified periods of time if they wish to do
so. The specified periods are:
• if the agreement was not negotiated by telephone, within 10 business days after the
day on which the agreement was made, and
• if the agreement was negotiated by telephone, within 10 business days of the consumer
receiving their copy of the agreement.
Longer periods for termination are allowed in special circumstances. If the dealer
approached the consumer outside of the permitted hours, failed to disclose their purpose
11
or identity or did not cease to negotiate at the consumer’s request, the consumer has three
months in which to terminate the agreement.
The consumer may bring about the termination of the agreement by informing the
supplier of their decision, either orally or in writing. They can do this even if the agreement
has been carried out in whole or in part. The effect of termination is to rescind (cancel)
the agreement. The consumer must return any goods received to the supplier (which can
be done simply by notifying the supplier where they can be collected) and the supplier
must refund any monies paid by the consumer. The consumer is liable for any damage
to the goods for which they are responsible, but not for reasonable wear and tear. If,
after termination, the supplier fails to collect the goods within 30 days, they become the
property of the consumer.
Civil pecuniary penalties may be imposed for a breach of the prohibitions regarding
unsolicited consumer transactions.
11.6.8 No waiver of rights permitted
Section 90 of the ACL states that a consumer cannot waive any rights that are conferred
by the provisions of the ACL that deal with unsolicited consumer agreements.
[11.7] Safety Standards

11.7.1 Regulation of dangerous products
Particular goods or services may be inherently dangerous or unsafe, or might be used
in ways that are potentially harmful to consumers. Rather than simply giving individual
consumers or other persons who may be harmed a private right of action, Ch 3, Pt 3-3 of
the Australian Consumer Law (ACL) establishes a broad system of information sharing
and control over the marketing of such goods and services.
11.7.2 Setting safety standards
The Commonwealth minister responsible for the administration of the Competition and
Consumer Act 2010 (Cth) is empowered by s 104 and 105 of the ACL to publish safety
standards for particular consumer goods or product related services. Safety standards
consist of requirements in relation to how goods are to be designed, made, finished,
packaged and tested, so as to reduce or prevent the risk of harm to any person. As regards
services, safety standards consist of requirements in relation to how services are to be
supplied, the skills and qualifications of the supplier, the materials used in supplying the
services and the testing of the services. Safety standards for particular goods or services are
declared by the minister via publication on the internet. Once a safety standard is declared,
s 106 and 107 of the ACL prohibit a person from offering or supplying consumer goods or
services in trade or commerce that do not comply with the safety standard.
11.7.3 Bans on goods or services likely to cause injury
If it appears to the Commonwealth, state or territory minister who is responsible for the
administration of the ACL that particular consumer goods or services may cause injury
to a person, each minister is empowered by s 109 and 114 of the ACL to impose a ban
on those goods or services. The minister does this by publishing on the internet a written
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notice of the ban. There are two kinds of bans: interim bans and permanent bans. Interim
bans imposed by a Commonwealth, state or territory minister last for 60 days from the
date on which they begin operating. They can be extended for a further 30 or 60 days
in some circumstances. Permanent bans, which only the Commonwealth minister can
impose, remain in force from the day on which they begin operation until they are revoked
at the minister’s discretion. While an interim or permanent ban is in effect, s 118 and 119
prohibit a person from supplying the banned goods or services.
11.7.4 Recall of goods
The Commonwealth, state or territory minister responsible for the administration of
the ACL is empowered by s 122 of the ACL to issue a recall notice if they decide that
particular consumer goods may cause injury to a person, that they do not comply with a
published safety standard, or if they are subject to an interim or permanent ban. A recall
notice may require the regulator (the ACCC and equivalent state and territory bodies) or
the suppliers of the goods to recall the goods from consumers and give a general notice of
the dangers posed by the goods or their use. Identified suppliers may be required to inform
consumers what the suppliers will do in relation to the recalled goods (for example, replace
them, repair them or refund the price paid). Any repairs or replacements must conform to
relevant safety standards. The minister may also direct that the recalled goods be destroyed
by the regulator. Failure to comply with a recall notice is a breach of s 127 of the ACL.
11.7.5 Safety warning notices
The Commonwealth, state or territory ministers who are responsible for the administration
of the ACL are empowered by s 129 of the ACL to publish a written notice on the
internet, warning that specified goods or services are under investigation to determine
whether they pose a risk of injury or to warn of possible risks. When any investigation has
been completed, and the goods have not been recalled or banned, the minister may publish
the results and give notice of any proposed action.
11.7.6 Notice of death, injury or illness
Sections 131 and 132 of the ACL require a supplier of goods or services who becomes
aware of the death, serious injury or illness of a person that may have been caused by the
use of consumer goods or services to make a report to the Commonwealth minister who
is responsible for the administration of the ACL, identifying the goods or services and
other relevant circumstances. This notice does not amount to an admission of liability for
the harm, but enables the minister to take appropriate action, for example, by recalling or
banning the goods or services.
11.7.7 Information standards
Sections 134 and 135 of the ACL empower the Commonwealth minister who is responsible
for the administration of the ACL to create and publish documents on the internet called
‘information standards’ for particular goods or services. These standards specify the content
and manner in which specified information is to be provided to consumers. A failure by a
supplier to comply with an information standard is prohibited by s 136 and 137.
11
11.7.8 Liability of manufacturers for safety defects

