Canterbury Institute of Management (CIM)

LAWS101 Fundamentals of Business Law

Tutorial Plan – Week 9

Time Activity
5 minutes Ice breaker activity – Tutor to get students to share their previous experience about
consumer law.
20 minutes Lecture recap –
The key concepts covered in the week 8 lecture were:
• The Australian Consumer Law – Schedule 2 of the Competition and Consumer Act
2010 (Cth)
• Consumer guarantees
• Product safety
• Business practices
o Misleading or deceptive conduct
o Pyramid schemes
o Pricing
o Unsolicited transactions
o Unconscionable conduct
o Enforcement and compliance
30 minutes This week we will be completing review questions from Chapter 7. We will focus on
these Review Questions:
Q5 ('A client contacts you...')
Q6 ('Cara is trying to decide...')
Q11 ('Marc is considering...')
Q14 ('True of false...')
Q16 ('Does a 'No Refund' sign...')
Q17 ('George was particularly depressed...')
Q24 ('How would you clearly...')
Q26 ('The prohibition of misleading...')
30 minutes After the students have been given time for group discussions on the Review Questions,
randomly select groups to present their answers to the class. The tutor will lead
discussions around the questions.
15 minutes Students to attempt the odd numbered true and false and multiple-choice questions
from Chapter 7 of the textbook.
15 minutes After about 15 minutes, the tutor will lead the discussions on the odd numbered true
and false and multiple-choice questions.
5 minutes The tutor will provide an overview of the next weeks class.
Contemporary Business Law

Chapter 7 Review Questions

1. The Competition and Consumer Act 2010 (Cth) was set up mainly to:
(a) Limit trade between States.
(b) Limit the number of imports into Australia.
(c) Protect businesses from Government.
(d) Protect consumers from unfair trading practices.
2. Stanley is a business client who seeks your advice on the following matter. Stanley has recently
bought a truck from a car trader, Paul for which he paid $56,000. However, Stanley now believes
the deal was unfair because he has discovered that another car trader Beth was selling the same
truck for $50,000. Can the Australian Consumer Law be applied in this situation? Why or why
not?
3. Can omitting to provide information ever count as misleading or deceptive conduct? How would
you explain this concept to a client?
4. A fabric shop declares on a sign that its material, displayed in unopened plastic packaging, is
‘All New!’ In reality, while it has just recently arrived at the shop, it has been used before and
just repackaged. What provision/s of the ACL could apply in this situation to help an unsatisfied
consumer?
5. A client contacts you having received several complaints about the manner in which they are
advertising their prices. The client operates a bike shop, and they have been advertising bikes
for $300. In reality the full price a consumer has to pay is $330 because of GST. Your client has
presumed a customer will simply imply this and add it to the price.
Are the complaints of the consumers justified? How would you explain this to your client and
what advice would you give them to ensure they operate in compliance with the ACL?
6. Cara is trying to decide between two strengths of liquid nails to build a cupboard. Cara explains
her issue to Alan, a sales assistant at the hardware store, and explains that the cupboard is only
to hold craft materials and is to be made from particle board. Alan insists that Cara needs the
version of liquid nails which is twice as expensive as the alternative, stating repeatedly that the
weaker version will not last and will be unsuitable for the job. Cara subsequently finds out both
from friends and a carpenter that the less expensive version would have worked just as well.
Has Alan breached the ACL in any way?
7. Anthea sold Bob some paper and pens for $65. Anthea did not give Bob a receipt. Has Anthea
done anything unlawful?

