International Trade and Business Law Review
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International Trade and Business Law Review |
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Daril Gawith[1]
This article is concerned primarily with an examination and comparison of select aspects of the model international consumer protection laws proposed by the United Nations (UN),[2] the European Union (EU),[3] and the Organisation for Economic Co-operation and Development (OECD),[4] using the Trade Practices Act 1974 (Australia) as a basis for examination and comparison. As a secondary consideration, it also broadly examines the content of, and differences between, the model laws.
The motive for this article is that any future enforceable international consumer protection regime (possibly in the form of an international treaty or convention) would need to take into account the UN, EU and OECD guidelines. A cross-comparison of those model laws, and a comparison of them with the consumer protection provisions of a well established national consumer protection law, should provide a useful starting point for the development of such a regime. The ‘select aspects’ of the model laws in question are the various provisions of those laws which could relate to situations involving the wrong delivery or non-delivery of goods.
The terms ‘non-delivery’ and ‘wrong delivery’ need some explanation, and the narrow focus upon such problems needs some justification. ‘Non-delivery’ is mostly self-evident: the goods which are the subject-matter of the consumer contract are not delivered, either to the purchaser or their agent—within the terms of the contract—by the contractual delivery date, or by some reasonable date, or within some reasonable period of time. Alternatively, the goods are not delivered to the contractually-agreed place of delivery—be that place express or implied in the contract. The term ‘non-delivery’, as used here, also encompasses a proper physical and contractual delivery, but without appropriate transfer of ownership because, for example, the goods are not free from some sort of encumbrance to title—potentially making the delivery a mere bailment.
The meaning of ‘wrong delivery’, however, can be less obvious. For the purposes of this article, ‘wrong delivery’ shall mean a delivery of goods which fail to achieve reasonable conformity with the specification of the goods named in the relevant contract. It will therefore include delivery of goods of a fundamentally different nature to that specified by the contract (for example—a computer was contracted for, but a book was delivered); delivery of goods of a ‘slightly’ different nature to that specified, where exact conformity to a contractual description is a condition of the contract; delivery of goods unfit for a contractually-stated purpose; delivery of goods of unmerchantable quality; delivery of goods which do not correspond to a contractual description; and so on.
So why does this article focus narrowly on provisions relating to wrong-delivery and non-delivery? Apart from the need simply for selection and limitation of the field of study, it focuses on these situations because it is believed that the majority of consumer complaints will arise in these areas—that most consumer grievances will not arise until after the contract has been notionally concluded by the completion of payment by the consumer and by a purported contractual performance by a supplier.
Conversely, the kinds of consumer protection provisions which will not be examined here include, for example, those that relate to the supply of services, privacy standards, product liability, representations concerning land or employment, the offering of gifts or prizes, advertising, pyramid selling, and so on, unless they relate at least indirectly to wrong delivery or non-delivery of goods. A useful side-effect of this study, though, may be that any conclusions that a reader may draw from it concerning ‘optimal’, ‘harmonised’, ‘integrated’ or ‘complete’ provisions relating to a future international consumer protection regime may also, to some extent, be applicable to some or all of these other situations.
The basic purpose underlying the creation of the Trade Practices Act 1974 (the TPA) can be discerned from the Australian Federal Parliament’s Second Reading Speech,[6] which states that:
The purpose of the Bill is to control restrictive trade practices and to protect consumers from unfair commercial practices… The principle known as caveat emptor…[which] may have been appropriate for…village markets…has ceased to be appropriate as a general rule…[because] now the marketing of goods or services is conducted on an organised basis and by trained executives…[with whom] the untrained consumer is no match…[and thus now] the consumer needs protection by the law…
A further need for government intervention in consumer transactions has been the growing disparity in product knowledge as between suppliers and consumers since the Second World War. This is because of the increasing sophistication in the goods and services available since that time. Whereas once, in ‘village markets’, the seller and the buyer had a roughly equal knowledge about the subject of their negotiations, the widespread availability and complexity of goods—such as motor cars, computers, television sets, etc—means there is now an inequality of bargaining power in the market, thus prompting governments to try to achieve a level playing field.
In a sense, then, the TPA is two acts rolled into one: on the one hand, it contains laws concerning business-to-business transactions, such as laws about restrictive trade and anti-competitive practices; however, it also contains laws promoting the protection of consumers engaged in business-to-consumer transactions with corporations. It is this second type of laws which are of general concern here, and specifically, certain provisions contained especially in Part V, but also in Parts IVA and VI (indirectly), in connection with transactions involving the wrong-delivery or non-delivery of goods.
Section 51AB(1) of this Part prohibits unconscionable conduct of a corporation in connection with the supply of goods to a consumer. We know that s 51AB(1) applies to consumer transactions because of ss 51AB(5) and (6).
While the term ‘unconscionable’ is not defined in the TPA, s 51AB(2) provides a list of non-exhaustive but reasonably foreseeable[7] factors which the court may have regard to in determining whether conduct has been unconscionable. These include the relative strengths of bargaining position; the consumer being required to comply with conditions that are not reasonably necessary; whether any document is comprehensible to the consumer; and whether undue influence or unfair tactics is a factor. Hill J in Zoneff v Elcom Credit Union Ltd[8] held that ‘conduct will be unconscionable when it can be seen in accordance with the ordinary concepts of mankind to be so against conscience and fairness that a court would intervene’. Unconscionable conduct also includes both active and passive misrepresentations which result in injustice arising accidentally.9
The s 51AB provisions are relevant here where breach results in wrong delivery or non-delivery of goods to the consumer; but, of course, since an aggrieved consumer will be more likely to bring an action for such occurrences under the Part V provisions, Part IVA may be of only limited relevance.
