13 Consumer Protection

Learning objectives

By the end of this Chapter, you should be able to:

  • Outline the main factors which have contributed to the rise in consumer protection legislation in PNG.F
  • Explain and apply the term ‘misleading and deceptive conduct’.
  • Explain and apply the term ‘false representation’ in relation to the supply or possible supply of goods and services.
  • Discuss the relationship between consumer protection laws and unconscionable conduct.
  • Explain the concept of implied guarantees in consumer contracts.
  • Describe and apply the possible remedies and defences that may be available under consumer law.

Key terms

You will notice these key terms, which are mentioned throughout the chapter, to help you to better understand and remember the material:

    • Agreement to sell: where the property in the goods is to be transferred at some later date, or when some condition has to be fulfilled, such as payment of the price.
    • Ascertained goods: goods which, in a contract for the sale of unascertained goods, have become identified and agreed on by the parties.
    • Caveat emptor: is Latin for ‘let the buyer beware’ and means that the buyer is buying the goods at their own risk.
    • Chattels: any property other than freehold land; articles of personal property.
    • Chose in action: a personal property right to an intangible object such as a debt.
    • Contract for the sale of goods: under the Goods Act 1951, a contract whereby the seller transfers, or agrees to transfer, the property in goods.
    • Existing goods: goods owned or possessed by the seller at the time of the contract.
    • Future goods: goods to be manufactured or acquired by the seller after the making of the contract for sale.
    • Goods: broadly defined, all ‘chattels personal other than things in action and money’. This generally includes only physical and movable things, ownership of which transfers to the buyer for a money consideration, called the price.
    • Market overt: an open, public, and legally constituted market regulated by the rules framed by a local government.
    • Mercantile agent: also known as a ‘factor’ is a person who has authority to buy and sell goods, or consign them, on behalf of his principal.
    • Personal property: any property that is not land, buildings or fixtures to land such as cars, boats, furniture.
    • Possession of goods: the control or custody of goods.
    • Property in goods: ownership of, or title to, goods.
    • Romalpa clause: a retention of title clause that is often used in contracts for the sale of goods that title remains with the seller until the buyer meets a predetermined condition such as payment of the purchase price.
    • Sale of goods: the transfer of ownership (or property) from the seller to the buyer at the time of the contract.
    • Specific goods: goods identified and agreed on at the time of the contract of sale.
    • Unascertained goods: goods that are defined by description only. They are not identified when the contract is made, and they may or may not be future goods.

Introduction

At last, you have nearly reached the end. Consumer Law, which is the second last chapter of this unit, has a connection with Contract Law and is an important topic in business and commerce, as well as to you as a consumer. Consumer protection laws in PNG at the time of writing are under review. Current consumer legislation is focused on the Goods Act 1951, the Independent Consumer and Competition Commission Act 2002, the latter having a focus on industry regulation but it does provide some protection to consumers with regard to the price, quality, and reliability of goods and services, the Fairness of Transactions Act 1993, the Packaging Act 1974 and the Commercial Advertisement (Protection of the Public) Act 1976.  The future may see the introduction of specific aspects of Australian Consumer Law and we shall make brief reference to specific aspects of the Australian Consumer Law at the end of this chapter to provide a sense of what may be the future of consumer protection.  

Consumer protection

This chapter deals with particular types of contracts – contracts for the sale and supply of goods and services. As we noted in previous Chapters, the common law has always recognised inequalities that can occur in contractual relationships because of factors such as misrepresentations, unequal bargaining power, and unconscionable conduct. However, the remedies available to the innocent party were often limited (for example, rescission, damages) and were applied by the courts with caution, so as not to threaten the general principle of freedom to contract. 

This principle was epitomised in the Latin phrase caveat emptor (‘let the buyer beware’), which may have been adequate in its time, but the situation is different today, with advances in transport and technology providing suppliers of goods and services with almost unlimited markets. Supermarkets carry thousands of mass-produced items, many of which are packaged in sealed containers with little or no chance of pre-purchase inspection by the buyer. Advertising is increasingly used as a means of informing (or in some cases misleading) potential customers about the attributes of the goods or services that they are urged to buy. 

Over time, consumers and governments have become more concerned with the imbalances between the bargaining power of suppliers and consumers. During the last 50 years, countries around the world have been introducing legislation aimed at prescribing minimum quality standards and increasing protection for consumers like us. 

It is worth noting that the PNG Government commissioned a Consumer and Competition Review (completed in 2017) which appears to be based on the Australian Consumer Law, so we will spend a short time looking at specific aspects of that as at some point in the future it may form the basis of new PNG consumer laws as the current Independent Consumer and Competition Commission Act 2002 needs updating when you compare it with what the Australian federal government has done with the introduction of the Australian Consumer Law. And, to ensure that businesses comply with the legislation, the fines for a breach of the Competition and Consumer Act 2010 (Cth), which includes the Australian Consumer Law as Schedule 2, were increased in 2022 from A$10 million to A$50 million per breach for a body corporate, and for individuals it is A$2.5 million (now take a deep breath and work out what that is in PNG Kina when A$1 = K2.59 at the time of writing).  

What are the current consumer protection laws in PNG? 

Like most countries, PNG has recognised that consumers need protection in entering into certain types of contracts and has enacted legislation to provide an easier basis to bring actions, rather than having to rely on common law principles, and the Goods Act 1951 as an early form of consumer protection.

The current consumer protection laws in PNG include:

  • the Goods Act 1951, but note it’s application is limited to goods, not services
  • the Independent Consumer and Competition Commission Act, 2002 , administered by the Independent Consumer and Competition Commission (note that the Independent Consumer and Competition Commission Act 2002 only provides limited protection to consumers, mainly in relation to consumer product safety)
  • the Packaging Act 1974   
  • Commercial Advertisement (Protection of the Public) Act 1976, and 
  • the Fairness of Transactions Act 1993 which offers some protection to a consumer with its emphasis on the overall fairness of any transaction so that ‘no person suffers unduly because he is economically weaker than, or is otherwise disadvantaged in relation to, another person.’ But it is also limited in what it can do to protect the consumer.

Part 1: The Goods Act 1951 

We will review the Goods Act 1951 but it will not be in great deal. Hopefully, it will give you an overview of what it does and the protection it offers you as a consumer. 

The underlying principle of the Goods Act 1951 is that contracts for the sale of goods have certain terms in common that do not need to be expressly stated every time a contract for sale is entered into to protect the consumer. Implied terms are terms that are not expressly stated in a contract but which the law implies are included in the contract – for example, when we are buying something, we presume that the seller owns the goods and has a right to sell them, that they are of merchantable quality (that is, they are saleable) and fit for purpose.