Sections 138, 139, 140 and 141 of the ACL make a manufacturer who supplies goods in
trade or commerce liable for injuries, death or property damage caused by a safety defect
in those goods. The manufacturer is made liable to pay compensation to:
• persons who directly suffer injury or death as the result of safety defects in the
manufacturer’s goods
• other persons who may suffer loss or damage indirectly as the result of safety defects
in the manufacturer’s goods
• persons who suffer loss or damage because safety defects in the manufacturer’s goods
cause damage to that person’s other personal, domestic or household goods, or
• persons whose private land or buildings are damaged as the result of safety defects in
the manufacturer’s goods.
If the person seeking compensation cannot identify the manufacturer of the goods,
they are entitled to request that information from the supplier of the goods. If the supplier
fails to provide the necessary information, the supplier becomes liable for the relevant loss
or damage in place of the manufacturer.
11.7.9 Enforcement
A civil pecuniary penalty can be imposed in the event of any of the following: the supply
of banned goods; a failure to comply with safety standards, a recall notice or information
standards; or a failure to give notice of a death, injury or illness. Such conduct is also
made a criminal offence, punishable by a fine. See below for a description of the general
remedies available for contraventions of the provisions of Ch 3 of the ACL (injunctions,
damages, compensation orders, non-punitive orders and other orders, such as declaring a
transaction void).
In addition to other penalties and remedies, a person who supplies goods which have
been recalled is liable for harm caused to another person as a result of the breach.
[11.8] Enforcement Provisions

11.8.1. How are the provisions of the ACL enforced?
The provisions of the ACL are enforced in various ways. A range of remedies is made
available to persons who wish to bring a private action against someone who has breached
the ACL. In addition, prescribed penalties can be imposed to punish persons who
contravene particular provisions.
11.8.1(a) Remedies in actions brought by private persons
In outline, the available remedies are:
• Injunctions: Section 232 empowers a court to issue an order called an ‘injunction’,
which prevents a threatened or continuing contravention of a provision of Ch 2, 3 or
4.
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• Damages: Section 236 empowers a court to award damages to compensate a claimant

for loss or damage suffered as a result of a person’s contravention of a provision of Ch
2 or 3.
• Compensation orders: A court is empowered by s 237 and 238 to order the payment
of compensation to a person who has suffered, or is likely to suffer, loss or damage as
a result of a contravention of a provision of Ch 2, 3 or 4, or because of an unfair term
in a consumer contract.
• Other orders: Section 243 empowers a court to make a variety of other orders to
provide relief to a person who has suffered, or is likely to suffer, loss or damage as a
result of a contravention of a provision of Ch 2, 3 or 4, or because of an unfair term
in a consumer contract. These orders include: declaring a contract or arrangement
void in whole or in part; varying the terms of a contract or arrangement; refusing
to enforce any part of a contract or arrangement; ordering the refund of money;
ordering payment of damages; ordering the person who breached the ACL to pay
for repairs, the supply of spare parts or the supply of specific services; and varying or
reversing the transfer of land.
• Non-punitive orders: Section 246 empowers the court to impose a variety of ‘non-
punitive’ orders. These orders are not intended to punish the person against whom
they are made, but aim to rectify the situation that has resulted from the breach of the
ACL. The non-punitive orders include: directing the performance of a service for the
benefit of the community; the establishment of a compliance, education or training
program to ensure that no further breaches occur; the disclosure to particular persons
of information specified by the court; and the publication of an advertisement in
specified terms.
11.8.1(b) Penalties for contraventions of the ACL

The ACL imposes penalties for contravening many of its provisions. A person who
breaches the ACL may be subject to these penalties in addition to court orders sought
by an individual in a private action. Some contraventions attract civil pecuniary penalties.

