The time restriction runs from the date upon which the cause of action arose, not from the date on which the contract was commenced.

Transcription

1 The time restriction runs from the date upon which the cause of action arose, not from the date on which the contract was commenced Remedies for breach of implied statutory conditions VOL 2 Consumers Why change the common law? Our society is dominated by large corporations using high powered advertising and sales strategies. Consumers and these corporations are not in an equal bargaining position. In the past, trading corporations were able to rely on a long standing legal saying, caveat emptor which means, let the buyer beware. Concern about the inequality of bargaining power has lead to an increasing number of statutes to protect the consumer, and to provide them with very clear remedies. Parliaments have made laws which add rules to, or make deletions from, the common law of Contract. All consumers in Australia, are now covered by the provisions of the Competition and Consumer Act 2010 (Cth). The provisions of this new Act (the CCA) replaced many of the provisions of the legislation in each state which protected consumers. This does not mean that all previous state Acts have been replaced, but that when looking for the remedies which apply to consumers, it is important to go to the CCA first and see if it applies. In Queensland, laws have been passed in the Fair Trading Act 1989 (Qld), the Sale of Goods Act 1896 (Qld) and the Hire Purchase Act 1959 (Qld) affecting the common law. Rather than deal with each of these Acts in detail, we have chosen to take a broad approach to the provisions which apply to consumers by looking at the Australian Consumer Law, (ACL), contained in Schedule 2 of the CCA. A more detailed analysis of the law which applies to consumers is found in the section Consumers, in Legal Studies for Queensland Volume 2. Statutes Change the Terms of a Contract We have seen that all contracts can be set aside on the basis of unconscionable conduct, and where there are unfair contract terms. The ACL also contains provisions that contracts can be set aside for misleading or deceptive conduct. These remedies can be relied on by both businesses and consumers. These topics will be considered in more detail in Legal Studies for Queensland Volume 2. There are provisions in the ACL called Consumer Guarantees on which only consumers can rely. These are set out in s51 to s68 of the ACL. The ACL introduces a new approach to consumer contracts. Previously the Act contained a number of warranties and conditions which were implied into consumer contracts. These are now called consumer guarantees. Consumer Guarantees relating to the supply of goods 1. The supplier must have a right to sell (s51). 2. The buyer has a right to undisturbed possession of the goods (s52). 3. The goods must be free from any security, charge, or encumbrance not disclosed to the consumer (s53). 4. The goods must be of acceptable quality (s54). 5. The goods must be reasonably fit for any disclosed purpose (s55). 6. The goods must match their description (s56). 332 LEGAL STUDIES FOR QUEENSLAND - Volume 1

2 REMEDIES IN Contract Chapter The goods must match the sample or demonstration model (s57). 8. The manufacturer of goods must take reasonable action to ensure that facilities for repair and parts for the goods are reasonably available for a reasonable period (s58). 9. The supplier and manufacturer must comply with any express warranty given or made by the manufacturer (s59). Guarantees relating to supply of services A supplier of services to a consumer guarantees that the services will be rendered with due care and skill (s60). A supplier of services to a consumer, where the consumer, expressly or by implication, makes known to the supplier the particular purpose for which the services are being acquired, guarantees that the services, and any product resulting from the service, will be reasonably fit for that purpose (s61). A supplier of services to a consumer, where the time for supply is not fixed or agreed guarantees that the services will be supplied within a reasonable time (s62). Guarantees not to be excluded The guarantees in the ACL are not able to be excluded by the term of a contract between the supplier and a consumer (s64). A supplier of goods and services to a consumer cannot avoid a term of the contract for failing to comply with a guarantee because the term limits the supplier s liability (s64a). Interstate and overseas transactions A supplier of goods and services to a consumer in any part of Australia, is bound by the law of Australia contained in the ACL and not by the law of a state or territory (s7). A supplier of goods and services to an international consumer, or from an international supplier to an Australian consumer is subject to the United Nations Convention on Contracts for the International Sale of Goods (the Vienna Sales Convention) (s68). The Consumer Guarantees relating to the supply of goods are now examined below in some detail, to illustrate how the law in statutes is now of overriding importance to the consumer, and how the common law has been changed. LEGAL STUDIES FOR QUEENSLAND - Volume 1 333