Part V, the main consumer protection part of the TPA, contains the catch-all s 52 prohibition against corporations engaging in ‘misleading or deceptive conduct’. It also contains the s 53 prohibitions against various kinds of false representations, such as false representations in regard to the supply of goods:
(s 53(g)). Obviously these provisions are relevant to non-delivery or wrong delivery. For example, s 53(eb) would relate to wrong-delivery where the relevant contract stipulated that the goods delivered were to derive from (or not derive from) a particular country of origin, and such contractual term was breached.
The presumption of mens rea (knowledge of the wrongfulness of an act) is displaced by s 53 of the TPA, according to Given v CV Holland (Holdings) Pty Ltd.[10] Therefore, even if a supplier lacks awareness that goods delivered did not have, for example, the particular performance characteristics claimed, in breach of s 53(c), the supplier is still liable, as the representation will come within the meaning of ‘falsely represent’ in s 53.
Division 2 of Part V deals with conditions and warranties in consumer transactions. It contains provisions concerning:
Part VI of the TPA contains the enforcement and remedies provisions in relation to consumer protection and other provisions of the Act. The sections of most relevance here are: s 75B—which defines a person who has assisted with or has directly contravened the TPA; s 79—which specifies applicable penalties; s 80— which grants powers to the court to order injunctive remedies; s 80A—powers of the court to order corrective advertising; s 84—which provides that the conduct of an agent is that of the offending corporation; s 85—providing defences available to corporations allegedly in breach of Part V; and s 87— providing a range of further orders a court can make regarding contraventions.
There is nothing in the TPA which makes it expressly applicable or inapplicable to ecommerce transactions, or transactions conducted via the Internet. However, for our purposes, this express inclusion or exclusion is irrelevant, since we only wish to refer to the TPA to ask the following questions: [12]
The United Nations Guidelines for Consumer Protection (the Guidelines) were released on 9 April 1985 by resolution 39/248 of the United Nations General Assembly. The Guidelines were re-released in amended and expanded form by the UN’s Economic and Social Council resolution 1999/7 of 26 July 1999, and were adopted by the General Assembly in late 1999.
The reason for release of the 1999 version was largely to include elements on sustainable consumption, which was intended to bolster the perceived relationship between this and consumer interests. Since the detailed differences between the old version, which contained 46 clauses, and the new version, containing 69 clauses, are not important here, a comparison between them is not addressed. Thus, examination of the Guidelines here is restricted entirely to the current version.
The structure of the Guidelines is as follows:
I Objectives (cl 1)
II General principles (cll 2–8)
III Guidelines (cll 9–10)
A Physical safety (cll 11–14)
B Promotion and protection of consumers’ economic interests (cll 15–
27)
C Standards for the safety and quality of consumer goods and services
(cll 28–30)
D Distribution facilities for essential consumer goods and services (cl 31)
E Measures enabling consumers to obtain redress (cll 32–34)
F Education and information programs (cll 35–41)
G Promotion of sustainable consumption (cll 42–55)
H Measures relating to specific areas (cll 56–62) IV International co-operation (cll 63–69)
The Guidelines commence with a preamble consisting of 10 paragraphs, which note historical precedents and declare statements of principle. In summary, these state that resolution 1999/7:
In summary, the Objectives assert that the interests and needs of consumers world-wide are within the contemplation of the Guidelines. This echoes the TPA Second Reading Speech by stating that ‘consumers often face imbalances in…bargaining power’. However, it extends beyond the Second Reading Speech (apart from its express general international application) by arguing for a consumer right to safe products with ‘just, equitable and sustainable economic and social development and environmental protection’. The specific objectives of the Guidelines are:
(a) to assist countries in achieving or maintaining adequate protection for their population;
(b) to facilitate production and distribution patterns responsive to the needs and desires of consumers;
(c) to encourage high levels of ethical conduct for those engaged in the production and distribution of goods and services to consumers;
(d) to assist countries in curbing abusive business practices by all enterprises at the national and international levels which adversely affect consumers;
(e) to facilitate the development of independent consumer groups;
(f) to further international co-operation in the field of consumer protection;
(g) to encourage the development of market conditions which provide consumers with greater choice at lower levels; and
(h) to promote sustainable consumption.
The description of these clauses, as follows, has been made so that the essential meaning of the individual clause can be seen, with little or no added commentary. Thus the description is complete but it is inevitably list-like, to some extent.[13]
In summary, the general principles urge governments to adopt the Guidelines, setting local consumer protection priorities ‘in accordance with local circumstances and needs’, bearing in mind the relevant costs and benefits of the policies they apply (cl 2); and provide a list of needs that are defined as ‘legitimate’[14] in the sense of being needs worthy of pursuing through government-run consumer protection programs (cl 3). In other words, there can be a relationship between (i) government consumer protection programs and (ii) social/economic/environmental needs, and the former should be designed to pursue satisfaction of the latter, so long as the needs are ‘legitimate’. The ‘legitimate’ needs, according to cl 3, are:
(a) the protection of consumers from hazards to their health and safety;
(b) the promotion and protection of the economic interests of consumers;
(c) access of consumers to adequate information to enable them to make informed choices according to individual wishes and needs;
(d) consumer education, including education on the environmental, social and economic impact of consumer choice;
(e) availability of effective consumer redress;
(f) freedom to form consumer and other relevant groups or organisations and the opportunity of such organisations to present their views in decision-making processes affecting them; and
(g) the promotion of sustainable consumption patterns.
