Skip to 0 minutes and 5 secondsEMMANUEL LARYEA: To be able to enforce a contract, one of the elements you have to establish is that there is an intention to create a legal relation-- so, an intention to have legal obligation for whatever promise is made. In this case, the law will look at whether the situation-- whether an intention can be established. The problem will be that because it's between siblings and in the particular circumstances looking at what was at stake and what was been, the subject matter, fetching of water, it's going to be hard to establish that it was intended to be legally binding.

Skip to 0 minutes and 50 secondsJUSTIN MALBON: And the Australian consumer law will not apply here because that arrangement was not in trade or commerce because the brother was not in the business of selling water, I take it. So that wasn't a proper business arrangement.

Skip to 1 minute and 9 secondsEMMANUEL LARYEA: The law also looks at the power balance between the parties. There might be situations where something or other appears to be a contract, a valid contract, because all the elements that we talked about of acceptance, consideration, and intention may well be present. And yet, the courts might not enforce that. And the idea-- and that will happen because the parties' consent or agreements may be thought to have been vitiated. For instance, it's been reduced. And in that situation where the doctor has some sort of power or influence over the patient, the patient readily agrees. The law will think that that agreement would have been procured by undue influence and therefore will strike the agreement down.

Skip to 2 minutes and 10 secondsJUSTIN MALBON: You bought something from someone overseas. So in the United States, you bought from Australia, supplier in the United States. And you find that the product is of unacceptable quality and you want to remedy. Question is, does the Australian consumer law apply? Generally speaking, the chances are that the Australian consumer law does apply even though you've purchased it from someone in the United States. The difficulty is that-- and I'll use the United States because there is a real problem in the United States. They don't have the consumer guarantees that we have in Australia. And so they believe much more in freedom of contract.

Skip to 2 minutes and 51 secondsSo they're more prepared to rely on the common law in the United States as a general proposition. What happens is, you purchase something from the United States to sell there. You'll click, I agree to the terms and conditions. No one reads those terms or conditions. Those terms and conditions in many cases are getting worse and worse because they know you don't read them. And often in the US ones, they'll say, you agree to get rid of all your rights. Any consumer right I hereby agree to forego. That's often what you got.

Skip to 3 minutes and 22 secondsAnd sometimes, it's so bad you've agreed to the seller entering into your computer system, searching around for any data they can find, and then selling it off to third parties. You actually agree to that buried somewhere in clause 553 in those terms and conditions. So there is a danger that it is lying there. Also, what you're often agreeing to is that you will agree to have the dispute resolved in the United States and you agree that the United States law applies. So even though from the Australian point of view, we say the Australian law applies to that transaction, the United States courts are going to say, no, you've agreed to the United States laws applying here.

Skip to 4 minutes and 6 secondsAnd in practical, terms having a fight between two jurisdictions like that will cost so much money that it far exceeds the product that you've purchased. So you do need to be careful purchasing online from an overseas seller because your rights in practice may be substantially less than if you bought within the one country. If you click, I agree to the terms and conditions, and you're in Australia purchasing from a seller within Australia, then you will have those consumer guarantees. They cannot contract out of it. And even if you click, I agree to the terms and conditions, and in those terms conditions, it says, I agree to give away all my consumer rights, that has no legal effect in Australia.

Skip to 4 minutes and 47 secondsThe practical reality is if you purchase from an overseas seller, you are at risk. So you therefore need to be very careful whether you can trust that seller. And maybe you go onto a review site, many review site-- can you trust this seller? It often comes down to those questions of trust more than your strict legal rights. If I have a computer, can I recently expect it only to last one year? No, it should last longer than that. The problem is, because the statute is quite broad-- it says the goods must be of acceptable quality. But if you take the computer back after, say, 14 months or at 14 months, clearly a computer is built to last longer than that.

Skip to 5 minutes and 31 secondsSo you can say to the store, I don't care about the warranty. The thing is, you're still in breach of section 54. And it sounds very impressive naming a section number. You're in breach of section 54 of the Australian consumer law. This good is not of acceptable quality. You'd expect a computer to last more than 14 months. The warranty is just what you've been prepared to offer, but the law goes beyond that. You need to provide me the remedies that I'm entitled to. The other thing is, when you purchase goods like a computer from a store, they'll often offer you an extended warranty. Now, there's been a serious issue with extended warranties.

Skip to 6 minutes and 14 secondsIn many cases, stores make more money out of the extended warranty than the actual sale of the goods. So they'll often be saying to you, you should buy this extended warranty. The question is, what is the extended warranty giving you that you don't already have under the law? And there is a provision in the Australian consumer law which says, a supplier must not engage in misleading or deceptive conduct. He cannot deceive you into thinking that you have to buy this warranty-- that without that warranty, extended warranty, you won't have rights.

Skip to 6 minutes and 49 secondsIf they suggest that without the warranty, you'll be able to climb nothing, that is clearly, in most cases, misleading or deceptive conduct and they'll be in breach of the law. Often, they're much more careful these days. They'll say, with the extended warranty, you are entitled to be able to return the goods, but we give you extra service. We'll do extra things for you. So that's the way they often get around the law because they're not allowed to mislead you into believing that without the warranty, you have nothing.

Skip to 7 minutes and 20 secondsIn terms of getting a remedy-- that's what it's called at law-- seeking a remedy, getting your money back, being able to recover the loss that you've suffered-- you try and deal with the supplier and have the matter resolved that way. But if that doesn't work, then often, you will need to take it to some court or tribunal. In many places-- we call it jurisdictions. In many jurisdictions, it will depend on the amount that you're claiming. So if the amount is relatively small, in Victoria, the place you go to is the Victorian Civil and Administrative Tribunal.

Skip to 8 minutes and 2 secondsIf there are other kinds of consumer issues-- for example, you've got a problem with your telephone or your smartphone-- there are a number of specialists ombudsman schemes which for free will help you resolve your dispute. And it's the industry that pays for the dispute. Even though you lose, they still pay. Industry still pay. So there are mechanisms there. And similarly, if you've got complaints against your bank or your insurer or issues around money, you more likely than not can take it to the financial industry ombudsman service. Then, you'll have your dispute resolved for free.

Skip to 8 minutes and 46 secondsEMMANUEL LARYEA: And if it's a consumer guaranteed issue or something that infringes the Australian consumer law, you may file reports to the regulator. So it could be the ACCC. In Victoria, we have the Victorian Consumer Affairs Office, and they can act on your behalf. They can take the breaching party or the perpetrator to task on your behalf.

Case study 2 analysis: What’s the deal?

Watch Justin and Emmanuel explore contract law and the way it provides fairness with their analysis of the “What’s the deal?” case study.

Talking point

How has your understanding of contract law and the themes discussed by Justin and Emmanuel changed after watching their analysis?

Within the Comments, consider sharing with other learners your new understanding of contract law and how it provides protection for parties entering into contracts.

Also consider sharing with other learners your thoughts on the following questions:

  • Do you read all the terms and conditions when you sign a contract? If so, why, if not, why not?

  • What is your experience of negotiating contracts, whether at work, or in your neighbourhood?

  • Have you ever sought legal advice or help when a contract has gone bad or you cannot complete the obligations you originally agreed to? What was the process that worked best for you?


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This video is from the free online course:

Law for Non-Lawyers: Introduction to Law

Monash University