We will begin considering the formation of the contract, what terms are implied by the Goods Act 1951, the distinction between property and possession, the different classifications of goods, the rules to determine when property passes, the effect of transfer of title by a non-owner, the duties of the seller and the buyer, and the remedies for breach. We will then look at the duties of the buyer and the seller to complete a contract for the sale of goods, and the remedies that are available to the parties if there is a breach. 

The Goods Act 1951 is an example of the application of all the principles that we looked at in the previous chapters on the creation and validity of a contract.  

In brief 

What is the difference between the words ‘property’ and ‘possession’?  

There is a fundamental difference between ‘property’ (legal title or ownership) in goods and ‘possession’ (physical control) of goods that both consumers and businesses must be aware of, because:

  • risk in goods passes with property; and 
  • for the Goods Act 1951 to operate, property or ownership of the goods must pass to the buyer.

A seller who doesn’t have title cannot pass anything on to a buyer.

What are the requirements for the formation of the contract? 

For the Goods Act 1951 to apply to a transaction, there are some things you need to know first. These include:

  • what exactly are we buying – goods and/or services? Note it only applies to goods.
  • what is the price? and 
  • are we buying ownership or property in the goods?

A contract for the sale of goods (not services) is defined in the Goods Act 1951 as ‘a contract whereby the seller transfers, or agrees to transfer, the property in goods to the buyer for a money consideration called the price’ (s 3(1)). This means that there must be: 

  • goods
  • money consideration (called the price); and
  • transfer of property.

A contract of sale may be in writing (a good idea for certainty if the goods have a monetary or other value to you), oral, partly in writing and partly oral, or implied from the conduct of the parties (s 5). 

What are ‘goods’?

Goods are broadly defined to include all chattels personal other than things (or choses) in action such as a personal property right such as a car, boat or furniture, and money (s 1(1)). This generally includes only physical and movable things. It doesn’t include:

  • land or things attached to land (although it does include timber and growing crops that are to be harvested before sale or under the contract of sale)
  • choses in action or rights, for example, debts, negotiable instruments, shares or patents that can be sold but that are not goods (‘choses in action’); or
  • services, such as work and labour, or repairs.

What is the price paid for the goods?

The price paid for the goods is the money consideration. If no money is present, there can be no sale of goods contract; there is either a barter or exchange.

What is the importance of transfer of ownership?

There must be transfer of ownership (what in law is called ‘property’ or ‘title’) in the goods if the transaction is to be caught by the Goods Act 1951. The importance of transfer of ownership is that risk of loss of the goods goes with the person who has the ownership in the goods. If you go and buy something; you get ownership (the property in the goods) and possession…and the risk of loss or damage to the goods becomes your responsibility.

Is the contract a contract for sale of goods or for work and materials?

Once it has been determined that a transaction falls under the Goods Act 1951, it is necessary to be able to decide whether a contract is for the sale of goods (where the Goods Act 1951 will apply) or for work and materials or repair (where Goods Act 1951 will not apply and the buyer will have to rely on contract law).

Here problems can arise because a large number of contracts involve both an element of service and an element of goods – for example, the supply and fitting of an oil heater, washing machine or air-conditioner, or the service on a car. What is the main purpose of the agreement? Is it to transfer ownership of goods? If it is, it is a contract for the sale of goods.

Business tip

Once it is clear that the Goods Act 1951 applies, look to the main part of the contract and consider whether it is for the transfer of title of goods, or skill and experience. 

When does property pass? 

Property transfers in a sale at the time of sale, while with an agreement to sell it transfers at a later time, thus affecting the rights of the parties and who bears the risk if the goods are damaged.

If the main part of the agreement is the skill and experience to be displayed by one of the parties in performance of the contract, and the transfer of title to the materials is of secondary importance, it is a contract for work and labour and the supply of materials, and Goods Act 1951 will not apply. 

What is the difference between a sale and an agreement to sell?

The definition of a ‘contract for the sale of goods’ includes two types of contracts:

  • a sale of goods, where ownership (or property) transfers from the seller to the buyer at the time of the contract, and hence is an executed contract; and
  • an agreement to sell, where the property in the goods is to be transferred at some later date, or when some condition has been fulfilled, such as payment of the price, which is known as an executory contract. Once the time elapses or the conditions are fulfilled, the agreement to sell will become a sale.

Are there any formalities to be observed in making a contract of sale?

There are no special formalities to be observed. The normal rules of contract law apply and the contract may be in any form—oral, written, partly oral and partly in writing, or implied from conduct (s 5(1)). Just note though that if the goods are of any value to you, and this can either be in price or sentimental value, put the contract in writing because if something goes wrong with the contract, you have written evidence to support your claim.

A contract for the sale of goods to the value of K20 or upwards is unenforceable unless you, as the buyer: 

  • accepts part or all of the goods and has received them; or
  • has paid a deposit or given something in part payment of the price – for example, the trade-in of a car on another car; or 
  • there is a written note or memorandum of the contract signed by the party to be charged or their agent showing:
    • the names of the parties
    • the identity of the subject matter
    • the price and terms of payment if they have been agreed on, and 
    • the signature of the party to be charged or their authorised agent.

The note or memorandum need not be contained in one document but may be contained in a series of documents, provided that they can be read together to satisfy Goods Act 1951. Furthermore, they may be obtained after the sale has taken place. 

Reflection question

Take a break for a couple of minutes and test your understanding of what you have just read.

PROBLEM:

The plaintiff verbally agreed to paint the defendant’s portrait for K1500. In a dispute over payment, the defendant argued that it was a contract for the sale of goods and was unenforceable because it had not complied with a statutory procedural requirement. Did the painting of the portrait involve the supply of goods or skill and labour?

Just as a matter of interest, if you think the contract is not a contract for the sale of goods, does that mean it is not a contract at all and therefore no rights are created? And what would you say if one of the parties died? Explain why.

What are the terms of the contract?

The implied terms found in the Goods Act 1951 are framed as conditions or warranties and, as noted above, where business-to-business contracts are concerned, they may be excluded by the parties to the contract. However, this is subject to the usual rules of common law relating to exclusion clauses and s 4 of the Fairness of Transaction Act 1993. Remember when we looked at exclusion clauses in Chapter 11, if the document was unsigned, would a reasonable person have regarded the document as one that would contain contractual terms? And even if sufficient notice has been given of the term, did it cover the breach?

Is the term a condition or warranty?

Where it is possible to discover, by inspection, the quality and condition of the goods and their fitness for a particular purpose, at common law the buyer may lose any legal rights that may have existed against the seller if the goods are not satisfactory providing each party is negotiating on equal terms and so the maxim ‘caveat emptor’ (let the buyer beware) prevails. Buyers have only themselves to blame if they fail to make a careful inspection of the goods before they purchase them. The reason we say ‘may’ is because s 4 of the Fairness of Transactions Act 1993 may apply.