The general principles also tell us that a major cause of global environmental degradation is unsustainable production and consumption patterns, and that developed countries should lead the way in correcting the problem (cl 4). It continues that, in pursuing cl 4 objectives, policy-makers must take into consideration policies to eradicate poverty, satisfy basic human needs, and reduce ‘inequality’ within and between countries (cl 5). Clause 6 provides that consumer protection programs require ‘infrastructure’ in order to be implemented and monitored, and that a consumer protection program should benefit all, especially the rural and the poor. Clause 7 sets out that enterprises should obey the laws (including the provisions of any binding international laws) of countries in which they do business, and cl 8 proposes that public and private research enterprises should be involved in the development of local consumer protection policies.
An obvious difference between the Guidelines (and the other model laws generally) and the TPA is that, as a body of national law, the TPA contains actual specific enforceable provisions, whereas the Guidelines are just that: they are ‘guidelines’, and are meant to be converted into enforceable provisions for local application. Interestingly, that difference could arguably detract from the ‘internationality’ of the Guidelines, in the sense that they could potentially be a set of internationally-enforceable rules. Nonetheless, they have much merit as potential provisions in a future international consumer protection law in initial form.
These clauses are the core provisions of the document. They commence with two clauses of general application to this part, and are then divided up into eight sections: A-H. Clause 9 provides that cll 10–62 apply to ‘home-produced’ goods and services, and to imports. Clause 10 states that consumer protection laws generally should not become barriers to international trade, and that they should be consistent with international trade obligations.
According to cll 11–14, governments should take all appropriate steps to ensure that consumer goods are safe for reasonable use.[15] Clause 12 provides that distributors should ensure that goods in their care do not become unsafe, and that consumers should be informed of proper usage and relevant risks through international symbols. If manufacturers or distributors become aware of unforeseen hazards after products are placed on the market, cl 13 states that they should notify the relevant authorities and the public without delay. Further, under cl 14, if a product is a severe hazard even when properly used, manufacturers and/or distributors should recall it and replace it within a reasonable period of time, or the consumer should be compensated.
Under cll 15–27, government policies should enable consumers to obtain optimum benefit from their economic resources, and to achieve satisfactory production and performance standards, distribution methods, business practices, informative marketing and effective protection against adverse practices.16 Governments should ensure manufacturers—and others—adhere to established laws and standards and monitor adverse practices, according to cl 16.
Clause 17 sets out that governments should control abusive business practices harmful to consumers, being guided by General Assembly resolution 35/63 of 5 December 1980.
Under cl 18, governments should make clear (a) the responsibility of the producer to ensure that goods meet reasonable demands, and (b) that the seller should see that these requirements are met, and similar policies should apply for the supply of services.
Under cl 19, governments should encourage fair and effective competition to provide consumers with choice at the lowest cost. In accordance with cl 20, governments should also ensure manufacturers and/or retailers guarantee availability of after-sales service and spare parts. Consumers should be protected from one-sided contracts, exclusion clauses, and unconscionable conditions under cl 21.
Marketing and sales practices should be fair and legal to enable informed and independent decisions by consumers, and to ensure that information provided to consumers is accurate, under cl 22. Governments should encourage the free flow of accurate information on all aspects of consumer products under cl 23; and under cl 24, information about the impact of products and services should be available through reports, information centres, eco-labelling and hotlines.
Governments should take measures regarding misleading environmental claims, and relevant advertising codes and standards, under cl 25; and should encourage codes of marketing and other business practices to ensure adequate consumer protection under cl 26, which also provides that these codes should receive adequate publicity. Lastly, under cl 27, governments should regularly review legislation pertaining to weights and measures.
Clauses 28–30 indicate that governments should formulate standards at national and international levels for the safety and quality of goods and services.[17] Where a standard is lower than the applicable international standard, under cl 29 every effort should be made to raise that standard. Finally, governments should encourage and ensure the availability of facilities to test and certify the safety, quality and performance of essential consumer goods and services in accordance with cl 30.
This section contains only cl 31, which states that governments should consider ensuring the efficient distribution of goods and services to consumers and encouraging the establishment of consumer co-operatives.
Clauses 32–34 say that governments should establish legal and/or administrative measures to enable consumers to obtain redress through procedures that are expeditious, fair, inexpensive and accessible (cl 32); that governments should encourage all enterprises to resolve consumer disputes in a fair, expeditious and informal manner, and to establish mechanisms which can provide assistance to consumers (cl 33); and that information on available redress should be made available to consumers (cl 34).
Clauses 35–41 provide that governments should develop, or encourage the development of, general consumer education and information programs, to enable people to act as discriminating consumers. In so doing, governments should give special attention to the needs of disadvantaged consumers (cl 35). Furthermore, cl 36 sets out that consumer education should become an integral part of the basic curriculum of the educational system as a component of existing subjects. Such consumer education programs should cover:
(a) health;
(b) product hazards;
(c) product labeling;
(d) relevant legislation;
(e) information on weights and measures, price, quality, etc;
(f) environmental protection; and
(g) efficient use of materials, energy and water (cl 37).
Under cl 38, governments should encourage consumer organisations and the media to undertake education programs on the environmental impact of consumption patterns. Additionally, cl 39 states that businesses should undertake, or participate in, consumer education, whilst cl 40 sets out that governments should develop consumer information programs in the mass media. Finally, under cl 41, governments should organise or encourage training programs for educators and consumer advisers.
G Promotion of sustainable consumption
Clauses 42–55 say that sustainable consumption includes meeting the needs of present and future generations for goods and services in ways that are sustainable.[18] Clause 43 states that the responsibility for sustainable consumption is shared by all; that informed consumers have an essential role in promoting sustainable consumption through the effect of their choices on producers; and that governments, business, consumer and environmental organisations have a responsibility for promoting public participation and debate on sustainable consumption.