Other contraventions are criminal offences, punishable by fines. Some contraventions
that attract pecuniary penalties are also made offences, but if a person is convicted of the
offence, the court cannot also order them to pay the pecuniary penalty.
• Civil pecuniary penalties: These are penalties that are made payable even if the
contravention in question is not made a criminal offence. The penalties are payable
to the Commonwealth, state or territory government, as appropriate. The amount
of the pecuniary penalty varies. The details are laid down in Ch 5, Pt 5-2 of the
ACL. The courts will determine the amount to be paid in a particular case by taking
into account the nature and extent of the act or omission which breached the ACL,
any loss or damage suffered as a result, the circumstances in which it occurred, and
any previous conduct of the same type. Maximum penalties are set out in s 224(3).
Generally, corporations face larger maximum penalties than individuals.
11
• Fines: Chapter 4 of the ACL makes certain contraventions of the ACL offences,
punishable by payment of fines. Separate sections deal with different types of conduct
and prescribe the maximum fines payable. The maximum fines are substantial,
typically $1.1 million for corporations and $220,000 for individuals.
Director of Consumer Affairs Victoria v Alpha Flight Services Pty Ltd

[2014] FCA 1434
Australian Consumer Law; safety standards; permanent ban;
penalties
Facts: From August to September 2013, Alpha Flight Services (Alpha) sold ‘Nano
Magnetics Nanodots’ to customers aboard Qantas international flights. The
Nanodots were small, high-powered magnets which could be used as a game or
puzzle. A permanent ban had been issued on such products in 2012, meaning that
they were sold in contravention of s 118 of the Australian Consumer Law. Neither
Alpha Flight Services nor Qantas were aware of the ban. It was brought to Qantas’
attention when a passenger on one of their flights, after seeing the product in
their in-flight catalogue, phoned Qantas to inform them that the products were
dangerous and should not be offered for sale.
Issue: Both Alpha Flight Services and Qantas accepted that they had contravened
s 118 of the ACL by supplying, offering to supply, possessing and controlling the
prohibited goods. However, the court had to decide what was an appropriate penalty
for the contravention.
Decision: Section 224 of the ACL provides a broad discretion for the court to
determine what pecuniary penalty, if any, should be imposed. It lists a range of
factors relevant to determine what is appropriate, including the nature and extent
of the contravention, any loss or damage suffered as a result, the circumstances,
and any history of similar conduct.
Reason: The court said (at para 23): ‘The fundamental cause of both Alpha and
Qantas contravening the provisions lay in the absence at the time in each company
of a system and process which would have prevented the contravention and which
would have ensured that each complied with the obligations imposed upon them by
law.’ Because of Alpha’s ‘exemplary and prompt behaviour’ once it became aware
of the ban, and its inclusion of a safety warning in the original catalogue, the court
held that Alpha’s penalty should be only $50,000. Although Qantas had played a
more limited role in the contraventions, it had attempted to ‘wash its hands’ of
its obligations once made aware of the ban. Given this behaviour, and Qantas’
‘very substantial resources’, a penalty of $200,000 was imposed. In addition to
the pecuniary penalties, the court also ordered a range of non-punitive measures
including Adverse Publicity Orders, refunds to all customers who purchased the
goods, and the destruction and disposal of the dangerous goods with costs to be
covered by Alpha and Qantas.
11.8

on Business Law
[11.9] Checklist: Applying the Australian Consumer Law

The provisions of the Australian Consumer Law (ACL) are complex and detailed. It can
be difficult to identify and distinguish between the particular rules that might be relied on
in a given case. One possible approach is summarised in the checklist below.
Step 1
Has unethical conduct taken place that is regulated by the ACL?
• Recall and consider the various types of unethical conduct that are
regulated by the ACL:
• misleading conduct
• unconscionable conduct
• unfair business practices
• unsolicited marketing
• supply of dangerous goods or services
• Do the circumstances of your case suggest that there has been conduct
of any of the kinds listed above?
• Do the known facts satisfy the essential requirements that must be
established for the type of conduct in question?
• Is the conduct in your case likely to constitute a breach of any of the
provisions that regulate the kind of behaviour in question?
• What relief is generally provided by the ACL for the kind of breach that you
can establish? What particular relief is most appropriate in your case?
Step 2
Has a consumer contract, as defined by the ACL, been entered into?
Recall and consider the various protections provided for consumers by the
ACL:
• Have any unfair terms, as defined by the ACL, been included in the
contract? What relief does the ACL provide if such terms have been
included in the contract?
• What relief is generally provided by the ACL for the kind of breach that you
can establish? What particular relief is most appropriate in your case?
[11.10] Questions for Revision