528
 Chapter 7:  Consumer Protection Law

8. Marilyn has decided to redecorate her home and is thrilled to receive a catalogue from ‘Home
and Shed’, a furniture and lifestyle retailer, advertising a huge sale commencing at 9am the next
morning. The catalogue states that “every price is discounted, including Australian designer rugs
for only $200 each, a saving of $500!” Marilyn rushes to her nearest Home and Shed shop the
following morning arriving at 9.04 only to be told that there has been an enormous demand
for the Australian designer rugs and they are sold out. The sales person goes on to say that
instead, Marilyn may like to see a wool rug from the ‘Danni Minogue Collection’, stressing that
Danni has at least three of the same rugs in her own home! Marilyn is strangely impressed by
Danni Minogue.
Marilyn likes the red wool rug she is shown and is further convinced when the sales person
informs her that the rug is 100% Australian wool, designed and made in Australia, and is priced
at only $300, reduced from the normal retail price of $600! As there are no rugs in stock (only
display rugs) Marilyn orders and pays for six of the rugs.
When the rugs are delivered, Marilyn is very disappointed to discover that the colour is completely
different to the one she saw in the shop and that the rugs are actually a wool and synthetic mix
made in China. There is also a second price tag on the rugs showing that their ‘everyday retail
price’ is $250. Worst of all, the rugs do not appear to be part of the ‘Danni Minogue Collection’
as Danni Minogue has placed a statement on her website stating that she refuses to deal with
Home and Shed and does not allow her products to be sold there.
Marilyn is devastated and thinks that Home and Shed may have failed to meet their obligations
under the Australian Consumer Law. Is Marilyn correct? If yes, what remedies are available to her?
Give reasons for your answer.
9. AngolaPlex manufactured dishwashing detergent. It said on the bottle that this detergent was
safe and beneficial for sensitive skin, but it actually included a chemical which was highly acidic
and reacted aggressively with sensitive skin. Has AngolaPlex done anything unlawful?
10. The Minister has decided to recall AngolaPlex’s dishwashing detergent due to the harm it has
done and is doing to those with sensitive skin. Under what section of the Australian Consumer
Law does the Minister have this right?
11. Marc is considering entering into a mobile phone contract with GreedyGuts Phones. He is upset
to find out that within the contract, there is a term stating that if Marc defaults on payment of
his monthly statement, there is a default fee that increases by 10% every day of default. Marc
considers this extreme but the salesperson informs him that this contract is standard form and
its terms are non-negotiable. What argument could Marc make? Do you think he would be
successful?

529
Contemporary Business Law

12. Which of the following statements are false?

(a) The ACL only prohibits unconscionable conduct between businesses and consumers..

(b) Pecuniary penalties are not available for breach of s18 of the ACL.

(c) If
unsolicited goods or services are provided to someone who did not request them, they are
not obliged to pay for them.
(d) S138 of the ACL imposes strict liability on manufacturers or importers of defective goods
that cause personal injury or property damage.
13. Trueor False: Under the ACL a person has the right to insist that a retailer resolve a problem
with a product, rather than referring the customer to the manufacturer.
14. Trueor false: Goods purchased on sale that prove to be faulty are not protected by the same
guarantees as full-price items.
15. Sebastianis going camping in the snow and asks the sales assistant which sleeping bag would
be the best for his requirements. He is advised that the SleepDry bag is the best but in fact he
gets wet and cold while camping. Who would be responsible for his miserable camping trip:
Sebastian, the manufacturer or the sales assistant? Do you need further facts to answer this
question fully? Discuss.
16. Does a ‘No Refund’ sign contravene the ACL? How would you explain this to a client?
17. George was particularly depressed about his accelerating baldness and was constantly looking for
a remedy. About 4 months ago he noticed the following advertisement in the newspaper:
‘Remember the luxuriant, lustrous hair you used to have? Don’t let hair loss destroy your
self-esteem, self-confidence and what is left of your life! For a mere $550, a glorious head of
hair can be yours – renewed youth, renewed vitality and renewed appeal can be yours within
2 months by using our Australian-made products! Hair growth will commence within one week
of using these fabulous products! Visit Hair Help Pty Ltd today!’
Joyfully, George rushed to the Hair Help Pty Ltd Studio, where he was approached by the
sales assistant, Newman. George asked further about the products and was told by Newman
that complete hair regrowth was guaranteed within two months if George purchased the
starting pack of products, priced at $550. George was told that the starting pack contained six
containers of product which was enough to last him two months. George was still a little unsure,
but Newman went on to say that there was a complete money back guarantee if George was
not completely satisfied. Still reluctant, George is also informed that for every friend he refers
who also purchases the products, he will receive a $100 rebate off the purchase price.