Under cl 44, governments should promote sustainable consumption through regulation; under cl 45, governments should encourage products and services that are safe and energy and resource efficient, and should encourage recycling programs; and under cl 46, governments should promote environmental health and safety standards for products and services. However, cl 46 also states that those standards should not result in disguised barriers to trade.
According to cll 47 and 48 respectively, governments should encourage impartial environmental testing of products, and should manage environmentally-harmful substances and encourage sound alternatives. Moreover, governments should promote awareness of health-related benefits of sustainable consumption and production patterns under cl 49, and should encourage the transformation of unsustainable consumption patterns under cl 50. Clause 51 encourages governments to create or strengthen effective regulatory mechanisms for the protection of consumers, including aspects of sustainable consumption; whilst cl 52 suggests that governments consider a range of economic instruments to promote sustainable consumption. According to cl 53, governments should also develop publicly-available indicators for measuring progress towards sustainable consumption. Similarly, under cl 54, governments and international agencies should take the lead in introducing sustainable practices in their own operations, and encourage the use of environmentally-sound products and services. Finally, under cl 55, governments should promote research on consumer behaviour related to environmental damage.
Clauses 56–62 provide that governments should give priority to areas of essential concern for the health of the consumer—such as food, water and pharmaceuticals—for quality control; adequate and secure distribution facilities; and standardised labeling and information; as well as education and research programs.[19] With regard to food, cl 47 sets out that governments should adopt accepted international food standards. Under cl 58, governments should promote sustainable agricultural policies. Clause 59 provides that governments should formulate policies to improve supply and quality of drinking water, whilst cl 60 states that governments should assign high priority to the formulation of policies concerning the multiple uses of water. Governments should also develop adequate standards for ensuring the quality and use of pharmaceuticals, according to cl 61, and should adopt appropriate measures in other areas under cl 62.
Comparing Part III of the Guidelines with the TPA, the following points may be noted. Sections A and C (on the safety of goods and services) can be compared with Part VA (product liability) of the TPA, and with Division 1A of Part V. Section A, however, consists of ‘guidelines’ meant for conversion into enforceable provisions by national governments, with Part VA of the TPA being an application of the principles expressed in Section A of the Guidelines.
Section B, which covers the economic interests of consumers, contains provisions found only indirectly or impliedly in the TPA. It exemplifies the Guidelines at their most abstract and generalised.
Section D, which deals with efficient distribution of goods and services, has no direct counterpart in the TPA. Thus national governments may consider that market forces will ensure goods are distributed efficiently without government intervention. Measures enabling consumer redress, contained in Section E of the Guidelines, would relate, to a limited extent, to Part VI of the TPA, which deals with enforcement and remedies. Section F, on consumer education, and Section G, on sustainable consumption, have no parallels in the TPA.
Section H contains some provisions with only an indirect relationship to provisions in the TPA: for example, quality control principles in respect of food and pharmaceuticals can be related to product safety provisions in the TPA.
The foregoing review raises the question: are there any Part III clauses which relate directly to Part V of the TPA or, more specifically, to the issue of wrong delivery or non-delivery of goods, in more than an abstract way? The short answer is no. There is nothing in the Guidelines like s 74 of the TPA. The only clauses that come close are cll 17, 20 and 21, all of which are contained in Section B. As a consequence, either the Guidelines are extremely generalised, or they have a ‘blind spot’. That is to say, there are no provisions in the Guidelines that assist consumers who fall victim to a wrongftil or nondelivery. However, his may not be a weakness in the Guidelines. It may mean merely that it was not intend by its drafters to extend into these areas of consumer protection. The Guidelines, as they are, may nonetheless be a valuable addition to international law. We shall return to the Guidelines when we look at all the model laws together.
The relationship of this part to the TPA speaks for itself. The TPA says nothing about international co-operation, for it is a domestic statute dealing with consumer protection law in Australia. Clauses 63–69 state that governments should:
(a) exchange information on national policies in the field of consumer protection (cl 63);
(b) co-operate in the implementation of consumer protection policies (cl 63);
(c) co-operate to improve the conditions under which essential goods are offered to consumers (cl 63);
(d) develop information links regarding products which have been banned, withdrawn or restricted (cl 64);
(e) work to ensure that the quality of products and information does not vary from country to country (cl 65);
(f) ensure that policies for consumer protection do not become barriers to international trade (cl 69).
All parties concerned should work together to develop environmentally sound technologies and mechanisms for financing their transfer among all countries under cl 66, and should facilitate capacity-building in the area of sustainable consumption under cl 67. Finally, according to cl 68, those same parties should promote programs relating to consumer education.
Pursuant to Art 15 of the Distance Sales Directive (DSD), EU member states were required to implement the DSD by June 2000. The DSD, which aims to protect consumers engaging in ‘distance contracts’ (Art 2), applies to all companies engaging in online transactions with EU consumers (Art 6). Notably, the DSD includes a right of withdrawal in favour of consumers that cannot be waived by contract.
The structure of the DSD is as follows: Article:
1 Object
2 Definitions
3 Exemptions
4 Prior information
5 Written confirmation of information
6 Right of withdrawal
7 Performance
8 Payment by card
9 Inertia selling
10 Restrictions on the use of certain means of distance communication
11 Judicial or administrative redress
12 Binding nature
13 Community rules
14 Minimal clause
15 Implementation
16 Consumer information
17 Complaints system
18 The Directive shall enter into force on the day of its publication in the Official Journal of the European Communities.