Under the Goods Act 1951, it should be noted that where a contract of sale is subject to a condition to be fulfilled by the seller, the buyer can waive the condition, or treat the condition as a breach of warranty which will then mean the contract cannot be repudiated (s 12(1)). If a contract is not severable and the buyer has the goods or part of the goods, or the contract is for specific goods and the property has passed to the buyer, the breach of a condition can only be treated as a breach of warranty and the goods cannot be rejected (s 12(4)). 

However, while the idea of caveat emptor is to encourage buyers to take care, there are circumstances in which the application of the common law rule would prove unjust. Two examples would be:

  • when there is no reasonable opportunity for inspection (for example, goods packaged in containers, tins, or wrapping); and 
  • when the buyer must rely on the special knowledge or expert judgment of the seller. 

As a result, where the buyer is at a disadvantage, the Goods Act 1951 implies several terms into contracts as either conditions or warranties.  

Whether or not a term in a contract is a condition or a warranty depends in each case on the construction of the contract. A term may be a condition, even though it is referred to as a warranty and vice versa in the contract by the parties.  

What are the terms implied in the Goods Act 1951?

In a contract for the sale of goods, unless a different intention appears from the terms of the contract, for example, a clause excluding the operation of the Goods Act 1951 under s 12, the following terms, which are exceptions to the caveat emptor rule (let the buyer beware), are implied into consumer and non-consumer contracts for the sale of goods.

From this point on, we are assuming that ‘you’ means the buyer.

What does the term ‘title’ mean? (s 13)

There is an implied condition in both the case of a sale and an agreement to sell that the seller has a right to sell the goods. But note that there is only an implied warranty if you are the buyer that you will have and enjoy quiet possession of the goods, and that the goods are free from any charge or encumbrance in favour of any third party not declared or made known to you before or at the time when the contract was made.

What is a sale by description? (s 14)

There is an implied condition that goods sold by description will correspond with that description, and, if the sale is by sample and description, the bulk of the goods must correspond with both requirements.

What does fitness for purpose (s 15(2(a)) and of merchantable quality (s 15(2)(b)) mean?

There is no implied condition or warranty as to the quality or fitness for a particular purpose unless you make known to the seller:

  • the particular purpose for which the goods are required and can show that you relied on the seller’s skill or judgment, and they are goods that the seller normally sells. Then there is an implied condition that the goods are reasonably fit for that purpose (s 15(2)(a)), and 
  •  where the goods are bought by description from a seller who deals in goods of that description (whether or not he is the manufacturer), there is an implied condition that they will be of merchantable quality (s 15(2)(b)).

Two further points to note. First, if the goods are bought under a patent or trade name, there is no implied condition (s 15(3)).  Second, if the buyer has examined the goods, again there is no implied condition if there were defects that the examination should have revealed (s 15(4)).

What is a sale by sample? (s 16)

In the case of a contract of sale by sample, where there is an express or implied term in the contract, Goods Act 1951 implies three conditions:

  • that the bulk will correspond with the sample in quality
  • that the buyer will have a reasonable opportunity to compare the bulk with the sample, and  
  • that the goods will be free from any defect, rendering them unmerchantable, which would not be apparent on any reasonable examination and would cause the goods not to be of acceptable quality.
Can you exclude the implied conditions and warranties? (s 55)

The implied conditions and warranties may be excluded by the parties under the Goods Act 1951 by express agreement, or while dealing with the parties, or usage if the usage binds both parties.

Why is the distinction between property and possession important in business? 

Many people assume that if a person has possession of goods, that person must also be the owner. But this is a presumption and is based on appearance and one that can lead to serious problems for an unwary buyer such as yourself.  

There is a vast difference between the meaning of the terms ‘property in’ and ‘possession of’ goods: 

  • ‘Property in goods’ means the same thing as ‘ownership’ or ‘title’ and is a legal relationship. It means you have the legal right to control and use the goods however you want. But remember that getting ‘property’ in the goods also means that risk passes to you when the contract is made. If you have the property in the goods and they get damaged or destroyed, that’s your problem. 
  • ‘Possession of goods’ refers to the physical control or custody of the goods. While possession can create a strong presumption of ownership as it gives you immediate physical control or occupancy, it does not transfer ownership rights and there is a duty on you to take reasonable care of the goods or property while they are in your possession. 

For example, if you leave your car to be serviced at a garage, ownership or title of the car remains with you. The garage has possession. A change in possession has occurred without a change in ownership. But equally, a change in ownership may occur without a change in possession – for example, where you sell your car to a leasing company and then lease it back from them. 

Business tip 

‘Property’ and ‘possession’ do not mean the same thing: ‘property’ means ownership, while ‘possession’ means control. 

When does property pass? (ss 17, 20) 

Under the Goods Act 1951, provision is made for determining when property in goods is transferred to the buyer in the absence of intention by the parties. Unless the buyer has agreed to bear the risk, the general rule is that any damage or loss suffered to the goods before property passes to you as the buyer is borne by the seller (s 20).  

There are no problems where the goods are sold over the counter, but when delivery is to take place at a later date, and the goods are damaged before delivery, it would often be difficult, in the absence of rules, to determine who should bear the loss. Even when the property has passed to you as the buyer, but possession remains with the seller, it doesn’t necessarily follow that the seller must automatically deliver the goods to you unless credit has been agreed between you and the seller. The seller is entitled to payment before delivery. However, the fact that you have property in the goods usually means that you also bear the risk, but the seller may still be liable for lost or damaged goods as a result of negligence if they are acting as a bailee because they are bound to take reasonable care. 

Business tip 

When does risk pass?

Unless the buyer has agreed to bear the risk, the general rule is that any damage or loss suffered to the goods before property passes to the buyer is borne by the seller. If problems arise, it is usually when delivery is to take place at a later date, and the goods are damaged before delivery – who has the risk? An appropriate clause should be inserted in the contract between the parties stating who is to bear the risk, and appropriate insurance arranged by the party at risk.

What does classification of goods mean?

Goods that are the subject of a contract of sale can be divided into several classifications under the Goods Act 1951:

  • existing
  • future
  • specific
  • unascertained; or 
  • Ascertained.

Although, it will be apparent that there is an overlap. The distinction is important for determining when the property, and hence risk, in the goods passes to you as the buyer. 

What are existing goods? (s 7(1)(a))

These are goods owned or possessed by the seller at the time of the contract – for example, a dealer who has for sale and in stock a 2024 white Toyota Prado.

What are future goods? (s 7(1)(b))

These are goods ‘to be manufactured or acquired by the seller after the making of the contract for sale’ – for example, the purchase of a new Toyota Prado that is yet to be manufactured by Toyota.

What are specific goods? (s 1)

These are goods identified and agreed on at the time of the contract of sale – for example, a 2022 white Toyota Prado.