3 1. The supplier must have a right to sell. (s51). The seller must have title (ownership) in the goods being sold. Rowland v. Divall [1923] 2KB500 Facts: Rowland, a car dealer, bought a car from Divall. He sold it to a customer. After three months, the car was taken by the police as it had been stolen. The police returned the car to the original owner. Rowland gave a refund for the car to his customer. He then sued Divall seeking an order that he return the money he had paid Divall for the car. Divall did not know, at the time that he offered the car for sale to Rowland, that it had been stolen. Legal Issue: Did Divall have the right to sell the car to Rowland? Was Rowland entitled to any compensation for work he did on the car before selling it to his customer? Decision: Divall did not have the right to sell the car as he did not have good title at the time that he sold it to Rowland. He could not obtain good title from the thief. Ownership remained with the original owner. Divall was ordered to pay back Rowland. Rowland was not entitled to any compensation for the work he carried out on the car. 2. The buyer has a right to undisturbed possession of the goods. The effect of this guarantee is that the buyer enjoys the use of the goods free from any interference from, or claims by, other persons. Gencab of Canada Ltd v Murray Jensen Manufacturing Ltd (1980) 29 OR(2D) 552 Facts: Machinery was sold for the purpose of manufacturing a certain product. The seller impliedly warranted that the buyer would be able to use the machinery for that purpose. The holder of the patent on the product threatened to sue the buyer because he was using the machinery without approval. Legal Issue: Would the seller be in breach of the warranty to give the buyer quiet enjoyment of the goods? Decision: The seller was in breach of the implied warranty as to quiet enjoyment because the buyer was brought into a disagreement with the owner of the patent. 3. The goods must be free from any security, charge, or encumbrance not disclosed to the consumer (s.53). The effect of this guarantee is that the buyer is entitled to enjoy the use of the goods free from any interference from, or claims by, other persons. In effect, this guarantee is an extension of the right to undisturbed possession. If the security, charge, or encumbrance is disclosed to the consumer and the consumer buys the goods, it will take on these obligations. Hypothetical Facts: Bob transfers a car to his partner Alison. The car is subject to a lease. Bob and Alison draw up an agreement to say she will make the monthly lease payments. The lessor writes to Alison and Bob and confirms that it consents to Alison becoming the owner of the vehicle. Alison stops making the monthly lease payments. The lessor repossesses the vehicle. Alison asks her lawyer if she can get back the car from the lessor. Legal Issue: Could Alison require the car to be returned by the lessor? Decision: The lease over the car was disclosed to Alison. The provisions of the ACL do not prevent the lessor from repossessing the car. Alison is not able to stop the lessor from doing so. 334 LEGAL STUDIES FOR QUEENSLAND - Volume 1

4 REMEDIES IN Contract Chapter The goods must be of acceptable quality (s54) This statutory guarantee says that goods supplied to a consumer must be: fit for the purposes for which they are commonly supplied; free from defects; of acceptable appearance and finish; and as safe and durable as a reasonable consumer would expect. This guarantee gives a right of action both against the supplier and the manufacturer of the goods. Medtel Pty Ltd v. Courtney [2003] FCAFC151. Facts: Courtney had a Tempo pacemaker implanted in his body. The Therapeutic Goods Administration issued a hazard alert on 5 June 2000 warning that the particular batch of pacemakers: had an increased risk of early battery depletion; and affected some 1,048 people in Australia. The only way Courtney s pacemaker could be checked was by taking it out of his body and testing it. Courtney s pacemaker, when removed was found to be functioning normally. Courtney brought an action against Medtel Pty Ltd for compensation under the section of the Trade Practices Act (TPA) which is now replaced under section s54 of the ACL. Mr Courtney alleged that the pacemaker was not of acceptable quality. materials that would create a substantially greater risk of premature failure than that applicable to pacemakers generally. Because each of the pacemakers were subject to a hazard alert and many of them had actually failed, even though Courtney s was not actually defective, the Judge found that none of the pacemakers were of acceptable quality. Courtney was successful and was awarded compensation for pain and discomfort, but he did not receive compensation for stress, worry and anxiety (damages available under the ACL) because he said that he was already worried before the hazard alert and was only slightly worried upon becoming aware that his pacemaker might be defective and would need to be removed to be checked. Legal Issue: Was Courtney s pacemaker not of acceptable quality, given that both before and after removal, the device was found to be operating normally? Decision: The Judge concluded that a reasonable consumer would expect that the Tempo pacemaker would not be manufactured using What do you think? The proceedings brought by Courtney were on behalf of himself and other potential claimants. What implications do you think this would have for any person who also had a Tempo pacemaker implant where: a person elected not to have it removed; or a person s pacemaker was removed and found to be defective? [I] LEGAL STUDIES FOR QUEENSLAND - Volume 1 335