19 This Directive is addressed to the member states.
The DSD also commences with a lengthy preamble. Under cl 2 of the preamble, consumers should have access to the goods and services of another member state on the same terms as the population of that state. Similarly, cl 4 notes that the diverging measures to protect consumers in respect of distance selling has had a detrimental effect on competition between businesses, and that it is therefore necessary to introduce a minimum set of common rules in this area.
Under cl 11 of the preamble, distance communication must not lead to a reduction in the information provided to the consumer. Thus, under cl 13, consumers must receive written notice of information necessary for proper performance of contracts. Clause 14 deals with the consumer’s rights of withdrawal from contracts. It requires that the costs to the consumer should be limited to the direct costs of returning goods, and without prejudice to the consumer’s rights under national laws. Clause 14 has particular regard to the receipt of damaged products or of products which do not correspond to the description given in the offer.
Clauses 18 to 22 deal with the administrative and procedural principles that underlie the DSD. Clause 18 provides that the minimum binding rules in the DSD are to be supplemented by voluntary arrangements among the traders concerned. Further, cl 21 notes that the Commission, on 14 February 1996, published a plan of action on consumer access to justice and the settlement of consumer disputes, including specific initiatives to promote out-of-court procedures. Lastly, cl 22 provides that the burden of proof should be shifted to the supplier, as consumers are not in control of the means of communication used.
In summary, the 19 Articles of the DSD provide as follows. Article 1 provides that the object of the DSD is to approximate the laws of the EU member states in the field of distance contracts between suppliers and consumers. Article 2 defines important terms—‘distance contract’ is defined as a contract organised by a supplier who makes use of a means of distance communication for the purpose of the contract; ‘consumer’ is a natural person acting outside his trade business or profession; ‘supplier’ is a natural or legal person acting in their commercial or professional capacity in relation to contracts covered by the DSD; and ‘means of distance communication’ is deemed to include ordinary mail, telephone, radio, email, etc.
Article 3 specifies that the DSD does not apply to contracts for financial services involving vending machines, or public payphones or auctions, or relating to immovable property. Article 3 also notes that Arts 4–7(1) are inapplicable to contracts relating to goods of daily consumption (for example, foodstuffs) or the provision of accommodation, transport, and catering or leisure services in certain circumstances.
Article 4 specifies the items of information which the supplier must provide to the consumer prior to conclusion of the contract. These include information concerning the supplier’s identity and address, the goods, the price, delivery costs, arrangements for payment, delivery or performance, and the rights of withdrawal. These must be provided in a clear and comprehensible manner.
Article 5 specifies that the consumer must receive written confirmation of the information required to be provided under Art 4 during performance, or, at the latest, at time of delivery of goods.
Article 6 provides that the consumer has the right of withdrawal for a period of seven working days from the day of receipt of the goods, without penalty and without giving any reason, the only charge to the consumer being the direct cost of returning the goods. If, however, the supplier has failed to comply with Art 5, the period shall be three months, beginning on the day of receipt by the consumer. In any case, the supplier must reimburse the sums paid by the consumer, free of charge, within 30 days. The rights of withdrawal are subject to some noted exemptions—for example, where goods were made or personalised to the consumer’s specifications.
Article 7 provides that, unless agreed otherwise, the supplier must deliver the goods within 31 days of receipt of the consumer’s order, but if the goods ordered are unavailable, the consumer must be informed and be able to obtain a refund of any sums paid, in any case, within 30 days.
Articles 8–10 deal with inappropriate behaviour by the seller, either in soliciting for custom or after the contract has been concluded. Article 8 provides that a consumer may cancel a payment where fraudulent use has been made of a payment card, and be recredited with sums paid where appropriate. Article 9 provides that member states shall prohibit supply of goods not ordered by the consumer, where such supply involves a demand for payment—silence of the consumer not constituting consent. Article 10 provides that suppliers are prohibited from the use of automatic calling and facsimile machines without the prior consent of the consumer, and that other means of distance communication may be used only where there is no objection from the consumer.
Articles 11–13 govern the scope and enforcement of the DSD. Article 11 provides that member states shall ensure compliance with the DSD in the interests of consumers, by allowing appropriate bodies with standing to take action before competent judicial or administrative bodies (the burden of proof in some cases being on the supplier), or by direct enforcement measures, or by measures taken through self-regulatory bodies. Article 12 provides that consumers cannot contract out of rights conferred on them by the DSD if they have close connection with a member state. Article 13 provides that the DSD applies unless there are EU Community rules which prevail in particular cases, or in relation to particular parts of supply contracts. This provision is reminiscent of the generalia specialibus non derogant rule of statutory interpretation in common law.
Articles 14–18 deal with the application and implementation of the DSD itself. Article 14 provides that member states may introduce more stringent provisions than currently found in the DSD, in the interest of consumers. Article 15 provides for the timing of the introduction of, and the implementation of, the DSD. Article 16 provides for measures to keep consumer residents of member states informed of developments relating to the implementation of the DSD. Article 17 provides for a proposed consumer complaint mechanism in respect of distance selling. Article 18 provides for the date of the DSD entering into force, and Art 19 provides that the DSD is addressed to the member states.
At this point we can see what the DSD has to say about our matters of primary interest. Probably the provision of the DSD closest to the Part V TPA provisions of relevance here is Art 6. Although Art 6 is quite different in specific content to Part V, it could result in an identical—or better—effect in some cases. For example, if the consumer under Part V complains of noncompliance with contractual description of goods, the seven-day right-ofwithdrawal period under Art 6 may provide a superior remedy in some cases, although an issue remains as to whether a seven-day period is sufficient. In addition, the mechanism which allows the consumer to return goods may prove more convenient in some cases. However, given the range of the provisions covered under Part V of the TPA, Art 6 undoubtedly provides less consumer protection on balance.