What are unascertained goods? (s 17) 

These are goods that are defined by description only. They are not identified when the contract is made and they may or may not be future goods. Until the goods are ascertained, it is merely an agreement to sell – for example, a sale by a dealer of a new Toyota Prado that is yet to be made – until that particular car comes off the assembly line and is earmarked for you, the car is a future and unascertained good.

How do ascertained goods differ from unascertained goods? (s 18)

These are goods that, in a contract for the sale of unascertained goods, have become identified and agreed on by the parties. For example, if you order a new white BMW 520i car and the dealer has a number of that make, model and colour in stock, the goods are unascertained until a particular car from that dealer’s stock is selected and identified (or ascertained) to your contract.

When does property pass where the goods are ascertained goods?

When does property pass? (s 18)
  • the conduct of the parties,
  • the circumstances of the case; and
  • the terms of the contract. If it is unconditional and the goods are in a deliverable state, property passes to you when the contract is made. But if the seller must do something to put the goods in a deliverable state, property doesn’t pass to you until the thing is done and you have notice of it. If the goods are delivered to you on approval or ‘on sale or return’, property passes to you when you signify your approval.  

Where property (ownership) has passed, and remember that risk passes with property (s 20), you as the buyer can elect to treat a breach of condition as a breach of warranty and sue for damages, rather than treating the contract as at an end (s 12(4)). If the intention of the parties isn’t clear, the following rules need to be looked at to determine the time at which the property in the goods is to pass to you as the buyer. Sections 18(3)(a) to (s 18(3)(d) deal with contracts for the sale of specific or ascertained goods, while s 18(3)(5) applies to a contract for the sale of unascertained or future goods by description. 

Unconditional contract for specific goods (s 18(3)(a))

Property passes to you as the buyer if the following requirements have been met:

  • there is an unconditional contract
  • the contract is for the sale of specific goods, and
  • the goods are in a deliverable state.

The time of delivery or payment, or both, is immaterial if property and risk have passed.

Business tip 

Take care where property, but not possession, has passed to the buyer

Where there is an unconditional contract for the sale of specific goods in a deliverable state, property and risk pass you as the buyer when the contract is made, and the time of delivery is immaterial. If the goods are not to be picked up immediately, you should take steps to protect against damage to your goods while they are out of your possession – for example, with insurance or a clause to the effect that they remain with the seller at the seller’s risk.

Conditional contract for specific goods (s 18(3)(b))

Where the seller must do something to the specific goods to put them into a deliverable state, property in the goods doesn’t pass until it is done, and you have notice of it. For example, if you buy a new car but it must be registered by the dealer, the car is not in a deliverable state until registered.

Contract for specific goods that require pricing (s 18(3)(c))

Where there is a contract for the sale of specific goods ready to be delivered, but the seller must weigh, measure, test, or do some other thing to the goods to work out the price, property doesn’t pass until this has been done and you have been notified – for example, where wheat is sold at a certain price per kilogram, and the seller first has to weigh it to determine the price.

Contract for goods on approval (s 18(3)(d))

Where goods are delivered ‘on approval’ or ‘on sale or return’, property passes to you:

  • when you give approval through words or conduct – for example, by using the goods
  • when you do any other act adopting the transaction (for example, lending the goods to a third party); or 
  • if you retain the goods for more than the agreed time or beyond a reasonable time. This is a question of fact in each case—for example, if you accept goods under an agreement of sale or return within 14 days and keep them longer than this, they would be considered to have adopted the agreement.
Contract for unascertained or future goods sold by description (s 18(3)(e))

Where there is a contract for the sale of unascertained or future goods by description, and goods of that description in a state ready for delivery are unconditionally appropriated (selected) to the contract by either party with the assent of the other, the property passes at once to you. Assent can be either express or implied. Once the seller notifies you of an appropriation, unless you object within a reasonable time the property in the goods, and the risk, will be deemed to have passed to you.

Why should a business reserve a right of disposal? (s 19)

Where the seller has delivered the goods to you, or a carrier for the purpose of delivery to you, and the seller doesn’t reserve the right of disposal, delivery is an unconditional appropriation of the goods to the contract.

When the seller reserves the right to retake possession of the goods if certain conditions are not fulfilled (for example, as to payment), the property in the goods won’t pass until those conditions have been met. In such cases the appropriation is not unconditional. 

In an attempt to preserve the property (or ownership) rights in their goods until they had been paid for, a seller would often include a reservation of title clause in the contract of sale. This created an equitable interest or charge in favour of the original seller. If you fail to pay for the goods, went into receivership, or became insolvent, it could be argued that the seller can repossess the goods because they still have property and title in the goods. Risk passes to the buyer upon delivery. These clauses are also called ‘Romalpa clauses’. 

What is the purpose of the Personal Property Securities Act 2011?

The Personal Property Securities Act 2011 covers security interests over personal property other than land. A security interest is an interest in personal property that in substance secures payment of a debt or other obligation. In addition to covering standard forms of security such as chattel mortgages, the definition also covers retention of title clauses in contracts under which a purchaser has possession of property but does not acquire title from the vendor until the full purchase price is paid.

Under the Personal Property Securities Act 2011, retention of title suppliers become secured parties with a security interest, called a ‘purchase money security interest’. This type of security interest gives the secured party a superior status over other secured interests. To take full advantage of the protections offered by the Personal Property Securities Act 2011, the secured party must register their security interest on the Personal Property Securities Registry. By registering a security interest, the retention of title supplier takes priority over all others. Registration also means that the property will not be available to a trustee in bankruptcy or to a liquidator.

Business tip

Preserve ownership rights by a reservation of title clause under the Personal Property Security Act 2011.

It is in the seller’s interest to preserve their ownership rights where you as the buyer have possession but have not paid in full for the goods. If you default, or go into receivership or liquidation, the seller may lose the goods if they haven’t used a ‘reservation of title’ or ‘Romalpa’ clause to reserve title or legal ownership over the goods and registered their interest in the goods with the Personal Property Securities Registry. If you default, the seller may be able to get the goods back from an innocent third party.

Reflection questions

Before you take a break, take a moment to review the following questions and assess your comprehension of the material we have covered so far:

  1. What is the meaning of the following terms, giving an example in each case?
    1. specific goods.
    2. future goods.
    3. unascertained goods.
  2. Into which classification would the following goods be placed?
    1. 10 kilograms (kg) of sugar out of a 100 kg bag of sugar.
    2. an LCD flat-screen TV on display in a shop.
    3. a second-hand blue Toyota Camry car.
  3. Explain the purpose of a Romalpa clause in a sale of goods contract. What impact, if any, has the Personal Property Securities Act 2009 (Cth) had on Romalpa clauses?