530
 Chapter 7:  Consumer Protection Law

George is finally convinced, and purchases the box of products for $550.When he returns home he
undoes the packaging to find that he has only received three bottles of product. He telephones Newman,
who says that he will post the remaining bottles to him. George commences the treatment, but sadly,
he runs out of product in one month, has not received the remaining bottles and has sprouted no new
hair whatsoever. He has also noticed that, while the main label on the bottles says ‘Proudly Australian
Made’, on the base of each bottle is a label saying ‘Made in Taiwan’. George is fed up and returns
to Newman, demanding his money back guarantee. Newman laughs in his face and tells him he
obviously needs to buy more products to do the job, which they will give to him at a discounted price.
George is furious. Advise him as to any action he may take, against whom he may take it, why he
may take it and the consequences of any such action.
18. Aarifah,a diligent and committed accounting student arrived home one day to find on her
doorstep a package. It contains a selection of perfumes and aromatherapy oils from a business
called Swell Smells Pty Ltd, an organisation which sells its product through home demonstrations.
The box also contains an invoice for $200 and a brochure containing instructions as to how Aarifah
can earn a fortune with no effort by procuring and recruiting her friends and relatives to become
involved in the business of selling Swell Smells products and obtaining a large portion of their profit.
Aarifah has had no previous contact with Swell Smells whatsoever, nor does she want to have any
now. Advise Aarifah.
19. Rachel goes to the toy shop, Playstuff, to purchase a toy for her niece’s birthday. Rachel explains
to the shop assistant that her niece is only five, but that she enjoys artistic activities. The shop
assistant recommends a kit to make and paint plaster animals from moulds and reassures Rachel
that such a toy is suitable for a five year old. Unhappily when the child attempts to paint the
animal figures, she receives chemical burns from the paint. Rachel is horrified and seeks your
advice as to what action she may take, against whom and the likely consequences.
20. Joe
purchases a new football scarf which carried the AFL endorsed label. It is a replica and he is
now demanding a refund. Who is his claim against-the seller or the supplier?
21. Which section of the Australian Consumer Law has been breached in the following examples?
(a) Goods are supplied which do not match the description of the product.
(b) A service is not provided with care and skill.
(c) A seller recommends a product which will be able to do the job. In fact it is unable to do so.
(d) A seller claims the product was made in Australia but it was in fact made in Ireland.
(e) A business proposes to pay you a commission for every person you recruit and then they will get
a commission for those they recruit.

531
Contemporary Business Law

22. When can a product claim to be Product of Australia?

23. All Australianconsumers will have the same rights under the Australian Consumer Law, whether
they shop at home, on the phone or online from an Australian website. Which of the following
is not correct?
(a) You do not have extra rights for unsolicited sales made at home, over the phone or online.
(b) You are entitled to see the total price, inclusive of any additional fees, charges or taxes.
(c) You are entitled to receive a standard form consumer contract that has no unfair terms.
(d) At home or on the phone, you are entitled to know who you’re dealing with and what your
rights are.
(e) A product can be advertised even if it cannot be supplied.
24. How would you clearly and conscisely explain the following matters to a client?
(a) What does a supplier guarantee for a consumer who is buying goods?
(b) What does a supplier guarantee for a consumer who has contracted a service?
(c) Which goods are covered by consumer guarantees?
(d) Which goods are not covered by consumer guarantees?
(e) Which services are covered by consumer guarantees?
(f) Which services are not covered by consumer guarantees?
25. As we have discussed, the ACL imposes various obligations on suppliers to meet consumer
guarantees. If those guarantees are not met, the consumer may have certain rights to remedy,
but only if those guarantees are not met. This research activity is therefore to prepare a sign for
a retail business which informs the consumers of those rights, manages their expectations and is
compliant with the provisions of the ACL.
The aim of the exercise is to provide your client, the supplier, a clear understanding of their
obligations to consumers relating to refunds and remedies, including the line beyond which they
do not have to go. Concurrently, it should provide consumers with a clear picture of their rights
under the ACL.
You should therefore prepare a sign which addresses the circumstances under which refund,
exchange or repair is provided for under the ACL including the concepts of major and minor
failure of consumer guarantees.
26. The prohibition of misleading and deceptive conduct or conduct likely to mislead or deceive
pursuant to s18 ACL and the prohibition of unconscionable conduct by a business against a
consumer pursuant to s21 of the ACL are central protections of the ACL. Explain and compare
these two provisions and the conduct they address.

