Transcript Section 52 Trade Practices Act Misleading & Deceptive Conduct

THE LAW OF COMMERCIAL CONTRACT
Unconscionable Conduct
Part IVA Trade Practices Act
Sweeney & O’Reilly
1st Ed. pp 61 – 64
2nd Ed. Pp 88 -91
THE LAW OF COMMERCIAL CONTRACT
s51AA (1) Trade Practices Act
 A corporation must not, in trade or commerce,
engage in conduct that is unconscionable within
the meaning of the unwritten law, from time to
time, of the States and Territories.
 Applies only to consumer contracts
THE LAW OF COMMERCIAL CONTRACT
s51AB (1) Trade Practices Act
 A corporation shall not, in trade or commerce, in
connection with the supply or possible supply of
goods or services to a person, engage in
conduct that is, in all the circumstances,
unconscionable.
 Applies only to consumer contracts
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s51AB (2) Trade Practices Act
 Provides a non-exhaustive list of matters a Court
can have regard to in determining if
unconscionable conduct has occurred
 Court may have regard to:
 the relative strengths of the bargaining
positions of the corporation and the consumer
 Whether conditions were not reasonably
necessary for the protection of the legitimate
interests of the corporation
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s51AB (2) Trade Practices Act
 Court may have regard to (cont.):
 Whether the consumer was able to
understand any documents
 Undue influence and unfair tactics
 The cost of identical goods\services
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Exclusions
 The Court shall not have regard to any
circumstances that were not reasonably
foreseeable at the time of the alleged
contravention (s51AB(4) TPA)
 Instituting legal proceedings\arbitration is not
unconscionable conduct (s51AB(3) TPA)
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s51AC(1) Trade Practices Act
 Designed to cover small businesses
 A corporation must not engage in unconscionable
conduct:
 in trade or commerce
 in connection with
 the supply of goods or services to a person (other
than a listed company)
 the acquisition of goods or services from a person
(other than a listed company)
 Limited to contracts under $1 million
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s51AC(3) Trade Practices Act
 Provides a non-exclusive list of matters court
can take into account
 Similar to s51AB(2) Trade Practices Act but also
 Whether the suppliers conduct was consistent
with similar transactions with others
 Industry codes applicable to the supplier
 Industry codes that the business consumer
reasonably believed applied to the supplier
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s51AC(3) Trade Practices Act (cont.)
 Matters to be taken into account (cont.)
 Unreasonable failure by supplier to disclose
its intended conduct and risks to business
consumer from that behaviour
 The degree to which the supplier was willing
to negotiate terms
 The extent to which the supplier and business
consumer acted in good faith
THE LAW OF COMMERCIAL CONTRACT
Torts
The Law of Negligence
Sweeney & O’Reilly
1st Ed, pp 42 – 49
2nd Ed. Pp20 - 45
THE LAW OF COMMERCIAL CONTRACT
Definition
 Conduct falling below the standard demanded for the
protection of others against unreasonable risk of
harm
 This means that a person can sue for negligence
when he is injured by another person who either:
 Did an act which a reasonable person in the
circumstances would not have done (an act of
negligence); or
 Failed to do an act that a reasonable person in the
circumstances would have done (negligence by
omission);
and that action or failure caused the injury.
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Elements of Negligence
1.
2.
3.
4.
Defendant owed a duty of care to the plaintiff to
take reasonable care to prevent him for suffering
injury, loss or damage
There was a breach of the duty of care by failing to
adhere to the standard of care expected
The breach of duty caused damage to the plaintiff
The plaintiff suffered damage that was of a kind
which was reasonably foreseeable i.e. was not
too remote
THE LAW OF COMMERCIAL CONTRACT
Duty of Care – Physical Damage
Two part test:
 Reasonable foreseeability test
 Proximity relationship test
THE LAW OF COMMERCIAL CONTRACT
Reasonable foreseeability test
 A reasonable person, in the circumstances of
the defendant, would have reasonably
foreseen that because of his actions there
was a risk of injury to the plaintiff, or to a
class of persons of whom the plaintiff was a
member
THE LAW OF COMMERCIAL CONTRACT
Reasonable foreseeability test (cont.)
 BEFORE the damage occurred, a reasonable
person could foresee SOME kind of damage
COULD occur
 Donoghue v Stevenson (S&OR p17\21)
 Grant v Australian Knitting Mills (S&OR
p23\36)
 Levi v Colgate-Palmolive (S&OR p19\23)
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Proximity Test
 There was sufficient proximity or closeness
between the plaintiff and the defendant
 This limits the Reasonable Foreseeability test
 Used to limit duty of care on public policy
grounds
 The “neighbour” test
 Donoghue v Stevenson (S&OR p18\22)
THE LAW OF COMMERCIAL CONTRACT
Proximity Test
Justice Deane in Jaensch v Coffey (1984)
151 CLR 549 stated that proximity could be
established in one of 3 ways:
 Physical proximity
 Circumstantial proximity
 Causal proximity
THE LAW OF COMMERCIAL CONTRACT
Duty of Care – Financial Loss
 Recovery of “pure economic loss” was denied
by the courts for many years as economic
effects may be more extensive than physical
effects
 Now allowed, but very narrow application
 Hedley Byrne V Heller & Partners (S&OR
p49\69)
 Difficult to Develop tests to avoid too onerous
a duty
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Duty of Care – Financial Loss (cont.)