The following questions will help you to discover whether or not you have learned some of
the things you need to know about the ACL.
1. Does the ACL apply uniformly throughout Australia?
2. What conduct amounts to misleading or deceptive conduct under s 18 of the ACL?
Is misleading conduct prohibited if it is neither intentional nor careless?
11
3. What conduct amounts to unconscionable conduct under s 20 and 21 of the ACL?

Are the provisions of either of these sections wider in their scope than the general law
doctrine of unconscionable dealing?
4. How are ‘unfair’ contractual terms defined? What is the effect of the ACL on such
terms if they are included in a standard form consumer contract? What kinds of
contract are covered by the provisions regarding unfair terms?
5. What particular business practices are prohibited by the ACL because they are
‘unfair’? How is the prohibition of such practices enforced?
6. What private remedies are available to consumers in the event of a breach of the
ACL?
7. To what extent are breaches of the ACL punishable? What is the difference between
civil pecuniary penalties and fines?
Visit www.alcware.com for more information on how to access the FPBL

e modules.
11.10

on Business Law

Statutory Protection Against Unethical Conduct: Chapter 11

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Statutory Protection Against Unethical Conduct: Chapter 11

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CHAPTER

Statutory Protection Against Unethical

11.1.2 Past regulation of unethical conduct

[11.2] Protection Against Misleading Conduct

McWilliam’s Wines Pty Ltd v McDonald’s System of Australia Pty Ltd

(1980) 33 ALR 394

Campomar Sociedad Ltd v Nike International Ltd (2000) 202 CLR 45

Australian Competition and Consumer Commission v TPG Internet

Australian Competition and Consumer Commission v Coles

11.2.3 No intention required for misleading conduct to occur

Yorke v Lucas (1985) 158 CLR 661

Twentieth Century Fox Film Corp v The South Australian Brewing Co

Misleading conduct; relevance of intention of defendant

11.2.6 Conduct must take place ‘in trade or commerce’

O’Brien v Smolonogov [1983] FCA 305

Taylor v Crossman (No 2) (2012) 199 FCR 363

Misleading conduct; meaning of ‘in trade or commerce’

Reason: Cowdroy and Flick JJ said (at [47], [49], [52]):

11.2.7 Application to natural persons, artificial persons and information

[11.3] Protection Against Unconscionable Conduct

Australian Competition & Consumer Commission v CG Berbatis

Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392

behaviour. HK also negotiated with Crown to obtain favourable terms as a ‘high

11.3.3 Additional circumstances giving rise to unconscionable conduct

Issue: Was Subaru’s decision to terminate the appointment a breach of s 51AC of

[11.4] Protection Against Unfair Terms in Contracts

NRM Corporation Pty Ltd v Australian Competition and Consumer

[11.5] Protection Against Unfair Business Practices

11.5.5 Bait advertising

11.5.11 Harassment or coercion

[11.6] Unsolicited Consumer Agreements

• it involves the supply of goods or services to a consumer by a dealer. Section 71 says

11.6.3 Restricted times for calls

they allowed to call before 9 am on other days, after 5 pm on a Saturday or after 6 pm on

[11.7] Safety Standards

11.7.8 Liability of manufacturers for safety defects

[11.8] Enforcement Provisions

• Damages: Section 236 empowers a court to award damages to compensate a claimant

11.8.1(b) Penalties for contraventions of the ACL

by an individual in a private action. Some contraventions attract civil pecuniary penalties.

Director of Consumer Affairs Victoria v Alpha Flight Services Pty Ltd

[11.9] Checklist: Applying the Australian Consumer Law

[11.10] Questions for Revision

3. What conduct amounts to unconscionable conduct under s 20 and 21 of the ACL?

Visit www.alcware.com for more information on how to access the FPBL

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