PROBLEM:

A carrier was sent by the buyer, Wardar’s (Import and Export), to pick up 600 cartons of kidneys that were being held by the seller, Norwood & Sons, in cold storage. The cartons were part of a larger consignment held in the cold store. When the carrier arrived at 8 am, he discovered the cartons had been stacked on the pavement ready to be loaded. The carrier handed over the delivery note and started loading. He didn’t turn on his truck’s refrigeration unit until 10 am. By 11 am some of the cartons had started to defrost. Loading was completed at noon. By 1 pm the refrigeration became effective. By the time the buyer received the cartons they were unfit for human consumption. He refused to pay for them, arguing that they were not of merchantable quality, and the seller counterclaimed for the price. Does the buyer have to pay for the kidneys?

What happens if the sale is not by the owner? (s 21)

In some cases, the conduct of the owner may be such that the owner is estopped (or prevented) from denying the authority of the seller to sell the goods. The owner of the goods, by their words or conduct, must make a third party believe that another person has the right to sell the goods—for example, a sale by a car dealer of a car, where the car is in fact owned by a finance company or you get no better title then the seller had.

What is market overt? (s 23)

Usually, these are markets controlled by municipal councils. Where goods are purchased in market overt, a buyer acquires a good title provided that the goods are on open display, and are bought during market hours in good faith, and without any knowledge of the lack of title of the seller.

What is a sale under a voidable title? (s 22)

If a seller has a voidable title (that is, a title that is valid and binding until and unless it is repudiated by the true owner) at the time of sale, the buyer acquires a good title:

  • provided that the goods were bought in good faith, and
  • without notice of the seller’s defective title.

The most common situation of this kind is one where the seller has been induced to enter into an agreement by a misrepresentation, made innocently or fraudulently, by you.

What is the position of a buyer or seller in possession after sale? (s 25)

If a seller continues in possession of the goods or holds the documents of title after a sale, and then they (or a mercantile agent acting for them) transfer the goods or the documents of title to a third party, who buys them in good faith and without knowledge of their previous sale, the second sale is considered good.

Where you, with the seller’s consent, are in lawful possession of the goods or the documents of title after sale of either the goods themselves or the documents of title to the goods that are still subject to some lien or charge in favour of the seller, you can give a good title to a third person who receives the goods or documents of title in good faith and without notice of the rights of the seller.  

What is the position with factor or mercantile agents? (ss 61 – 64)

Where a factor or mercantile agent is entrusted with the possession of goods or documents of title to any goods from a principal for consignment or sale, they will be regarded as the true owner for the purpose of any sale, pledge, lien or other disposition of the goods they make in the ordinary course of their business, provided that the consignees:

  • act in good faith; and 
  • are unaware of the limitation placed on the agent.
What are the rights and duties of the parties in performance of the contract? (ss 27, 29(1))

To complete a contract for the sale of goods (s 27):

  • the seller must be ready to deliver or give possession of the goods; and
  • you, as the buyer, must be ready to accept and pay for them in accordance with the terms of the contract.

Delivery takes place when there is a voluntary transfer of possession from the seller to you but whether you take possession, or the seller sends the goods to you, depends in each case on the terms agreed to between the parties. This need not be the physical act of handing over; it may be symbolic, as in the delivery of a key to the warehouse where the goods are stored, or in handing over a document of title, such as a bill of lading. 

What is the duty of the seller in respect of delivery? (ss 29-37)

The Goods Act 1951 sets out a number of general rules as to delivery (see ss 29 – 37). These will apply if the contract between the parties doesn’t say anything about delivery:

  • Putting the goods into a deliverable state (s 29(7)) 

The expense of putting the goods into a deliverable state lies on the seller.

  • Delivery (s 29(2)) 

This is usually the seller’s place of business. However, in the case of specific goods that the parties know are in another place at the time of contract, that place is the place of delivery.

  • Third parties (s 29(5)) 

If the goods at the time of sale are in the hands of a third party, there is no effective delivery until the third party acknowledges to the buyer that the goods are held on the buyer’s behalf.

  • Time (s 29(4)) 

If no time is fixed for delivery, the seller is bound to send the goods within a reasonable time. What is a reasonable time is a question of fact in each case. Thus, it would be expected that perishable goods would be delivered more quickly than non-perishable goods.

  • Quantity (s 30) 

It is the duty of the seller to deliver the exact quantity of goods ordered by you. However, a trifling difference doesn’t give you the right to reject the goods, although this is subject to trade usage, special agreement, and the course of dealing between the parties.

  • Instalments (s 31) 

You are not bound to accept delivery of goods by instalments, unless you and the seller have agreed to this. If the agreement is that the instalments are to be paid for separately, and the seller makes defective deliveries, the seriousness of the breach and the likelihood of it being repeated must be considered in the context of the contract as a whole when it comes to termination.

  • Delivery to a carrier (ss 32(2), 33) 

Unless otherwise authorised by the buyer, any contract a seller makes with a carrier for you must be in your interest. If the seller doesn’t do this, and the goods are lost or damaged in transit, you may:

  • decline to treat the delivery to the carrier as a delivery to you; or 
  • hold the seller liable for damages.

If the carrier is the agent of the seller, effective delivery occurs when the goods have been delivered to you. However, if delivery is to a distant place – for example, another state – the risk of deterioration of the goods is then with you.

Reflection questions

Take a break and quickly review the 2 questions ahead to see how much you can recall.

  1. The seller agreed to supply 4950 tonnes of wheat to the buyer. On delivery, the buyer discovered that it had received only 4895 tonnes, a shortfall of 55 tonnes, and so refused to accept delivery. Can the buyer reject the whole delivery? Advise the buyer.
  2. Coca-Cola purchased 200,000 yo-yos, to be delivered in instalments. They were to be used in conjunction with an advertising program by Coca-Cola. Of the first 85,000 yo-yos delivered, 65,000 were returned as defective. Coca-Cola wants to terminate the contract. What percentage of yo-yos do you think Coca-Cola should have to accept delivery of?
When must you as the buyer accept and pay for the goods? (s 28)

Once the seller has delivered the goods, your duty as the buyer is to accept and pay for them in accordance with the terms of the contract. If no price is stated, you must pay a reasonable or customary price for the goods. If no arrangement has been made as to subsequent payment, you must be ready and willing to pay for the goods on delivery.

When does acceptance occur? (s 35)

You will be deemed to have accepted the goods when:

  • you advise the seller you have accepted the goods, or  
  • you have performed any act that is inconsistent with the ownership of the seller when the goods have been delivered (for example, the re sale of goods by you, or use or consumption of the goods), or 
  • after a reasonable time, you retain the goods without telling the seller that the goods have been rejected—what is considered a ‘reasonable time’ is a question of fact, but problems can arise where the defect is latent and considerable time passes before it is discovered.

Remedies for breach of contract?