Perre v Apland (S&OR p21\30) suggests limits;
 Whether plaintiff belonged to a determinate or
an indeterminate class
 Plaintiff’s vulnerability & dependency on
defendant
 Defendant’s knowledge of plaintiff’s
vulnerability
 Whether defendant assumed responsibility for
the risk being taken by the plaintiff
Applied in Johnson Tiles v Esso (2nd Ed. P 32)
THE LAW OF COMMERCIAL CONTRACT
Breach of Duty
 Defendants will breach their duty of care if
they fail to live up the standard of care
expected in the circumstances
 An objective test
 A 2 stage process
THE LAW OF COMMERCIAL CONTRACT
Breach of Duty (cont.)
 First stage:
 Would a reasonable person believe that
the risk of injury to the plaintiff was
reasonably foreseeable; and
 Would a reasonable person have
responded to that risk at all and, if so, how.
 Actions of defendant are compared with what
a reasonable person would\would not have
done
THE LAW OF COMMERCIAL CONTRACT
Breach of Duty (cont.)
 The degree of care expected in any particular
case depends on all the surrounding
circumstances
 May vary according to:
 amount of risk, and
 seriousness of the injury foreseen
 If a person claims special skills then they
must live up to the standard of the reasonable
expert in that field
THE LAW OF COMMERCIAL CONTRACT
The Standard of Care
Factors in assessing the standard of care:
 Probability of the risk occurring
 O’Dwyer v Leo Buring (S&OR p22\35)
 Gravity of the injury
 Rasbora v JCL Marine Ltd (S&OR p 23\35)
 Adelaide Chemical v Carlyle (S&OR
p24\37)
THE LAW OF COMMERCIAL CONTRACT
The Standard of Care
 Practicability and cost of eliminating risk
 Norton v Streets Ice Cream (S&OR p24\37)
 Age and capacity of the plaintiff
 Social value of defendant’s action
 Common practice
THE LAW OF COMMERCIAL CONTRACT
Causation
 A question of fact
 The “but for” test
“If you can say that the damage would not
have happened but for a particular fault, then
that fault is in fact a cause of the damage; but
if you can say that the damage would have
happened just the same, fault or no fault, then
fault is not the cause of the damage” per
Denning LJ in Cork v Kirby Maclean (1952) 2
All ER 402
THE LAW OF COMMERCIAL CONTRACT
Causation (cont.)
 If a number of factors contribute to loss, the
“but for” test may not be conclusive
 Did the defendant’s act or omission
“materially contribute” to the plaintiff’s loss?
THE LAW OF COMMERCIAL CONTRACT
Causation (cont.)
 Must prove each element of the causal link
 Kenny & Good v MGICA (S&OR p 49\71)
 Defendant will not be liable if the plaintiff’s
loss was inevitable
 Chapel v Hart (S&OR p26\40)
THE LAW OF COMMERCIAL CONTRACT
Damage
Plaintiff must prove that:
 Damage is of a kind recognised by law
 e.g. loss of income, pain & suffering etc.
 Damage was of a kind that was reasonably
foreseeable
 Damage will be foreseeable when the risk
of damage is a real risk which would occur
to the mind of a reasonable man in the
defendant’s position and which he would
not brush aside as far-fetched
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Defences to Negligence
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Contributory Negligence
Voluntary Assumption of Risk
Novus Actus Interveniens
Illegal enterprise
Statutory Reforms
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Contributory Negligence
 If the plaintiff
 failed to take precautions for his own safety
 Such failure contributed to his injury
Then the plaintiff’s compensation is reduced
 Damages are apportioned according to the
relative degree to which the parties
negligence contributed to the loss
 Partial defence
 Burden on the defendant
THE LAW OF COMMERCIAL CONTRACT
Voluntary Assumption of Risk
 Volenti non fit injuria
 Defendant must prove
 Plaintiff knew of the risk
 Plaintiff fully appreciated the risk
 Plaintiff accepted the risk freely and willingly
 Consent can be express or implied
 A total defence
 Burden of proof is on the defendant
 Moore v Woodforth (S&O 2nd Ed. p 43)
THE LAW OF COMMERCIAL CONTRACT
Statutory Reforms
 Each State is different
 Persons engaged in risky recreational
pursuits are assumed to be aware of the
risks
 Protection for Good Samaritans and
volunteers acting in good faith