Terms implied Terms implied

Business/Commercial Law
Implied term
Consumer Protection
Prepared by tutor. Daniel Pan
Implied terms
Implied by
Implied by
• Terms implied by common law
– Implied by past dealing
– Implied by trade custom
• Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur
Insurance (Aust) Ltd
– Implied by court
• BP Refinery (Westernport) Pty Ltd v Hastings Shire Council
reasonable and equitable;
necessary to give business efficacy to the contract;
‘it goes without saying’;
capable of clear expression
it must not contradict any express term in the contract.
Consumer Contract
• Terms implied by Statutory Law ACL
– for “consumer contract only” !!
–Sections 51-64 in ACL
statutory guarantees
• If a consumer contract in statutory
meaning exist
1. A contract for supply of goods / services by A person
– Natural person
– Both individual / corporation
2. To Consumer
• Provide for statutory guarantees (implied
terms) for: ACL S.51 to S.64
What is a consumer contract ?
A supply of
• By a legal
• s.3
Trade or
Terms implied
• Terms implied:
– statutory guarantee fog contract for sales of
good :
Ownership by seller s.51
Quiet procession by buyer s.52
Acceptable quality s.54
Fit for its purpose s.55
Corresponding quality and identity s.56
Corresponding to samples s.57
Terms implied
• Terms implied:
– statutory guarantee fog contract for sales of
service :
• Due care and skill s.60
• Reasonably fit for its purpose s.61 (1)
• Nature / quality/ state /condition that they might
reasonably be expected to achieve that result s 61(2)
s.3 consumer
S 3(1) if any one of the following criteria are met:
1. The amount payable for the goods does not exceed the
prescribed amount (currently $40,000) or
2. The goods are of a kind ordinarily acquired for personal,
domestic or household use or consumption (here no limit
on the amount); or
3. The goods consisted of a vehicle or trailer acquired for use
principally in the transport of goods on public roads (also
here no limit on the amount).
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s.3 consumer ?
• S.3 (2) : main exception to S3(1)
– However, s3 (1) does not apply when
– Goods are acquired for resale / re-supply
– Goods are acquired for reproduce / repair
•Effect of exclusion clauses:
• Any term implied by the ACL cannot be excluded,
restricted or modified s 64 of the ACL
– Any term that attempts to do so, is void
• However, where the goods acquired are not of a
type normally acquired for personal, domestic or
household use, a seller is allowed under s 64A(1)
and (2)
– To limit its obligations to those of
• Replacing
• repairing or
• repaying for the replacement or repair of the
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What if its not ?
• NOT a consumer contract ?
• Goods Act apply
– How does it apply
– What is the similarity ?
– What is the different ?
Goods Act 1958 Vic
• Terms implied:
– Implied term for contract for sales of good :
Merchantable quality s.19(b)
Fit for its purpose s.19(a)
Corresponding description s.18
Corresponding to samples s.20
• Differences with ACL:
– No provision for contract of services
– Excludability (clear and précised) s.61
ACL: Consumer Protection
s.51 - s.64
Misleading: s.18
The Australian Consumer Law contains a number of
provisions that relate to misrepresentation.
• Section 18: misleading and deceptive conduct;
• A legal person
• In trade or commerce
• Should not engage in misleading / deceptive conduct
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Misleading: s.18
• Misleading conduct
– Conduct is misleading when it lead the persons at
whom it is directed into error.
• McWilliam’s Wines Pty Ltd v McDonald's System of Australia
Pty Ltd (1980)
• Silence can be a form of misleading
• Intention or negligence is irrelevant
– Yorke v Treasureway Stores Pty Ltd (1983)
• Action can be bought by all parties as long as the
conduct is in breach of s.18
Australian Consumer Law
If Part 3-2, ACL applies to a particular consumer purchase then statutory
obligations are imposed on the manufacturer.
The statutory obligations imposed on the
manufacturer relate to:
1) Fitness for Purpose: the consumer may take action against the manufacturer under
s 271(1), ACL where a consumer guarantee under Pt 3-2 is not complied with eg not
fit for purpose (s 54(2), ACL).
2) Description: action is available against the manufacturer under s 271(3), ACL where
a consumer guarantee under Pt 3-2 is not complied with eg if the goods do not
correspond with the description (s 56, ACL).
3) Merchantable Quality: 74D - the goods must be of merchantable quality
4) Sale by Sample: 74E - if the purchase is on the basis of samples then the goods
supplied must correspond with the sample.
Note: the manufacturer must compensate the consumer for loss or damage.
Note: manufacturers are required to provide repairs or spare parts unless the
consumer is made aware that these services will not be provided: s 58, ACL
(former s 74F, TPA).
Australian Consumer Law Part 3-5
The ACL Pt 3-5 (former TPA Pt VA) provides that a
• manufacturer is liable for defective goods in circumstances
where a person is injured or suffers property damage.
• The injured party or the person suffering the loss does not have
to prove negligence
• merely that they suffered loss and that it was caused by the
defective product.
• Strict Liability
• The key elements of Pt 3-5 are:
– s 7 : definition of manufacturer.
– s 9 : defines “safety defect in relation to goods” as meaning “if
their safety is not such as persons are entitled to expect” and lists
relevant matters to take into account.
s 138 ACL
– allows a claim by ANY individual suffering loss as a result of injury.
s 139 ACL :
– loss as a third party
S 140 ACL :
– allows a claim for damage to other goods, however these other goods
must be of a kind ‘ordinarily acquired for personal domestic or
household use or consumption’.
s 140 ACL bv
– allows a claim for damage to land, buildings or fixtures (ordinarily
acquired for private use).
The manufacturer has recourse to defences set out in s 142, ACL
(former s 75AK, TPA). These include:
– the goods were not defective when the goods left the control of the
– the goods complied with mandatory safety standards.
A statutory defence of “contributory negligence” is also provided in s
137A, Competition and Consumer Act 2010 (Cth) (former s 75AN,
Note: Exclusion clauses are void: s 150, ACL (former s 75AP, TPA)
• Unconscionable conduct refers to a pre-contractual situation
in which one of the contracting parties has
– superior bargaining power and the other party has some ‘special
• Schroeder Music Publishing Co. Ltd. v Macaulay, Commercial Bank v Amadio, Louth
v Diprose.
• Statutory provision: Sections 20-22:
– Sec. 20 (1) prohibited all unconscionable conduct in
general law
– Sec. 21 (1) specifically prohibited unconscionable conduct
in supply of goods
– Sec. 22 (1) specifically prohibited unconscionable conduct
in supply / acquisition of goods (all business transaction)
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• Extent
the remedy to not only rescission but damages

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