200292 Building Law

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200292 Building Law

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200292 Building Law

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Course Code: 200292
University: Western Sydney University

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Country: Australia

Critically analyse how the Australian Consumer Law affects developers selling land insofar as  that law governs.

In the Australian legal system, the formation of Australian Consumer Law (ACL) is a significant step towards dealing with the concern of fair trading and consumer protection. It is the result of broad cooperative reform that has been conducted by the Commonwealth and territory and state governments. It is with the help of this piece of Legislation, wherein actions can be taken against individuals and businesses breaching ACL.
Thus considering the above discussed aspects, the present assignment would highlight on ways in which ACL impacts developers selling land. In this context, the impact of ACL on developers selling land will be discussed with particular emphasis on misrepresentation and unfair contract terms.
 In order to discuss the impact of ACL on developers selling land in regards to misrepresentation and unfair contract terms, it is essential to discuss the concept of ACL. It is the result of wide range of cooperative reform performed by Commonwealth and territory and state governments. It mainly deals with fair trading and consumer protection. The piece of law replaced Trade Practices Act 1974 and is a schedule to Competition and Consumer Act 2010. ACL is being administered by Australian Competition and Consumer Commission (ACCC) (Ross et al., 2013). In cases associated with the breach of the law actions can be taken against the responsible individual. The aspects covered under ACL include supply of services or goods, grant or sale of interests in land and the supply of financial services or products.
In the context of real estate transactions, ACL is associated with general ban on deceptive or misleading conduct in trade or commerce. In real estate transactions ACL also imposes general ban on unconscionable conduct in trade. Under ACL, the provision exists for making unfair contract terms void in consumer contracts. Specific unfair practices can be banned in trade and commerce under ACL (Miller, 2010). Under ACL in real estate transactions, the consumer’s goods safety and product related services are required to be maintained. The enforcement and formulation of information standards are also required to be maintained under ACL.
Under Section 18 of ACL individuals are prohibited in trade or commerce from engaging in conduct which are deceptive in nature or misleading or may result in deceiving or misleading the involved parties. Under Section 30 of ACL, it has been prohibited in relation to sale or promotion of an interest in land or possible sale, misleading or false representations in association to nature of the interest in land, sponsorship, affiliation or approval of the individual making the statement, payable price for land, characteristics of land, location of land, the use or utility of the land being put or may lawfully be put and the availability or existence or facilities associated to the land. This is applicable in representations associated with transactions related to sale of interests in specific land parcels. The impact on developers selling land due to infringement of Section 30 of the act may result in civil proceedings due to the damages, an injunction or a pecuniary penalty, remedial orders (Nottage, 2010).  Under the act, it has been stated regarding which aspects of contract may be considered to be “misleading” or “false” that is subjected to thorough consideration of the courts. The first priority in this context is considering the fact that representation is not just restricted to verbal statement. It is extended to a statement that has been made orally or by implication from conducts or words or in writings. It also includes drawings and plans, photographs, pictures, maps or demeanor, gestures and other conducts (Malbon and Nottage, 2013). In addition to the above discussed aspects, silence to a relevant fact can also be considered as representation, particularly in situations in which half-truth or representation has been performed that, at a particular time period was a truth that is no more relevant in context to present time period.   
In this context it is required to be mentioned here that it is not always required to make a representation to another individual who finally brings claim i.e. representee. The only aspect to be considered in this context is whether a misleading or false representation have been made or not, due to which on the part of the representee may experience damage or loss (Rochow, 2010). Considering the above made discussion it may be stated that misrepresentation implies a representation which contradicts the fact. An essential aspect to be highlighted in this context is, it is not always necessary for the individual making the representation to know that the statement is false in nature. On the part of the individual making the representation may have believe or perception that the statement is true in nature. However, the lack of knowledge regarding the falsehood of the statement or the perception that the statement is true in nature will not result in providing them with protection from the liability (Paterson, 2011). For the purpose of determining if a representation is misleading in nature, the entire representation is considered along with the context in which the representation has been made. Thus, on the part of either parties, without considering the related discussion, usually the context in which the statements were made, cannot choose particular statements.