5 Grant v Australian Knitting Mills Ltd (1936) 54 CLR 49 Facts: The plaintiff purchased woollen underwear from a retailer and developed dermatitis because of the presence of a chemical irritant in the garments. Legal Issue: Could Grant sue the retailer for breach of the implied term of merchantable quality? Decision: The court held that the retailer was in breach of the implied term of merchantable quality. The court stated that merchantable quality means saleable and that the purpose to which the goods are put is relevant to the question. This condition is not implied if the buyer examined the goods and failed to find defects which an examination should have revealed, or if the defects were specifically drawn to the purchaser s attention. What do you think? The above case was decided before the introduction of the Act. Would it now be decided in the same way? [I] [R] Hypothetical Facts: Amy went into a milkbar and bought a bottle of Pop C soft drink. The glass in the bottle had been manufactured badly and the bottle exploded when opened. Amy s daughter Emma was waiting nearby for Amy to open the bottle and was badly injured. Legal Issue: Who can Amy sue for breach of contract and why? Can Emma sue the shopkeeper for breach of contract? Your Decision? [I] Practical application The Courier-Mail Some swimsuits show an itsy bit too much Craig Hume WHEN is a bathing costume not a bathing costume? When it becomes see-through when wet. A Sydney woman who suffered an unplanned exposure when her $110 bathing suit became wet was told later by the retailer who sold it to her that the suit should not have been worn in the water. She complained to the Consumer Affairs Department and discovered there had been ten similar complaints in a week. The Queensland Consumer Affairs Bureau education officer, Ms Jan Taylor, said her office received a lot of complaints about not being able to return swimwear that became transparent. A lot of consumers are bluffed by shops that they can not take costumes back to the shop, Ms Taylor said. Every shop that sells swimwear or clothes with a sign saying you can not return or exchange costumes and clothes because of health regulations is wrong. 336 LEGAL STUDIES FOR QUEENSLAND - Volume 1

6 REMEDIES IN Contract Chapter 14 Practical application Ms Taylor said a solution to the problem would be to label swimwear that was likely to become transparent when wet. A Health Department spokesman said there were no regulations in the Health Act governing the exchange or refund of swimwear. Some shops display signs saying it is advisable for health reasons to wear underwear when trying on swimwear. 1. What acceptable qualities does a bathing costume need to have to be sold as a bathing costume? [K] [I] 2. Prepare a sign for the retailer which tries to prevent return of the bathing costume with a fault that breaches the acceptable quality condition. [I] [C] 3. Evaluate the effect of your sign on the marketing of the product by surveying your class. [E] You may have purchased goods marked as seconds. Here the seller is warning that the goods have defects which the consumer should check. Purchases of seconds are usually not returnable. 5. The goods must be reasonably fit for any disclosed purpose (s 55) Where the consumer discloses to the supplier and/or the manufacturer, the purpose for which the goods are being acquired, so long as the purpose is a purpose for which the goods are commonly supplied, the supplier and manufacturer are bound to provide goods which are reasonably fit for the disclosed purpose. Ryan v Great Lakes Council [1999] FCA 177 (5 March 1999) Facts: Ryan, as a representative of a number of consumers, sued the Great Lakes Council and a number of oyster growers from Wallace Lake in the Hunter River area of New South Wales. The oysters were contaminated by faeces which the Great Lakes Council allowed to escape from the sewage system into the water ways. Barclay Oysters was one of the oyster growers sued for selling the contaminated oysters. As a result of the contamination of the oysters, Ryan contracted the Hepatitis A Virus. buying the oysters, the consumer made known to the oyster farmer that they were going to be eaten and they should therefore be reasonably fit for human consumption. Ryan succeeded and was granted compensation. Legal Issue: Was Barclay Oysters liable under the former Trade Practices Act (now the ACL) for supplying the oysters to Ryan and other consumers not reasonably fit or fit at all or human consumption. Decision: The judge said that when consumers buy oysters from an oyster farmer, there is an implied condition that the oysters would be fit for the purpose for which they were intended. By LEGAL STUDIES FOR QUEENSLAND - Volume 1 337