Consumer Rights (VCE SSCE Legal Studies): Revision Notes

Consumer Rights

Online shopping has transformed how Australians buy goods and services. With 81% of Australian households making at least one online purchase in 2021, understanding consumer rights in this context is essential. This note examines the legal framework protecting consumers and vendors in online transactions, focusing on contract law and the Australian Consumer Law (ACL).

Rights protected by the law

Two main areas of law govern online shopping transactions and protect the rights of both consumers and vendors.

Contract law

Contract law is an area of civil law governing the validity and enforceability of agreements made between two or more parties. A contract is an agreement or promise (or set of promises) between two or more individuals or groups that is intended to be legally binding and can be enforced.

In online shopping, a contract typically forms when a consumer clicks the "I agree" or "purchase" button on a vendor's website. This creates a legally binding agreement, just as if the consumer had purchased goods in a physical store. The contract can be written or oral, though online shopping contracts are normally written (recorded electronically).

Consumer law

Once a purchase is made, Australian consumer law may apply. The main legislation is the Australian Consumer Law (ACL), which is Schedule 2 of the Competition and Consumer Act 2010 (Cth). The ACL promotes fair trading practices, protects consumers, and provides legal uniformity across Australia.

The ACL applies to most domestic transactions where:

• Goods or services cost less than $40,000
• They are purchased for personal or domestic use
• The consumer bought them in a commercial environment (e.g., from a retailer)

Guarantees under the ACL

The main guarantees are:

Guarantees for goods	Guarantees for services
The goods are of acceptable quality (fit for purpose, acceptable appearance, free from defects, safe and durable)	The services will be performed with care and skill
The goods are fit for any purpose made known to the consumer	The services will be fit for the purpose for which the consumer purchased them
The goods match any description given by the vendor	The services will be supplied within a reasonable time
If an express warranty is given, the vendor will comply with it

A warranty is a guarantee (or promise) provided by a business about the quality or standard of its products or services. Warranties often include actions the business will undertake beyond those required under consumer law (such as offering repair, replacement or refund).

Protected rights in online shopping

The law protects several key rights:

• The right of consumers and vendors to be protected in purchasing goods and services
• The consumer's right to receive goods and services that match the description and quality expected
• The vendor's right to receive payment for goods and services supplied
• The consumer's right to be protected from unscrupulous business practices
• The right of both parties to seek remedies when problems arise

Elements required to establish liability

When an online shopping transaction goes wrong, one party may have grounds for a civil claim. Common problems include:

• Goods not arriving despite payment
• Goods arriving broken or faulty
• Goods not matching the description or not being fit for purpose
• Customer failing to pay the full amount
• Significant delays in delivery or service performance

To establish a vendor's liability for breach of contract, the plaintiff (usually the consumer) must prove four elements.

Element 1: A binding contract existed

For a binding contract to exist, three essential elements must be present:

Offer: An offer is the act of a person (by statement or otherwise) that indicates the person is willing to buy or sell goods or services. In online shopping, the vendor typically makes the offer by displaying goods for sale on their website. The offer must be clearly communicated and can be withdrawn before acceptance, provided the withdrawal is clearly communicated.

Acceptance: Acceptance is the act of a person (by statement or otherwise) agreeing to an offer. In online shopping, acceptance usually occurs when the consumer clicks "buy now" or "I agree". The acceptance must match the exact terms of the offer. If it differs, it becomes a counteroffer rather than acceptance.

Consideration: Consideration is something of value that passes from one party to the other, at which time a contract is complete. Consideration can also be a promise to pay. In online shopping:

• The consumer's consideration is the money paid
• The vendor's consideration is the goods or services supplied

Additional requirements for a binding contract

Beyond the three essential elements, certain conditions must be met:

• Capacity to contract: Parties must be 18 years or older (with exceptions for minors buying necessities)
• Real consent: The contract must be free from mistake, duress (strong mental pressure to overcome independent will), or undue influence (unfair pressure)
• Legality: The contract must be for legal purposes (e.g., not for stolen or illegal goods)

Element 2: The contract was breached

A breach of contract occurs when one party fails to fulfil the agreement. This can happen when:

• A consumer fails to pay for goods or services
• A vendor fails to deliver goods or services on time
• Either party fails to fulfil any terms and conditions

Contract terms can be express or implied:

Express terms are provisions or conditions that are written in the contract or are clearly stated or discussed between the parties. In online shopping, express terms are often found in the "terms and conditions" section of the purchase.

Implied terms are provisions or conditions that are not expressed or written down, but are assumed and intended to be included in the contract. For example, if a consumer tells a vendor they need goods before Christmas and the vendor acknowledges this, there may be an implied term that delivery will occur before Christmas.

Element 3: The breach caused loss

To claim damages successfully, the plaintiff must prove causation—that is, the direct relationship between one event (the breach) and another event (the loss), where the breach was the reason the loss happened.

