Dee, Bill --- "Sharp Practices, Aboriginal Consumers and the Trade Practices Commission" [1991] AboriginalLawB 31; (1991) 1(50) Aboriginal Law Bulletin 8

• Sharp Practices, Aboriginal Consumers And The Trade Practices Commission
• Tpc Case Studies
• S.52a-The Law
• Remedies
• Conclusion

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Sharp Practices, Aboriginal Consumers and the Trade Practices Commission

Bill Dee explains how s.52A of the Trade Practices Act can assist and protect Aboriginal communities.

The 1986 amendments to the Trade Practices Act cover unconscionable conduct (s.52A) providing a general prohibition against sharp practices involving transactions for consumer goods.

TPC Case Studies

• In early 1988, a Townsville Aboriginal woman purchased a 12 year old car from a Brisbane dealer. The dealer provided an 'insurance policy' that covered the engine for 12 months from the date of purchase.
  
  Shortly after purchase, the car failed to complete the journey back to Townsville and it became necessary to fit a new engine worth $1415 in Rockhampton. The dealer refused to compensate the consumer, arguing that the policy was not valid for the first 30 days and did not apply to vehicles more than 10 years old.
  
  After protracted negotiations failed to settle the matter, the Commission approved the institution of proceedings under s.52A (unconscionable conduct) of the Act. Before the matter was filed the dealer agreed to fully compensate the consumer.

• During August 1989, two minors (male and female) sought to acquire a $7000 second hand motor vehicle from a Darwin car dealer at a negotiated price of $6350. The couple offered a $3000 deposit and were advised that repayments of $3250 per week over 3 years were required.
  
  While completing the hire purchase documents the sales man became aware that both purchasers were under the age of 18 years. The salesman asked if either purchasers had a parent who would guarantee the loan and was told that they did not.
  
  The salesman accepted the $3000 deposit, completed the loan application and advised the purchasers that they should return the next day after having found either a job or someone over 18 years who could sign the form.
  
  The purchasers returned the following day with a friend who had the previous week been under the age of 18 years. The friend signed the form in the belief that his signature was to enable the two minors to acquire the vehicle. He did not appreciate that he had just acquired the motor vehicle.
  
  The completed finance company documents which arrived two weeks later indicated that the repayment term had increased to four years and the weekly amount to$55.The additional amount arose out of the inclusion of consumer credit insurance, comprehensive insurance, extended warranty, registration and transfer fees-items not discussed with the purchaser.
  
  After Commission intervention in the matter the motor trader returned the deposit and rescinded the contract thus reinstating the consumers to their pre-contractual position. The dealer also signed an undertaking, under corporate seal, to "abide by the provisions, standards and code of behaviour set out in the Trade Practices Act".

• In another instance of unconscionable conduct a car dealer in Alice Springs wrote to a traditional Aboriginal man stating that unless outstanding money "is paid straight away I will send white 'kadaicha' (sic) fella to you."
  
  When assessing the complaint lodged by an Aboriginal Community Council the Commission considered both s.52A and s.60 (harassment and coercion). The Commission was concerned that the use of the term "kurdaitcha", which has special significance to traditional Aborigines could be threatening.
  
  Solicitors advising the motor dealer initially failed to recognize that their client was subject to the provisions of the Trade Practices Act because no corporation existed. Attention was drawn to s.6 which extends the application of the Act to "persons" not being corporations whilst they are engaged in trade or commerce within a Territory.
  
  After advice from the motor trader's solicitor that his client would not use such threats in the future to recover monies from Aboriginals and "confine debt recovery to proper procedures" the Commission indicated that no further action would be taken in respect of the allegations.

s.52A - the Law

s.52A(1) provides for a general prohibition against unconscionable conduct. However, s.52A(2) sets down a number of discretionary criteria which the courts may look to in deciding whether conduct is unconscionable.

One of the criteria the courts can consider when examining purported unconscionable conduct is whether the consumer is required to comply with conditions that are not reasonably necessary to protect the legitimate commercial interests of a company. Examples of one-sided terms in contracts which would probably fulfil this criteria include:

• terms that exclude the legal rights or remedies of the weaker party;
• terms that state the weaker party has agreed to, read, or understood terms, when in truth they have not;
• conditions that are so oppressive that they make a breach of the contract by the consumer inevitable;
• clauses that purport that no misrepresentations have been made by the other party;
• clauses that allow termination of contracts, forfeiture or penalties in favour of the stronger party for mere technical breaches and on terms oppressive to the weaker party;
• clauses that imply a smaller than actual liability;
• clauses that attempt to contract out of what is the main purpose of the contract;
• penalty provisions that require payment of an amount out of proportion to-the loss which might be experienced by the stronger party in the event of early termination;
• clauses that allow termination of contracts, forfeiture or penalties in favour of the stronger party for mere technical breaches and on terms oppressive to the weaker party.