A mentionable case associated with misrepresentation and the aspects taken into consideration on the part of court for the purpose of considering particular representations to be misleading or false in nature is Pryor v Given (1979) 24 ALR 442; (1980) 30 ALR 189 (FC). It is with the help of the particular case scenario with the help of which the approach of court in such cases can be observed (Findlaw, 2017).  The particular case was in appeal to the Federal Court of Australia associated with decision under 53A(1)(b) of the pervious Trade Practices Act 1974 (the TPA). In the particular case the court held the appellant as convict of making misleading statements related to the sale of land. The grounds on which the legal action was initiated and centered around was advisements for sale of land   in different media which use the phrase “a wonderful place to live” and “watch it grow”. These ads also included pictorial representations of different houses. In the particular case, the court examined the advertisements as a whole and also considered the pictures and words of the ad (Harris, 2013). On analyzing the ad, it was observed by the court that a representation was made by appellants stating that houses could be constructed on the particular piece of land, whereas the fact contradicted their claim wherein, the land was subjected to a planning scheme that needed special approval from the authority. The potential purchasers of the particular piece of land were also subjected to onerous conditions. It was also held by the court that any individual who saw the advertisement would come to the conclusion that houses could be built on the particular piece of land in question.
Finally, it was found by the court that the appellant was associated with misleading representation regarding the use of land that resulted in breach of Sec 53A(1)(b) of the TPA that was a precursor to Sec 30(1)(f) of ACL. An interesting aspect of Sec 30 of ACL is the lack of requirement to establishment the sale due to or likely to occur from the misleading representation (kottgunn, 2014).  Under the provisions of ACL, representations made in relation to promotion of the sale of land with the help of brochure that has been made available to the public is considered to be enough to demonstrate that an individual is associated with misleading or false statements.   
On the part of developers selling the land, due to associated to such misrepresentation under Sec 30 of ACL may have significant adverse impact ranging from civil proceedings related to the damage, a pecuniary penalty or injunction or remedial orders. The financial penalties that may be experienced on the part of the developers due to breach of Sec18 of ACL i.e. misleading or deceptive conduct if it is a corporation is potential compensation for the claim which is similar in case of individuals as well. It is required to be noted here that these cases are not subjected to disqualification orders or civil pecuniary penalties. However, on the part of claimant, they are entitled under the law to seek financial compensation up to a period of 6 years post the occurrence of the conduct (Corones, 2011). In case of breach of Sec 30 of ACL which deals with sale of land and for making false or misleading representations the developers, if corporations have to face financial penalties up to $ 1.1 million or if working individually have to face financial penalties up to $ 220,000. On the part of the developers selling land, in case of their associated with certain instances of misleading or false conduct have to undergo civil proceedings and the case will be considered as civil cases, in which the financial penalty that may be imposed on the developer by the court is up to $ 1.1 million in case of corporations and up to $ 220,000 in case of individuals (Webb, 2016). The developer may also be provided with infringement noticed due to which the individual will be imposed with spot fines, which, in case of corporations are up to $ 6,600 and in case of individuals it is up to $ 1,320. It is worth noting here that in case an infringement notice is not paid by the developer the issue may result in prosecution and on establishment of which may result in maximum penalties.
Unfair Contract Terms
Schedule 2 of ACL regulates the unfair terms related to consumer contracts. On the part of the property developers it has significant impact and their contracts with individuals those who are not investors and may have impact off the plan sales. Under ACL the terms of a consumer contract is void if the terms of the contract is considered to be unfair and the contract is a standard form contract under the law (Paterson, 2012).  In this context the concept of consumer contract is required to be discussed. Under ACL a consumer contract can be considered to be a contract regarding the grant or sale of an interest in land to another individual predominantly or wholly for domestic, personal or household use. It is on the intentions of the purchaser on the basis of which it can be determined if a contract for grant or sale of an interest land is consumer contract (Lawson, 2011). It is worth mentioning here that, it is essential for the developer’s selling agents to take a note regarding intentions of prospective purchaser, as an instance of they are purchasing for the purpose of private use or for investment purpose.  The reason being, ACL is not applicable in case of buying the property for investment purpose rather than for private purpose.
