Australian Competition and Consumer Act

The Australian Competition and Consumer Act regulates:

• how companies may conduct business
• protection from anti-competitive or monopolistic business practices
• the rights of consumers

An over keen sales representative or flamboyant marketing material can make all sorts of representations as to the capabilities of the company's goods or services in an attempt to secure a sale. If these representations are misleading, deceptive or false, the company may be prosecuted.

Such statements may be specific such as “this software package can process 100 invoices a minute”, or more general, for example “we know that this software will satisfy your requirements”.

If you know that your customer is under a misapprehension about your product and you do not correct that misapprehension, your conduct could be interpreted as being misleading.

Remember, it is not necessary that a person intends to be misleading.

It is the nature and content of the representation that is important.

You should consider the effect of the representation on a person of average intelligence and with background knowledge.

A prediction does not have to come true to avoid being misleading or deceptive. However, if the prediction does not come true and was made by a person who had no reasonable grounds for making the prediction it may be held to have been misleading or deceptive. Similarly, a person who gives an opinion must ensure that they honestly and reasonably hold that opinion.

As well as being misleading or deceptive, some statements, if false, can expose the company to criminal liability. For example, claims that: goods or services are of a particular standard; goods are new; facilities for repair and spare parts are available; or goods were made in a certain place.

A company cannot, in trade or commerce, assert a right to payment from a person for unsolicited goods or services unless the company has reasonable cause to believe that there is a right to payment. Similarly, payment cannot be demanded for an unauthorised entry in a directory.

If one month after the day the recipient gave notice to the sender or three months after the day the unsolicited goods were received, the sender has not recovered the goods, the goods become the property of the recipient.

The Trade Practices Act implies certain warranties and conditions into contracts for the supply of goods and services to consumers. These include, amongst other things, that: the supplier has the right to sell the goods and that the consumer will enjoy quiet possession; the goods will correspond to the contract description; the goods are of merchantable quality; and the goods are fit for the purpose for which they were sold.

Any term of a contract which attempts to or has an effect to exclude, restrict or modify the implied contract conditions and warranties in consumer transactions will be considered void.

You should have your Terms and Conditions carefully examined to ensure that your liability clauses are not too wide.

A company may not supply goods which are intended to be used by, or likely to be used by a consumer if: the goods are regulated by a consumer product safety standard and they do not comply with that standard; there is a notice declaring the goods to be unsafe; or there is a notice imposing a permanent ban on the goods.

If goods are sold which may cause injury to a person the Minister may require the supplier to: recall the goods; to the advertise the defect or dangerous characteristic; and/or inform the public of the repair services, replacement goods or refund available.

Although you are not covered by the Australian Competition and Consumer Act you may be covered by equivalent state legislation which has similar provisions.