The Directive on Electronic Commerce (DEC), in force since 17 July 2000, provides a general legal framework for the conduct of ecommerce within the EU, and by the EU member states with outside parties. It commences with a lengthy preamble (65 clauses), and is contained in 24 Articles in the following structure:
Chapter I General provisions
Art 1 Objective and scope
Art 2 Definitions
Art 3 Internal market
Chapter II Principles Section 1: Establishment and information requirements Art 4 Principle excluding prior authorisation Art 5 General information to be provided
Section 2: Commercial communications Art 6 Information to be provided Art 7 Unsolicited commercial communication Art 8 Regulated professions
Section 3: Contracts concluded by electronic means Art 9 Treatment of contracts Art 10 Information to be provided Art 11 Placing of the order
Section 4: Liability of intermediary service providers Art 12 ‘Mere conduit’ Art 13 ‘Caching’ Art 14 Hosting Art 15 No general obligation to monitor
Chapter III Implementation Art 16 Codes of conduct Art 17 Out-of-court dispute settlement Art 18 Court actions Art 19 Co-operation Art 20 Sanctions
Chapter IV Final Provisions Art 21 Re-examination Art 22 Transposition Art 23 Entry into force Art 24 Addressees
Annex—Derogations from Art 3
Of the clauses set out in the preamble, the following are of particular interest to this article. Clause 11 states that the DEC is without prejudice to the level of protection for consumer interests as established by the DSD. Clause 18 provides that information society services consist, inter alia, in the selling of goods online and in services giving rise to on-line contracting. Under cl 22, information society services should be regulated at the source of activity in order to ensure an effective protection of public interest objectives—not only for the citizens of the competent authorities’ own countries, but for all consumers, in order to improve mutual trust between states. However, cl 23 provides that the rules of private international law must not restrict the freedom to provide information society services established in the Directive. Under cl 26, member states may apply their national rules on criminal law and criminal proceedings with a view to taking all measures necessary in respect of criminal offences.
Clause 52 provides that the effective exercise of the freedoms of the internal market makes it necessary to guarantee victims effective access to means of settling disputes. It provides that the Directive requests members states to ensure that appropriate court actions are available. Member states should also examine the need to ‘provide access to judicial procedures by appropriate electronic means [emphasis added]’. However, cl 55 of the Directive does not affect the law applicable to contractual obligations relating to consumer contracts.
Clause 58 states that the Directive is without prejudice to the results of discussions within international organisations, such as the UN and the OECD, on legal issues. Clause 60 states that the legal framework on ecommerce must be clear and simple, predictable and consistent with the rules applicable at international level. Under cl 65, the Commission is to examine the degree to which existing consumer protection rules provide sufficient protection; if need be, the Commission should make specific additional proposals.
In summary, the 24 Articles of the DEC provide as follows. Article 1 provides that the object of the DEC is to contribute to the proper functioning of the internal market by ensuring the free movement of information society services between member states, and Art 2 contains definitions of certain terms used in the DEC.
Article 3 sets out rules for the purposes of ecommerce which regulate the EU as an ‘internal market’: for example, a member state may not prevent its citizens from providing the information society services of another member state unless it is necessary for the prevention of a criminal offence.
Article 4 provides that the activities of information service providers (see preamble, cl 18) may not be made subject to prior authorisation. Article 5 provides that, in addition to other information requirements established by Community law, service providers shall provide various items of information, including their name, geographic address and details of the service provider which allow him [sic] to be co ntacted rapidly. Article 6 stipulates a further information requirement that a ‘commercial communication’ shall be clearly identifiable as such; and its originator and promotional offers, etc, shall be clearly identifiable.
Article 7 provides that, subject to the DSD and Directive 97/66/EC, where any member state permits unsolicited commercial email, it shall be identifiable clearly and unambiguously, but that persons not wishing to receive such communications shall be able to register themselves appropriately.
Article 8 provides rules regarding the so-called ‘regulated professions’ (law, accountancy, etc)—such as their commercial communications being subject to compliance with any rules regarding the dignity and honour of the profession and fairness towards clients.
Article 9 provides that member states shall ensure that their legal system allows contracts to be concluded by electronic means, except in some cases with contracts in respect of the creation or transfer of interests in real property.
Article 10 provides that, in respect of information to be provided in relation to electronic contracts, and in addition to other information requirements under EU law, member states shall ensure that service providers clearly, comprehensibly and unambiguously—and prior to the order being placed by the recipient of the service—provide information regarding the steps to be followed to conclude the contract, or for the filing of, access to, and means of correction of errors in the contract document.
Article 11 provides that member states shall ensure that where the recipient places his order through technological means, the service provider must acknowledge its receipt without undue delay and by electronic means, and that the order and the acknowledgement of receipt are deemed received when parties to whom they are addressed are able to access them.
Articles 12, 13 and 14 include provisions reminiscent of the ‘innocent dissemination defence’ in defamation actions at common law. They provide that, where an information society service consists of the transmission or storage, etc, of information supplied by the recipient of the service, the service provider may not be liable for the information transmitted.
Under Art 15, member states shall not impose a general obligation on providers, when providing the services covered by Arts 12, 13 and 14, to monitor the information which they transmit or store.
Article 16 provides that member states shall encourage the drawing up—and compliance with—codes of conduct (by consumer and other organisations), designed to contribute to the proper implementation of Arts 5 to 15.
