Scope of the Trade Practices Act

1
Scope of the Trade Practices Act

• The Trade Practices Act (TPA) is principally
  concerned with
• regulating RESTRICTIVE TRADE PRACTICES to produce
  greater competition and efficiency in the market
  for the benefit of consumers and
• protecting the interests of consumers of goods,
  services and land against UNFAIR PRACTICES.

2
Constitutional basis for theTrade Practices Act

• The main Constitutional head of the TPA is
• s 51(xx) of the Constitution - the corporations
  power although the conduct of persons other than
  corporations may be caught under various other
  heads of the Constitution (see s 6 of the TPA).
• The scope of the Act is largely limited to
  situations involving inter-state trade and
  companies.
• The States/Territories have passed uniform Fair
  Trading Legislation mirroring the TPA to catch
  intra-state activities.

3
Application

• For the TPA to apply
• there has to be a corporation, or an individual
  caught under s 6
• there has to be a supply of goods or services in
  the course of business and
• a consumer.

4
Application

• A consumer is a person who (s 4B TPA)
• acquires goods or services (of any value) of a
  kind ordinarily acquired for personal, domestic
  or household use or
• acquires a commercial road vehicle (of any
  value) and
• the goods or services were not acquired for
  resupply, or use or transformation in trade or
  commerce or

5
Application

• acquires goods or services of less than 40,000
  or acquires a commercial road vehicle (of any
  value) and
• the goods or services were not acquired for
  resupply, or use or transformation in trade or
  commerce.

6
Manufacturers liability - Pt V Div 2A

• Part V Div 2A allows consumers to sue the
  manufacturer, and is some cases the importer, of
  goods if
• the goods are defective and
• the goods have been supplied through sale,
  exchange, lease, hire or hire-purchase.
• Conditions equivalent to the sale of goods
  legislation are imposed on manufacturers, i.e.
  fitness for purpose(s 74B) correspondence with
  description (s 74C) merchantable quality (s
  74D) and sale by sample(s 74E).
• A manufacturer must also ensure availability of
  repair facilities and spare parts (s 74F).

7
Grant v Australian Knitting Mills (1935) 54 CLR 49

• Facts
• Grant suffered dermatitis as a result of wearing
  a pair of woollen underpants that he had bought
  at a retail store in Adelaide. The underpants had
  contained bisulfite of soda, which it was found
  had been left in them owing to lack of care by
  the manufacturer. The manufacturer produced
  evidence that they had manufactured nearly five
  million pairs of underpants without a complaint.
• Issue
• Does a manufacturer owe a duty of care to the
  ultimate consumer of the manufacturers products?

8
Grant v Australian Knitting Mills (1935) 54 CLR 49

• Decision
• A manufacturer does owe a duty of care. The
  manufacturer was negligent in leaving the excess
  bisulfite of soda in the underpants during the
  manufacturing process.
• Comment
• Grant was also entitled to damages from the
  retailer under the Sale of Goods Act 1895 (SA).
  Implied into the contract of sale with the
  retailer were conditions relating to fitness for
  purpose and merchantable quality.

9
Manufacturers liability - Pt V Div 2A

• A manufacturer is liable to compensate a
  consumer, or a person who acquires the goods from
  a consumer, for any loss or damage they suffer as
  a result of a manufacturers failure to comply
  with an express warranty made about the goods (s
  74G).
• The consumer now has a choice of action where the
  contract is for the supply of goods
• sue the immediate supplier (the retailer) or
• sue the manufacturer directly.
• A consumer can bring an action any time within 3
  years after the day on which the case accrued
  with an absolute limit of 10 years from the date
  of first supply of the goods.

10
Product liability - Part VA

• Part VA imposes strict liability on manufacturers
  and importers of defective goods that cause
  personal injury or property damage.
• There is no need to prove negligence on the part
  of the manufacturer.
• In determining the safety of the goods, the
  courts can look at (s 75AC(2))
• the manner in, and purposes, for which the goods
  have been marketed
• packaging
• the use of any mark
• instructions or warnings
• what could reasonably be expected would be done
  to the goods
• the time of supply.

11
Product liability - Part VA

• While liability is strict, the following defences
  are available to a manufacturer or importer of
  goods (s 75AK)
• the defect occurred elsewhere in the distribution
  chain
• the goods had the defect only because they
  complied with a mandatory standard
• scientific or technical knowledge at the time of
  supply was not capable of detecting that type of
  defect
• the goods formed part of other goods and the
  defect was only attributable to the design of the
  finished product.

12
ACCC

• Australian Competition and Consumer Commission
• Administers TPA
• Ensures requirements in the Act are complied with
  by traders

13
Powers of ACCC

• Administering the TPA
• Investigating and prosecuting breaches of the Act
• Hearing disputes under the Act
• Conducting research
• Providing consumers and traders with information
  on their respective rights
• Obtaining evidence, including documentary
  evidence
• Establishing and administering standards relevant
  to product safety

14
Consumer protection legislation at state and
territory level

• Why do we need state and territory consumer laws?
• the TPA applies to corporations and not
  individual traders
• traders who are not legally bound by the TPA will
  be subject to the state and territory Fair
  Trading Acts
• Fair Trading Acts
• Enacted by each state and territory
• To protect consumers not protected by the TPA
• Prohibit
• misleading and deceptive conduct
• unconscionable conduct
• false representations regarding goods and
  services
• unfair trade practices.

15
Small Claims Tribunal - VCAT

• Has authority to hear consumer claims
• Operates through hearings
• Limits imposed on its operation
• Generally no right of appeal and no costs orders
  (except SA)
• Claims made by filing prescribed form

16
Financial services regulation

• The Financial Services Reform Act 2001 (Cth)
  regulates all sections of the financial services
  industry.
• New Chapter 7 inserted into the Corporations Act
  2001 (Cth) requiring
• Licensing and product disclosure.
• Person carrying on business dealing in financial
  products and providing related advice must obtain
  an Australian Financial Services License (AFSL)
  issued by the Australian Investments and
  Securities Commission (ASIC).
• Financial services provider must prepare a
  statement of advice in respect to the product
  and/or advice provided to clients.