Who is an unpaid seller? (s 38)

An unpaid seller includes any person who is in the position of the seller, such as an agent for the seller, and who:

  • has not been paid the full price; or 
  • has been paid with a bill of exchange or cheque as conditional payment, but which cheque or bill of exchange has been dishonoured.
What are the unpaid seller’s rights? (ss 39 – 43)

The unpaid seller’s rights depend on whether or not the property or possession of the goods, or both, have passed to you as the buyer:

  • Where property and possession have passed to you, the unpaid seller has rights only against you personally.
  • Where the unpaid seller has possession of the goods or they are still in transit to you, the seller may:
    • exercise a lien on the goods for the price – that is, the right to retain possession until the price is paid
    • in the case of insolvency, exercise the right of stopping the goods in transit, notwithstanding that the goods are no longer in the possession of the seller; and  
    • have a right of resale.
  • Where property in the goods has not passed to you, the unpaid seller has, in addition to the other remedies, the right to withhold or stop delivery of the goods.
  • Where the seller has property and possession, the goods may be resold without the seller committing a breach of contract.
What are the seller’s remedies?
What is the seller’s right to be paid? (s 49)

The seller may sue the buyer for the price of the goods if the property in the goods has passed and you are wrongfully neglecting or refusing to pay for the goods according to the terms of the contract.

The seller may also sue for the price, even if the property has not passed, if the terms of the contract stipulate that the payment is to occur before the passing of the property, and this has not occurred. 

Can the seller recover damages for non-acceptance? (s 50)

The seller may sue you for damages arising from non-acceptance where the property has not passed. This is reasonable, since the seller still has the ownership of the goods and may resell them. Of course, if the seller has actually resold the goods, the measure of damages will be the difference between the contract price and the market price at which the goods were sold. The seller is in no position to sue you for the price because delivery is no longer possible.

What are the buyer’s remedies?

Your remedies as the buyer against the seller depend on whether the goods have been delivered or not.

Can you recover damages for non-delivery? (s 51)

Where the seller wrongfully neglects or refuses to deliver the goods to you then you may sue the seller for damages for non-delivery. This is the equivalent of the seller’s remedy in the previous section.

The general measure of damages will be based on the loss that directly and naturally results from the seller’s default, usually being the difference between the contract price and the current market price. Thus, if the market price is the lower, no damages can result. Just note that the onus is on you to minimise your loss. 

Can you enforce specific performance? (s 52)

Where the seller fails to deliver the specific goods and they are of a rare kind or quality where damages would not be an adequate remedy, the court has discretion (as this is an equitable remedy) to award a decree of specific performance and direct the contract be specifically performed.

What is breach of warranty of quality? (s 53)

Where there has been a breach of warranty by the seller, or where you have elected (or have been compelled under the sale of goods legislation) to treat a breach of condition as a breach of warranty, you may either:

  • set up against the seller the breach of warranty as a ground for the reduction or extinction of the price asked by the seller; or 
  • bring an action for damages. The damages that you can recover are the difference between the value of the goods at the time of delivery to you and the value they would have had if the seller had complied with the warranty.

To determine the measure of damages, a distinction is maintained between the situation where:

  • the seller’s breach caused economic loss – in which case the test is whether at the time of contract the seller could reasonably have contemplated the loss as a serious possibility in the event of a breach; and
  • it caused physical injury to the person or property of you as the buyer – in which case it is whether the loss could be reasonably foreseen at the date of breach as a possible consequence of the breach.

Reflection questions

The last few questions on the Goods Act 1951 before we have a brief look at some other consumer legislation:

  1. Who is an unpaid seller? Briefly explain.
  2. Where an unpaid seller exercises a lien over goods, what is the seller doing?
  3. Discuss whether the unpaid seller has a right of resale of goods under a contract for the sale of goods. What rights do you have as a buyer under the Goods Act 1951 if the goods you purchase are faulty?

Part 2: Independent Consumer and Competition Commission

The current consumer protection law in Papua New Guinea is the Independent Consumer and Competition Commission Act 2002 , administered by the Independent Consumer and Competition Commission. The Independent Consumer and Competition Commission Act 2002 has provided limited protection to consumers, mainly in relation to consumer product safety. There are also other Acts which seek to protect consumers’ rights in relation to specific industries. 

Online reference

Read the About Us page on the Independent Consumer and Competition website for more information about the Independent Consumer and Competition Commission and its role and function in regulated industries and consumer protection.

Also read about the Independent Consumer and Competition Act 2002 on the Papua New Guinea Consolidated Legislation website.

The Consumer and Competition Framework Review (the Review) was initiated by the Department of Treasury in 2014 and its findings were made public in 2017. Of most interest to us is Part II of the Review dealing with consumer protection. Currently the Independent Consumer and Competition Commission’s consumer protection provisions are found in Part 7 of the Independent Consumer and Competition Commission Act 2002  and, only include product safety and information (ss 107 – 121).  

For further information on the Independent Consumer and Competition Commission’s current role on consumer protection see the Consumer Protection page on the Independent Consumer and Competition website. 

In brief, in terms of better consumer protection, the Review recommended several changes to the Independent Consumer and Competition Commission based on the Australian Consumer Law including:

  • Codes of Practice for business
  • better product safety standards and product information
  • prohibit conduct in trade that is misleading or deceptive (the same as Australian Consumer Law s 18)
  • prohibit unfair conduct including pyramid schemes (Australian Consumer Law ss 44 – 46), bait advertising (s 35 Australian Consumer Law), coercion or harassment of consumers by traders (Australian Consumer Law s 50), and where recipients receive unsolicited goods and services (Australian Consumer Law ss 40 – 46), recipients can treat them as gifts; and
  • replacing conditions and warranties with consumer guarantees (Australian Consumer Law ss 51 – 63).

Part 3: Other consumer protection legislation

What is the Commercial Advertisement (Protection of the Public) Act 1976?

This Act protects the public from any commercial advertisement that may contain untrue, inaccurate, misleading, misrepresentative or unreasonable statements used in describing the size, quality, quantity or nature of goods or services. Enforcement is the responsibility of the Independent Consumer and Competition Commission.

The Packaging Act 1974 

Online reference

For your interest, read about the Packaging Ac 1974 and the Packaging regulation 1975  on the Papua New Guinea Consolidated Legislation website.   

What is the Packaging Act 1974? 

The Packaging Act 1974 is responsible for ensuring that goods contain an approved brand by the Minister for Commerce and Trade and are properly labelled, or contain the name and address of the person on whose behalf the article was packed, or the name and address of the packer. The purpose of the legislation is to protect the consumer who buys labelled or packaged goods to ensure that the goods are properly labelled by making it an offence for a person who is not authorised to mark a package that it is an approved brand, or to mark a package with a copy of an approved brand (s 10). 

The Packaging Regulation 1975 specify certain products must have specific packing requirements including medicinal products, plants, dairy products and cooking oils. Schedule 8 of the Regulations sets out goods exempted from Packaging Regulation 1975 and is quite interesting to look at the range of products that are exempt. 