Under Art 17, member states shall ensure that their legislation does not hamper the use of out-of-court schemes—for example, alternative dispute resolution.
Similarly, Art 18 requires member states to ensure that available court actions allow for the rapid adoption of measures designed to terminate any alleged infringement of the information society service interests involved.
Article 19 provides that member states shall ensure that service providers supply them with the requisite information, and that member states shall cooperate with other member states.
Article 20 provides that member states shall determine and enforce effective, proportionate and dissuasive sanctions applicable to infringements of national provisions adopted pursuant to the DEC.
According to Art 21, before 17 July 2003, and thereafter every two years, the Commission shall submit a report on the application of the DEC, accompanied where necessary by proposals for adapting it to developments in information society services, in particular with respect to crime prevention and consumer protection.
Article 22 provides that member states shall bring into force laws necessary to comply with the DEC before 17 January 2002; Art 23 sets out the date on which the DEC will enter into force; and Art 24 provides that the DEC is addressed to the member states.
The Annex is headed ‘Derogations from Article 3’, and provides that Arts 3(1) and 3(2) do not apply in relation to a range of matters, including copyright, industrial property rights and contractual obligations concerning consumer contracts.
It is clear at this point that the DEC is quite different in purpose from Part V of the TPA and the DSD. In fact, the DEC contains no real consumer protection provisions at all in the sense used in the TPA. More shall be said about comparing the DEC with the TPA and the DSD at the conclusion of this article.
These guidelines (the OECD Guidelines) were released by the OECD on 9 April 1999. The Guidelines are ‘designed to help ensure that consumers are no less protected shopping on-line than they are when they buy from their local store or order from a catalogue’. These Guidelines are ‘non-binding’. Moreover, ‘the overarching principle of the Guidelines is that consumers shopping on-line should enjoy transparent and effective protection that is not less than the level of protection that they have in other areas of commerce’.[21]
The OECD Guidelines commence with a brief preamble, followed by an ‘annex’ containing the guidelines in the following structure:
Part One Scope
Part Two eneral principles
I Transparent and effective protection
II Fair business, advertising and marketing practices
III Online disclosures
(a) Information about the business
(b) Information about the goods and services
(c) Information about the transaction
IV Confirmation process V Payment VI Dispute resolution and redress
(a) Applicable law and jurisdiction
(b) Alternative dispute resolution and redress VII Privacy VIII Education and awareness
Part Three Implementation
Part Four Global co-operation
In summary, the preamble to the OECD Guidelines states that consumer laws limit fraudulent and unfair commercial conduct, and that they are indispensable in building consumer confidence. It continues by stating that the inherently international nature of the electronic marketplace requires a global approach to consumer protection, and that disparate national policies may impede the growth of ecommerce. Accordingly, it provides that consumer protection may be addressed most effectively through international co-operation. Finally, the preamble elucidates that the OECD Guidelines are a set of general guidelines to protect consumers participating in ecommerce without erecting barriers to trade, and which represent the core characteristics of effective consumer protection for ecommerce. After having regard to certain matters,[22] the preamble concludes by recommending that member countries implement the OECD Guidelines at international, national and local levels, and instructs the OECD Committee on Consumer Policy to exchange information on progress with respect to implementation progress, and to report to the OECD Council in 2002.
The scope of the OECD Guidelines is succinctly stated: they apply only to business-to-consumer transactions and not to business-to-business transactions.
This principle states that consumers shopping online should enjoy transparent and effective protection that is not less than the level of protection they have in other areas of commerce. It further states that all parties concerned should work together to achieve such protection.
This principle requires that businesses engaged in ecommerce should act fairly. Specifically they should not:
(a) Information about the business
This principle states that businesses should provide accurate and accessible information about themselves to allow, at minimum:
identification of legal and trade names, geographic and email addresses, telephone numbers, and any relevant government licenses, etc;
easy communication with the business;
effective resolution of disputes;
service of legal process; and
location of the business principals for law enforcement.
Where a business publicises its membership in any self-regulatory scheme, the business should provide consumers with the relevant contact details and method of verifying that membership.
(b) Information about the goods and services
This principle states that businesses should provide accurate and accessible information describing the goods or services offered and make it possible for consumers to maintain an adequate record of such information.
(c) Information about the transaction
Businesses should, under this principle, provide information about the terms, conditions and costs associated with a transaction, and such information should be clear, accurate and accessible, and provided in a manner that gives adequate opportunity for review before entering into the transaction. Where multiple languages are used, all information given should be provided in all applicable languages.
Information should include:
This principle states that the consumer should, before purchase, be able to identify precisely the relevant goods or services, and correct any errors in the order, and be able to retain an accurate record of the transaction.
This principle states that consumers should be provided with easy-to-use, secure payment mechanisms.
(a) Applicable law and jurisdiction
Business-to-consumer cross-border transactions are subject to the existing framework on applicable law and jurisdiction. Thus businesses are also subject to the existing problems associated with cross-border transactions—such as conflicts of laws, uncertainty, expense, complexity and potential language difficulties. However, the principle also acknowledges that ecommerce challenges this framework. It therefore provides that ‘consideration should be given to whether the existing framework should be modified [emphasis added]’ to ensure effective consumer protection in the context of the continued growth of ecommerce. The prospect of an enforceable international regime is left open as a possibility.
In considering whether to modify the existing framework, governments should ensure that, while facilitating ecommerce, the framework provides no less fairness to consumers and businesses than in other forms of commerce. Consumers should also be provided with redress mechanisms without undue cost or burden. This last point also seems to indicate the need for an enforceable international consumer protection regime, as arguably only such a regime could provide this solution; an international in-court redress mechanism ‘without undue cost or burden’ is impossible in the present circumstances.