532
 Chapter 7:  Consumer Protection Law

Media Release – ACCC

Get Qualified Australia ordered to pay $8 million penalty
August 30, 2017
The Federal Court today ordered Get Qualified Australia Pty Ltd (GQA) to pay an $8 million
penalty for multiple breaches of the Australian Consumer Law (ACL) and its sole director,
Mr Adam Wadi, to pay a penalty of $500,000.
This is one of the highest penalties ever awarded for breaches of the ACL.
Justice Beach stated that “the education sector has been infected by the parasitic practices of
operators preying upon the vulnerable and the unwary” and that GQA’s conduct was “serious,
extensive and deliberate”.
The Court also made declarations that GQA:
■ made false or misleading representations and engaged in unconscionable conduct in its supply
of services to consumers seeking recognition of their prior learning to gain qualifications.
■ imposed an unfair contract term and entered into unsolicited consumer agreements
by making uninvited sales phone calls to people, failing to disclose the full terms of the
agreement and requiring payment within ten business days.
“Get Qualified Australia and Mr Wadi took advantage of vulnerable people trying to advance
their career. Some examples of the illegal conduct included enrolling people into courses
through misleading marketing and unfair sales tactics, not providing the service customers paid
for, and refusing customers refunds despite GQA’s 100% money-back guarantee promise,”
ACCC Commissioner Sarah Court said.
Mr Wadi was found to be knowingly concerned in this conduct. In addition to ordering Mr Wadi
to pay a penalty of $500,000, the Court made an order disqualifying Mr Wadi from managing
a corporation for seven years.
Justice Beach stated that Mr Wadi’s “conduct and self-justifying arrogance, as disclosed in some
of the evidence before me, reflects an individual not suited to managing a corporation”.
The ACCC said the size of the penalties was in keeping with the nature of the conduct.
“It is important that penalties for breaching the Australian Consumer Law reflect the seriousness
of the conduct.We believe the substantial penalties imposed in this case do reflect the egregious
conduct of both GQA and Mr Wadi,” said Ms Court.
Get Qualified was placed into liquidation on 17 March 2017 and did not defend the case at
trial on 28 March 2017.

533
Contemporary Business Law

If consumers have specific enquiries about the liquidation they can contact the administrators,
Hall Chadwick, at http://hallchadwick.com.au/contact-hall-chadwick/index.html.
Background
On 23 June 2017, Justice Beach handed down judgment in the ACCC’s proceedings against
Get Qualified Australia (GQA) and its sole director, Mr Adam Wadi.
GQA’s false or misleading representations and misleading or deceptive conduct occurred
through a range of practices, including:
■ assuring consumers they were eligible for qualifications when, in fact, Get Qualified could
not directly offer qualifications, and its employees were not qualified to assess eligibility.
■ telling consumers that they would be entitled to a “100% money back guarantee” if they
were unsuccessful in obtaining the qualification despite Get Qualified almost always
declining students’ requests for refunds.
■ falsely claiming there were limited places in courses.
■ failing to provide the service promised, refusing refund requests, and taking debt recovery action
against consumers who did not receive a qualification and refused to make further payments.
GQA also engaged in a system of conduct that was unconscionable, comprising a number of
elements, including:
■ false or misleading representations.
■ obtaining contact details of potential customers through a “Free Skills Review” function
on its website which produced an automated response irrespective of the information
submitted by a consumer.
■ using unfair sales tactics to pressure consumers into enrolling.
■ requiring its sales representatives to take payment from consumers before providing
detailed documentary information about the requirements for a qualification and not
provide sufficient opportunity for consumers to consider all relevant information.
Release number: MR 145/17

Questions
(a) Why have two monetary penalties been imposed by the Federal Court?
(b) What did the court say about the amount of the penalty imposed?
(c) Why did the court make an order disqualifying MrWadi from managing a corporartion for 7 years?
(d) The Federal Court found GQA and its sole director guilty of several breaches of the ACCC.
Identify and explain four, including in your answer the specific provision breached.

534