The Fairness of Transactions Act 1993

The purpose of the Fairness of Transactions Act 1993 is to ensure the overall fairness of any transaction operates fairly and not be manifestly unfair or not be genuinely mutual. Or as s 4(1) of the Fairness of Transactions Act 1993 puts it:

For the purposes of this Act, the concept of fairness relates to the principle of the just and equitable distribution to and among parties to a transaction of the rights, privileges, advantages, benefits and duties, obligations and disadvantages of the transaction in proportion and relative to a party’s standing in or contribution to the transaction, and according to business principles and practices appertaining to the particular transaction in question and the provisions of this Act shall be read liberally and applied accordingly.  

‘Transaction’ is broadly defined in s 3 and ‘means any contract, promise, agreement, dealing or undertaking of an economic or commercial nature whether supported by consideration or not entered into between parties,’ and includes both informal and complete or incomplete transactions as well transactions governed by customary law. 

The emphasis of Fairness of Transactions Act 1993 is to try and arrive at an amicable settlement first (s 7) and if that fails, the court shall hear the matter and make such order as it thinks is fair (s 8). 

Part 4: Australian Consumer Law 

So, what does the Australian Consumer Law look like if something similar were to be legislated for in PNG? Here is a brief overview. 

Online reference

If you want to see what the Australian Consumer Law looks like, see Schedule 2 on the Australian Competition and Consumer Act 2010 (Cth) website. 

What is misleading or deceptive conduct?

The Australian Consumer Law contains one section (s 18) where the wording relating to misleading or deceptive conduct is very wide. The wording is:

A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or likely to mislead or deceive. 

Courts have interpreted the meaning of misleading conduct to be conduct that would lead an ordinary member of the public who reads the statement be led into error. Furthermore, misleading conduct is more than conduct that could simply result in confusion.

Note also the use of the word ‘or’. It is a splitting word (‘and’ is a joining word). If the section read ‘misleading and deceptive conduct’ then to have a breach of s 18 the conduct would have to be both ‘misleading’ and ‘deceptive’ for a breach of the section. But using the word ‘or’ means that s 18 will catch conduct that is misleading ‘or’ deceptive and is much wider in its application. It sets a norm of conduct. The misleading or deceptive conduct must either induce error or be capable of producing error.

Under the wording of s 18, it is not essential that anyone is actually deceived or misled; it is sufficient that the conduct is likely  to mislead. For this reason, this section of the Australian Consumer Law is known as the ‘umbrella section’ as it can cover most situations where an aggrieved consumer wishes to take action under the Australian Consumer Law and it is perhaps the most litigated section of the Australian Consumer Law. 

The main functions of the Australian Consumer Law can be summarised as follows:

  • protects the interests of consumers against:
    • unfair practices of traders (things traders do to consumers)
    • unconscionable conduct of traders
    • misleading or deceptive conduct
    • specific false representations; and
    • unfair practices;
  • provides consumer guarantees relating to the supply of goods and services
  • provides safety and information standards
  • establishes manufacturers’ liability; and  
  • establishes product liability.

It is not uncommon to find that proceedings under the Australian Consumer Law involving allegations of a breach of a specific section will also involve a breach of the more general s 18. However, there will also be cases where there will be a breach of s 18 without necessarily involving a breach of the more specific sections. It is worth noting here that, under the rules of statutory interpretation, where both a general and a specific section apply, the more specific section usually applies.

The reason the Australian Consumer Law has both general and specific sections, is that stricter penalties apply if you can prove a breach of one of the more specific provisions. We will consider penalties a little later.

What is unconscionable conduct?

You will recall that unconscionable conduct was one of the factors which could affect the validity of a contract at common law. The Australian Consumer Law contains provisions that confirm this. In Chapter 8 we noted that unconscionable conduct was conduct that was unreasonable, unscrupulous, or excessive. And remember it often involves situations where there is a serious difference in the commercial competency of the parties. Sections 20–22 of the Australian Consumer Law deal with unconscionable transactions between a business and a consumer, and between businesses (but not listed public companies).

What are consumer guarantees implied in contracts? (51-64)

The Australian Consumer Law created a new concept in consumer protection law when it was introduced and that was the replacement of conditions and warranties with non-excludable consumer guarantees. This was considered by the Review Committee that could be incorporated into new consumer protection legislation in Papua New Guinea.

The matters covered by these guarantees are considered to be so fundamental to a consumer contract that they don’t have to be put in writing or even stated by the parties, for them to be considered as part of the contract. While the notion of a consumer guarantee is new, the underlying principles are not, as previous consumer protection legislation in Australia provided for what were known as implied conditions and warranties. What the Australian Consumer Law does, though, is simplify the law and create language that is more readily understood by contemporary consumers. 

These implied guarantees relate to contracts for the provision of both goods and services. For goods, the main implied guarantees are:

  • Goods must be of acceptable quality.
  • Goods must be fit for their purpose, when you have made their purpose known to the seller.
  • Where goods are sold by reference to description, it is implied that the goods will correspond with that description (and also correspond with a sample, if a sample is also provided).

For services, the three implied guarantees are that services will be:

  • Rendered with due care and skill.
  • Fit for a disclosed purpose.
  • Supplied within a reasonable time (if no specific time for supply is stated).

Section 64 of the Australian Consumer Law expressly prohibits the consumer and the supplier from agreeing to exclude the operation of the consumer guarantees. Such term will be void. However, s 64A does provide exceptions to the rule in s 64 in business-to-business dealings and situations where the consumer can establish that it was not fair or reasonable for the supplier to rely on that term of the contract. 

What remedies, penalties and defences are available under the Australian Consumer Law?

Don’t get too bogged down in the detail here. Remember this section in only intended to show you what the Australian Consumer Law covers and possible remedies and penalties that could apply for breaches of consumer protection laws. The essential things to note are that some of the sections of the Australian Consumer Law attract fines as well as civil remedies for consumers. Note though that the courts will try to award civil penalties – that is, award damages by way of compensation, rather than impose fines. Currently, fines are A$50 million per breach, and for individuals (including directors and managers involved in a contravention) A$2.5 million per breach for making false or misleading representations, for unfair sales practices such as bait advertising, harassment and coercion, and for unconscionable conduct. As an exercise, try converting these fines into Kina.

Remedies available to a consumer, and a court or tribunal, include damages, compensation orders, undertakings, substantiation notices, public warning notices, injunctions, disclosure of information, orders for non-party consumers, and non-punitive orders.

Defences to alleged breaches of any of the sections attracting criminal penalties are:

  • reasonable mistake
  • reasonable reliance on information supplied by another person
  • the breach was due to the act or default of another person or beyond defendant’s control.

Defendants must be able to show that reasonable precautions were taken not to mislead or deceive consumers and it is not a defence to blame an employee, director or agent.

Key points

An understanding of the following points will help you to better understand and revise the material in this chapter. 