Under ACL the concept of ACL has also be specified according to which a contract for sale between a developer like vendor and an individual like buyer are considered to be standard contract forms till the development can proof otherwise. This acts as an essential aspect as most developers prefers a standardized contract in every development (Carter, 2013). The purpose of emphasis on standard form of contract on the part of most of the developers is for simplicity, consistency of selling agents along with meeting the requirements of financer. For the purpose of change the particular presumptions selling agents of the developer and selling solicitors are required to record the negotiations along with purchasers for the purpose of demonstrating that the purchaser has a real and effective opportunity in regards to negotiating the contract.  It may be also be that case that developers are required to encourage a purchaser for the purpose of arranging the solicitor of the purchaser or conveyance in order to review and negotiate a contract before signing it. (Paterson et al., 2012) On one hand, it may result in delay the process of exchange of contract, however, it helps in limiting the risk of the contract being a standard form contract.
It has already been mentioned, Schedule 2 of ACL deals with unfair consumer contracts terms.  The law particularly mentions regarding the terms of a contract of developer that can be considered to be unfair. Thus, according to ACL, the terms of developer’s contract that result in significant imbalance to the obligations and rights of the parties, or terms that is not reasonable essential to provide protection to the legitimate interests of the developer or a particular term of the contract may result in detriment that may be financial or other to a purchaser if the term of a contract are relied on can be considered to be unfair term of contract (Carter, 2012). Thus, the presence of these elements in contact will be considered to be unfair contractual terms.                                             
Other than the above discussed aspects, there exists different provision, especially in off the plan sale contract of a developer, which favors the interest of the developer resulting in creating imbalance. The presence of appropriate level of transparency helps in justifying the provisions basing upon which a degree of flexibility is provided on their part that is necessary to complete the project. The individual standard provision is in accordance with the well established norms of the industry or not, makes a major imbalance which is in favor of the developer which is subjected to the opinion of the courts in the future. In addition to it, if the terms of consumer contract are reasonable necessary in regards to protection of legitimate interests of a developer is a matter of judgment.
Thus, the presence of unfair terms in consumer contracts has significant adverse impact on developers selling land which includes voiding unfair term in a standard form consumer contract along with automatically voiding rest of the contract.  Under the concept of severability most of the sale contracts of developers contract effective provisions of severance with the intension of having whole contract to generally proceed in case an unfair term is void (Whittaker, 2011). However, in case the void term of consumer contract is of such a nature that it is a significant element of the contract due to which it cannot be severed, in such cases, the contract will be unenforceable. Essentially, the void term may be of such significance that it may result on the part of the developer to not proceed with the contract in the absence of the particular term. This would also result in voiding the contract. 
Thus, on the basis of the above made discussion it can be observed that, the associated of developers selling land with misrepresentation and unfair contract terms, may have significant negative impact on him/her. Due to association with misrepresentation Sec 30 of ACL gets breached due to which the developer is subjected to civil proceedings related to the damage, a pecuniary penalty or injunction or remedial orders.  In case of association with unfair contract terms includes the unfair term in a standard form consumer contract is voided along with automatically voiding rest of the contract.
Carter, J. (2012). Cases and materials on contract law in Australia. Chatswood, N.S.W.: LexisNexis Butterworths.
Carter, J. (2013). Contract law in Australia. Chatswood, NSW: LexisNexis Butterworths.
Corones, S. G. (2011). The Australian Consumer Law. Thomson Reuters Lawbook Co.
Findlaw. (2017). Misleading representations in the sale of land. [online] Available at: https://www.findlaw.com.au/articles/4768/misleading-representations-in-the-sale-of-land.aspx [Accessed 23 Aug. 2017].
Harris, B. (2013). Economic Cost Provisions in Fixed-Rate Home Loan Contracts and Breaches of Australian Consumer Law. Journal of Politics and Law, 6(3).
kottgunn. (2014). False or Misleading Representations in Property Transactions. [online] Available at: https://www.kottgunn.com.au/updates/false-misleading-representations-property-transactions-2/ [Accessed 23 Aug. 2017].
Lawson, R. G. (2011). Exclusion clauses and unfair contract terms. Sweet & Maxwell.
Malbon, J. and Nottage, L. (2013). Consumer law & policy in Australia & New Zealand. Annandale, N.S.W.: Federation Press.
Miller, R. (2010). Miller’s annotated Trade Practices Act. Pyrmont, N.S.W.: Thomson Retuers (Professional) Australia Ltd.
Nottage, L. (2010). The New Australian Consumer Law: What About Consumer ADR?. QUT Law Review, 9(2).
Paterson, J. (2011). Introducing the New, National Australian Consumer Law. Alternative Law Journal, 36(1), pp.50-50.
Paterson, J. (2012). Unfair contract terms in Australia. Pyrmont, N.S.W.: Thomson Reuters (Professional) Australia.
Paterson, J., Robertson, A., Duke, A. and Heffey, P. (2012). Principles of contract law. Pyrmont, N.S.W.: Thomson Reuters (Professional) Australia.
Rochow, N. (2010). The Australian consumer law. [Adelaide]: Law Society of South Australia.
Ross, K., Barr, J., & Stevens, J. (2013). Mandatory continuing professional development requirements: what does this mean for Australian nurses. BMC nursing, 12(1), 9.
Webb, E. (2016). Unfair terms and small businesses. Australian consumer law, 31(1).
Whittaker, S. (2011). Unfair Contract Terms, Unfair Prices and Bank Charges. The Modern Law Review, 74(1), pp.106-122.

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