Remoteness and reasonable contemplation

The person who failed to perform the contract is only liable for financial loss that could be reasonably contemplated as likely to result from the breach. If the loss is too remote from the wrongful act, the defendant is not liable.

Limitations on claimable losses

Element 4: Loss or damage was suffered

The party seeking compensation must establish they have suffered some form of loss or damage. In online shopping, this typically means:

• Money (or part of the money) paid for goods or services that were not delivered properly
• Goods and services delivered but not paid for

Limitation of actions

Extensions to the time limit

The six-year period can be extended in two circumstances:

• Where there has been fraud or mistake (for example, where the defendant has fraudulently concealed the breach)
• Where the plaintiff has a disability

Special time limits for death or personal injury

For contract claims involving death or personal injury, the time limit is either:

• Three years from the date the plaintiff discovered the cause of action, or
• Twelve years from the date of the act or omission that caused the death or personal injury

Defences to breach of contract claims

The defendant could argue:

• There was no binding contract: One or more elements of a binding contract did not exist (no valid offer, acceptance, consideration, or the additional requirements were not met)
• The contract was not breached: The conditions of the contract were fulfilled, so no breach occurred

A party could also argue:

• They did not have capacity to form a contract
• Consent was not freely given (due to mistake, duress, or undue influence)
• The contract was not legal

Possible remedies

A remedy is a legal solution to a breach of civil law. The type of remedy available depends on several factors:

• The type and circumstances of the dispute
• The body or institution involved in dispute resolution

In Victoria, several bodies can assist with consumer disputes, including Consumer Affairs Victoria (CAV), industry-specific complaints bodies, the Victorian Civil and Administrative Tribunal (VCAT), and the courts. VCAT is a tribunal that deals with disputes relating to a range of civil issues heard by various lists (sections), such as the Human Rights List, the Civil Claims List and the Residential Tenancies List.

General remedies for breach of contract

Remedy	Description
Specific performance	Requires the defendant to perform the contract (do what they agreed to do under the terms)
Injunction	Requires the defendant either not to perform an act that would continue to breach the contract, or to perform an act prescribed by the contract (similar to specific performance)
Damages	Requires the defendant to pay the plaintiff money to compensate them for the breach and any loss or harm suffered
Termination of the contract	Enables the plaintiff to end the contract because of the breach
Change the terms of the contract	Enables the parties to resolve their dispute by entering discussions to change the terms. This may allow some terms to be fulfilled and both parties to achieve some satisfaction with the outcome

Remedies under the Australian Consumer Law

The ACL provides automatic rights and guarantees that apply when buying goods or services. The remedies available depend on whether the problem is classified as major or minor.

Major problems

If a consumer buys a product with a major problem (a problem that, had the consumer known it existed, would have stopped them buying the product), the consumer automatically has the right to choose one of the following remedies:

• Refund: Get their money back
• Replacement: Receive a replacement item
• Compensation: Keep the product and receive compensation from the seller for the drop in value

Minor problems

If a consumer buys a product with a minor problem (a problem that can be easily fixed within a reasonable time), the supplier (the store that sold the product) can decide which remedy to provide:

• Provide an identical replacement product (or product of similar value)
• Repair the product within a reasonable time
• Provide a refund

If the supplier refuses to provide one of these remedies, the consumer may:

• Take the product elsewhere to be fixed and claim a reasonable cost from the supplier
• Insist on a refund or replacement item

Exceptions and exclusions

Possible impacts of a breach

A breach of contract in online shopping can significantly affect both consumers and vendors.

Impacts on the consumer

When a vendor breaches a contract, consumers may experience:

Financial loss: This is the most direct impact. The consumer loses money paid for goods or services not properly delivered. Indirect financial loss may also occur. For example, if a consumer bought various goods to make a special birthday hamper and one key item does not arrive, they may suffer loss beyond just that item (though they may not be able to claim compensation for all indirect losses).

Loss of confidence: A bad experience with online shopping can make consumers reluctant to shop online in the future. This loss of confidence can affect their willingness to engage in e-commerce generally.

Effect on mental health: Consumers may suffer stress or anxiety as a result of the breach. For example, stress may arise when goods arrive late for an important occasion.

Inconvenience: The time and cost involved in making a claim can be significant. Consumers may be inconvenienced by the lengthy process of dispute resolution and the effort required to pursue their rights.

Personal injury or death: In serious cases, faulty goods purchased online could cause physical harm. For example, a consumer might buy a washing machine online that explodes, causing serious injury.

Impacts on the vendor

When a consumer breaches a contract, vendors may experience:

Financial loss: Vendors may lose profit from goods or services delivered but not paid for. This can affect their cash flow and business viability.

Loss of reputation: Bad reviews or negative feedback resulting from disputes can harm a vendor's reputation. In the digital age, negative publicity spreads quickly and can significantly impact future sales.

Effect on mental health: Vendors may suffer stress or anxiety because a consumer has unreasonably withheld payment or made unfounded claims. Small business owners may be particularly vulnerable to this stress.

Remember!