  • What are the current consumer protection laws in PNG?: the Goods Act 1951, the Independent Consumer and Competition Commission Act, 2002 , and the Fairness of Transactions Act 1993.

Part 1: The Goods Act 1951

  • What are implied terms?: implied terms are terms that are not expressly stated in a contract but which the law implies are included in the contract and are enforceable. 
  • What are the requirements for the formation of the contract? – three elements are required: 
    • goods; and 
    • money consideration (called the price); and 
    • transfer of property
  • What are ‘goods?:  goods are broadly defined to include all chattels personal other than things in action and money’ (s 1(1) and generally only includes only physical and movable things). 
  • What is the importance of transfer of ownership?: risk of loss of the goods goes with the person who has the ownership in the goods. 
  • What is the difference between a sale and an agreement to sell?: in a sale of goods, ownership (or property) transfers from the seller to the buyer at the time of the contract, (an executed contract) while in an agreement to sell, property in the goods is to be transferred at some later date, or when some condition has been fulfilled. 
  • Are there any formalities to be observed in making a contract of sale?: there are no special formalities to be observed but for the Goods Act 1951 to operate the goods must be of a value of K20> and you, as the buyer, have accepted part or all of the good, or paid a deposit, or there is a written note or memorandum of the contract showing the names of the parties, the subject matter, the price and the buyer’s signature. 
  • What are the terms of the contract?: the implied terms contained in the Goods Act 1951 are framed as conditions or warranties. 
  • What are the terms implied in the Goods Act 1951?  
    • title (s 13): in the case of a sale and agreement to sell, an implied condition that the seller has a right to sell the goods and implied warranty that you will enjoy quiet possession of the goods and that the goods are free from any charge or encumbrance in favour of any third party. 
    • sale by description (s 14): an implied condition that the goods will correspond with the description, or if a sale by sample and description, that the bulk of the goods will correspond with both requirements.
    • fitness for purpose (s 15(2)(a)) and of merchantable quality (s 15(2)(b)): where you rely on the seller’s skill or judgment, and they are goods the seller normally sells, an implied condition that the goods are fit for purpose. If the goods are bought by description, an implied condition that the goods are of merchantable quality.
    • sale by sample (s 16): an implied condition that the bulk will correspond with the sample in quality, that the buyer will have a reasonable opportunity to compare the bulk with the sample, and that the goods will be free from any defect, rendering them unmerchantable, which would not be apparent on any reasonable examination and would cause the goods not to be of acceptable quality.  
  • What is the distinction between property and possession?: ‘property in goods’ means ‘ownership’ or ‘title’ and is a legal relationship while ‘possession of goods’ refers to the physical control or custody of the goods. 
  • When does risk pass? (s 20): risk passes when property (or ownership) passes from the seller to the buyer depending on the intention of the parties and whether the goods are:
    • existing
    • future
    • specific
    • unascertained, or 
    • ascertained.
  • When does property pass? (s 18): if the sale is for ascertained or specific goods, property transfers to you when you and the seller intend it to pass (s 18(1)). To ascertain intention, look at: 
    • the terms of the contract
    • the conduct of the parties; and 
    • the circumstances of the case.
  • What is the purpose of the Personal Property Securities Act 2011?: The Personal Property Securities Act 2011 covers security interests over personal property other than land that in substance secures payment of a debt or other obligation.
  • What is a sale under a voidable title? (s 22): If a seller has a voidable title at the time of sale, the buyer acquires a good title:
    • provided that the goods were bought in good faith; and 
    • without notice of the seller’s defective title.
  • What are the rights and duties of the parties in performance of the contract? (ss 27, 29(1)): delivery takes place when there is a voluntary transfer of possession from the seller to you but when that takes place depends in each case on the terms agreed to between the parties.
  • What is the duty of the seller in respect of delivery? (ss 29-37): where the contract says nothing about delivery you need to look at a number of factors including:
    • are the goods in a deliverable state? (s 29(7)) 
    • when and where is delivery? (s 29(2)) 
    • are there third parties involved? (s 29(5)) 
    • is delivery in a reasonable time? (s 29(4)) 
    • is the correct quantity being delivered? (s 30) 
    • is delivery by instalments? (s 31) 
    • who authorised delivery to a carrier? (ss 32(2), 33). 
  • When must you accept and pay for the goods? (s 28): your duty as the buyer is to accept and pay for them in accordance with the terms of the contract 
  • When does acceptance occur? (s 35): acceptance occurs when you have:
    • advised the seller you have accepted the goods; or  
    • performed any act that is inconsistent with the ownership of the seller after delivery; or 
    • waited a reasonable time. 
  • What are the seller’s remedies for breach of contract?: an unpaid seller is a person who has not been paid the full price or has been paid with a cheque or bill of exchange that has been dishonoured. The seller’s rights will depend on whether property or possession of the goods has passed. If they have possession, exercise a lien on the goods, or stop the goods in transit in the case of insolvency, resell the goods. If property has not passed, sue you for damages for non-acceptance.
  • Can you recover damages for non-delivery? (s 51): sue the seller for damages for non-delivery or sue for specific performance if damages are not an adequate remedy.

Part 2: The Independent Consumer and Competition Commission Act 2002

  • The Independent Consumer and Competition Commission Act 2002 provides limited protection to consumers, mainly in relation to consumer product safety. 

Part 3: Other consumer protection legislation 

  • The purpose of the Commercial Advertisement (Protection of the Public) Act 1976 protects the public from commercial advertisements that are inaccurate or untrue.
  • The purpose of the Packaging Act 1974 is to protect the consumer who buy labelled or packaged goods that the goods are properly packaged and labelled, making it an offence for a person who is not authorised to mark a package stating that it is an approved brand when it isn’t, or to mark a package with a copy of an approved brand.
  • The purpose of the Fairness of Transactions Act 1993 is to ensure the overall fairness of any transaction is fair and not manifestly unfair or not genuinely mutual. The emphasis of the Fairness of Transactions Act 1993 is to try and arrive at an amicable settlement first and if that fails, the court shall hear the matter and make such order as it thinks is fair.

Part 4: The Australian Consumer Law

This section is only intended to give you an overview of what Australia has done to try and give consumers a single national law for greater consumer protection and fairer trading by:

  • protecting the interests of consumers against: 
    • unfair practices of traders (things traders do to consumers)
    • unconscionable conduct of traders
    • misleading or deceptive conduct
    • specific false representations; and
    • unfair practices
  • providing consumer guarantees relating to the supply of goods and services
  • providing safety and information standards
  • established manufacturers’ liability 
  • established product liability; and
  • providing heavy fines for breaches of the Australian Consumer Law. The question to consider here is whether, and when, the PNG National Government will adopt changes to the current consumer protection laws.

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Introduction to business law in Papua New Guinea Copyright © 2024 by Southern Cross University is licensed under a Creative Commons Attribution 4.0 International License, except where otherwise noted.

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