In determining unconscionable conduct the courts may also look to whether the consumer was able to understand the contract. A classic example is where a consumer is illiterate or is not able to understand the complexity of, or the fine printin, contracts. It maybe unconscionable conduct not to remedy an obvious lack of understanding by perhaps explaining the document or suggesting that the consumer seek advice elsewhere.

Other criteria the courts can look to, include whether undue influence, pressure, or unfair tactics were used against the consumer or his/her representative.

• Undue influence arises when one person relies on the guidance or advice of another person who is aware of that reliance, and who may benefit from the transaction or have an interest in it being concluded.

• Pressure takes the form of coercive, direct forms of influence, such as physical or economic threats and includes compulsion or absence of real choice.

• Unfair tactics are tactics that are likely to affect the capability of one party to appreciate both the bargain which he or she has made and the comparative bargaining positions of the parties. A person's capability to appreciate the bargain would be determined by such things as pre-contractual representations and negotiations, the terms of the written agreement, and the operation of the transaction in practice.

For example, it would be unfair tactics to buy at a greatly undervalued price if the seller had agreed to sell at that price while temporarily incapacitated by alcohol or drugs. Similarly, it would be unfair tactics for one party to knowingly take advantage of the fact that the other party was labouring under some serious misapprehension about the nature of the transaction.

Another relevant criteria is whether the amount paid for the goods or services was higher, or whether the circumstances under which they could be acquired was more onerous, than generally applied elsewhere.

Remedies

Breach of the prohibition against unconscionable conduct does not attract criminal sanctions or give rise to a right to damages. However, both the Commission and individuals can apply to the Federal Court of Australia for other remedies for contraventions of S.52A. The Jurisdiction of Courts (Miscellaneous Amendments) Act 1986 also gives State Supreme Courts and lower courts jurisdiction to hear claims by individuals based on a breach of s.52A.

All mainland states and the Northern Territory have introduced legislation that mirrors s.52A so thatconduct not within the constitutional reach of the Trade Practices Act (essentially acts by individuals or non corporate entities operating intrastate) can be caught by that legislation.

People who choose to take private action under the Trade Practices Act may seek redress in the form of an injunction (s.80) and/or certain other orders (s.87). These other orders, which a person must seek within two years of the contravention (s.87(l)(A)), may take any form that appears to the court to be appropriate and includes: compensating a party for loss or damage, declaring a contract void in whole or in part, varying a contract or arrangement, requiring a refund of money or return of property, or requiring that specified services be performed.

Although monetary compensation may be available at the court's discretion under s.87(2)(c) and (d), damages as such are not available as a remedy for a breach of s.52A (s.82(3)).

Unconscionable conduct amounting to a contravention of s.52A maybe pleaded as a defence in State courts in circumstances where the conduct affects the validity of the contract which is the subject of litigation, and which the other party is attempting to enforce.

The Trade Practices Commission may also take administrative or legal action against a corporation that has engaged in unconscionable conduct.

Administrative action may take a number of forms. For instance, the Commission may request a company to cease certain conduct, for example by altering the terms in standard forms of contract or by changing its trading practice. In more serious instances, the Commission might request or require formal undertakings from the company concerned and make these public.

Court action by the Commission may include seeking an injunction (s.80), but cannot include actions for a fine (s.89(1)) or an order for corrective advertising (s.80A(1)).

Once the Commission has commenced proceedings, it may seek orders to prevent the dissipation of property or money (s.87A). When contravention of the Act has been proven, the Commission may apply for redress on behalf of one or more individuals named in the application (s.87). The application must be made within two years of the contravention.

Conclusion

The general law covering unconscionable conduct (s.52A) is proving to be a valuable tool for gaining redress for those consumers who have a limited knowledge of English and/or lack "market savvy". Many sharp practices now fall into the s.52A net and provide openings for either Aboriginal Legal Services or the TPC to seek redress for Aboriginal consumers.

Aboriginal Legal Services or other organisations whose clients have been affected by unconscionable conduct are encouraged to contact the TPC office in the capital city of their state. The TPC has a policy of making contact with 'opinion leaders' as a means of becoming aware of matters relevant to the Commission. The TPC is prepared to meet with community and group leaders at any mutually convenient time. The Commission also has a guide on s.52A which gives a run down on the law and provides some indication of market practices which may be caught by the section and the remedies available for breaches of s.52A. This can be obtained from the TPC in all capital cities.