(b) Alternative dispute resolution and redress
This principle enunciates that consumers should be provided with meaningful access to fair redress, including to alternative dispute resolution, again without undue cost or burden. It also provides that governments should develop policies to resolve consumer disputes arising from business-to-consumer cross-border transactions. Governments are also called upon to employ information technologies innovatively in implementing these policies.
This principle states that business-to-consumer transactions should be conducted in accordance with the OECD Guidelines Governing the Protection of Privacy and Transborder Flow of Personal Data (1980), and the OECD Ministerial Declaration on the Protection of Privacy on Global Networks (1988).
Under this principle, all parties should work together to educate consumers about ecommerce and the consumer protection framework that applies to their online activities.
When implementing the OCED principles, Part 3 requires that member countries should:
This principle states that member countries should facilitate communication, cooperation and enforcement of joint initiatives at the international level to provide effective consumer protection. This should be achieved, inter alia, through their judicial, regulatory, and law enforcement authorities and, importantly, ‘by entering into multi-lateral agreements to accomplish such co-operation
[emphasis added]’ based on consensus regarding core consumer protection at the international levels. They should also work towards developing agreements for the mutual recognition and enforcement of judgments resulting from actions taken to combat unfair commercial conduct.
So what do the OECD Guidelines say about the matters of primary interest to this article? As with the UN Guidelines, the OECD Guidelines are cast as relatively abstract matters of general principal, and do not equate directly to any provision in Part V of the TPA. The closest identification is found between the first two ‘General principles’—concerning how consumers should enjoy ‘protection that is not less than the level of protection they have in other areas of commerce’, and how businesses engaged in ecommerce ‘should act fairly’. Specifically, they are required to ‘not engage in any practice that is likely to be deceptive, misleading, fraudulent or unfair or is likely to cause unreasonable risk of harm to consumers’.
We are now able to conclude that there is, in fact, very little in the way of ‘select aspects’ of any of the four model laws which are directly and/or extensively similar to the consumer protection provisions under Part V of the TPA. Clearly the purpose of the model laws differs from the TPA, both in terms of their level of abstraction, and in terms of the comparative aims of all the laws studied here.
In general, the model laws are intended to be relatively abstract. Moreover, whilst overlapping in their application to some extent, they do address different fields. While the UN Guidelines are concerned with the broad principles of global consumer protection, however conducted, the DSD is concerned with the regulation of consumer contracts formed by using any means of distance communication, for the benefit of citizens of the EU member states. The DEC, by comparison, is concerned with general principles for the conduct of ecommerce for the benefit of EU citizens, whether they are participating in ecommerce as consumers or not. Finally, the OECD Guidelines are concerned with the broad principles of consumer protection specifically where consumer transactions are concluded by means of ecommerce technology.
Of the four model laws, the most readily applicable in its present form is the DSD. The DSD is formulated more like an actual set of ‘black letter’ laws, even when compared to the DEC—which more resembles the abstract principles found in the two Guidelines. In a sense, though, these distinctions are of little importance. The relative degree of generality or specific applicability of these model laws would make little difference to the construction of an enforceable multi-lateral international consumer protection convention, based on considerations such as those found in the four model laws and something like Part V of the TPA. For such a task, all of this material would be useful, whether it be principles or provisions from current enacted law, or the abstract provisions of multilateral guidelines.
[1] Associate Lecturer, TC Beirne School of Law, University of Queensland.
[2] The United Nations Guidelines for Consumer Protection (1985).
[3] Directive 97/7/EC Protection of Consumers in Respect of Distance Contracts (1997), and Directive 2000/31/EC Certain Legal Aspects of Information Society Services, in Particular Electronic Commerce (2000).
[4] Recommendation of the OECD Council Concerning Guidelines for Consumer Protection in the Context of Electronic Commerce (1999).
[5] No general explanations of the Australian law will be given—a basic understanding of consumer protection law is assumed.
[6] Hansard, 30 July 1974, 540–41.
[7] Section 51AB(4)(a).
[8] [1990] FCA 166; (1990) ATPR 41–009 at 51–157.
[9] Nathan J in George T Collings (Aust) Pty Ltd v HF Stevenson (Aust) (1991) ATPR 41–104 at 42–
[622] .
[10] (1977) ATPR 40–029.
[11] The s 69 provisions relate to non-delivery where there is no transfer of ownership of goods to the consumer.
[12] In fact, the TPA is applicable to ecommerce and internet consumer transactions, but only where they are conducted entirely within Australia.
[13] The alternatives are that commentaries could be made on each clause—requiring a book; and oversummarisation by grouping like clauses would leave out sufficient detail. This approach is taken throughout the whole article.
[14] Apparently universally legitimate needs, despite the fact that in cl 2, the ‘needs’ are meant to be understood as local needs.
[15] Clause 11. 16 Clause 15.
[17] Clause 28.
[18] Clause 42.
[19] Clause 56.
[20] Organisation for Economic Co-operation and Development.
[21] OECD news release dated 9 April 1999.
[22] The preamble states that regard is had to the following matters: the OECD Convention, the Recommendation Governing the Protection of Privacy, the Ministerial Declaration on Authentication, the Recommendations Concerning Guidelines for the Security of Information Systems and Cryptography, and recognising that ecommerce, which offers new and substantial benefits, may create situations which may put consumers at risk; that confidence in ecommerce is enhanced by effective consumer protection mechanisms, and considering that governments should devote special attention to the development of effective cross-border redress systems.
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URL: http://www.austlii.edu.au/au/journals/IntTBLawRw/2003/10.html