Chapter 17
Business ethics and legal systems
Team member:
林君 07308046
彭康媛07308080
张新梅
Content
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Business Ethics
Plethora of Information and the Database
The Australian Competition and Consumer Commission (ACCC)
The Australian Direct Marketing Association (ADMA)
Direct Marketing Code of Practice
The Trade Practices Act 1974
Trade Practices Act Compliance Program
Contract between Seller and Consumer
Non-Contractual Obligations
E-commerce
The direct marketing code of practice and e-commerce
Consumer credit
Advertising credit
The contract
non-consumer related laws
Summary
1. Business Ethics
 The
nature of morality
Essentially morality is the choice between ideas that are right
and those that are wrong.
Morality is a set of values by which they live, in other words
the principles people use to decide what is right and what
is wrong.
The three wise monkeys
One had its hands over its eyes so that
it could see no evil;
 one had its hands over its ears so that
it could hear no evil;
 the third had its hands over its mouth
so that it could speak no evil.

Whistle blowers

Nancy
a famous spy
A whistleblower is a
person who raises a
concern about
wrongdoing occurring in
an organization or body
of people, usually this
person would be from
that same organization.
The elements to whistle blowing:
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There is the revelation of information not
previously publicly known about a perceived
wrong doing by a person (whistleblower) who
has access to facts which they have interpreted
to be unethical by their moral values.
The information revealed is of activities that are
overseen by an organisation, usually the
employer, which could have directed the
activities to be carried out more ethically.
Finally, these revelations are usually made to a
person or organisation that the whistleblower
believes will act to right the wrongs or see that
they cease.
2. Plethora of Information and the
Database
Database side effects
 Like most things, too much of a good thing
may well have adverse effects.
 Form a marketer’s point of view, having so
much information may mean that there are
many more variables to choose from, and
about which the marketer has to make
decisions.
the Database

Programming
Not always change

Database
Always update
Worth to know
3. The Australian Competition and
Consumer Commission (ACCC)
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The Australian Competition and Consumer Commission
(ACCC) is an independent authority of the government of
Australia.
It was established in 1995 with the amalgamation of the
Australian Trade Practices Commission (TPC) and the
Prices Surveillance Authority to administer the Trade
Practices Act 1974.
Its mandate is to protect consumer rights, business
rights and obligations, perform industry regulation and
price monitoring and prevent illegal anti-competitive
behaviour.
The Australian Competition
and Consumer Commission
(ACCC)
China
12315
4. The Australian Direct Marketing
Association (ADMA)
ADMA is Australia's principal body for
information based marketing.
 Formed in 1966, ADMA has evolved to become
the nation's pre-eminent marketing association
representing over 500 member organisations.
 A national non-profit organisation based in
Sydney, ADMA has State Branches in New
South Wales, Queensland, South Australia,
Victoria and Western Australia.

5. Direct Marketing Code of
Practice
What is the code?
 The Code sets out specific standards of conduct for
participants in the direct marketing industry in relation to
their customers and serves as a benchmark in settling
disputes between industry participants and customers.
 The requirements of the Code are based on common
sense and are matters of fairness and honesty. The Code
not only promotes fair trading but is intended to serve as a
point of reference for direct marketers to ensure they
comply with all applicable State and Commonwealth fair
trading laws.
Why is the code necessary?
More consumers are choosing to purchase
goods and services through direct response
channels and more businesses are using these
media to meet this increasing demand.
 Because they operate at a distance rather than
face to face with their customers, direct
marketers place a greater emphasis on building
consumer confidence and trust.
 This is especially true in respect of their handling
of personal data such as name, address and
buying preferences.

 The
future expansion of direct marketing
depends on the players conducting their
business in a fair, honest and ethical manner.
Only by doing so can the reputation of the
industry be enhanced so that customer
demand will continue to grow.
The objectives of the Code are to:
Ensure customers have access to the product
and service information they need to make
informed choices;
 Minimize the risk of direct marketers breaching
the Trade Practices Act 1974 or state fair trading
legislation;
 Promote a culture among direct marketers of
conducting their businesses fairly, honestly,
ethically and in accordance with best practices;
 Increase consumer confidence in doing
business with ADMA members.

Applying the Code to agents,
suppliers and contractors
To achieve maximum effectiveness marketers
need their agents, contractors and suppliers to
abide by the code.
 If agents, contractors and suppliers are to be
bound by the code it is necessary to include this in
the contract between the direct marketer and the
agent, contractor or supplier.
 Otherwise the agent, contractor or supplier is not
bound. Of course, agents, contractors and
suppliers are bound by the law.

Enforcement of the Code
The code authority consists of:
 An independent chairperson
 Two consumer representatives, being people with
special competence in consumer or industry
matters
 Three industry representatives, being people of
good character and repute in the direct marketing
industry and including at least one customer
representative.
6. The Trade Practices Act 1974
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The Trade Practices Act 1974 is an act of the
Parliament of Australia.
The act provides for protection of consumers and
prevents some restrictive trade practices of
companies.
This act spells out legal responsibilities and
requirements of businesses towards their customers.
It is the key competition law in Australia.
It is administered by the Australian Competition and
Consumer Commission (ACCC) and also gives
some rights for private action.
Purpose of the Trade Practices
Act 1974
 The
Trade Practices Act covers a wide
variety of rules.
 It regulates not only consumer protection but
also anti-competitive practices.
 The object of this Act is to enhance the
welfare of Australians through the promotion
of competition and fair trading and provision
for consumer protection.
Purpose of the Trade Practices
Act 1974
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The code provides for a seven day cooling off period to
apply to all contracts. This is not required by the law.
The code implements the national privacy principles in
respect of the collection and use of data.
The Victorian government has draft legislation underway
and the Commonwealth government has indicated that it
will legislate for privacy.
However, at the moment there is no general law in place
regulating collection and use of data by private industry.
Purpose of the Trade Practices
Act 1974
The code sets out a standard for how to conduct
telemarketing.
 No Australian standard attempts to do this,
although there is legislation in the United States.
 It is doubtful that the law is the most effective or
efficient regulator of such things as permitted
calling times and calling frequency.
 Adherence to these rules requires a real
commitment by the firms within the industry

Enforcement of the Trade
Practices Act (TPA)
 The
body responsible for enforcing the
Trade Practices Act is the ACCC.
 The various fair trading acts and the
consumer credit codes are administered by
the state authorities charged with
responsibility for oversight of consumer
affairs in each state.
Obligations under the Trade
Practices Act 1974 (TPA)
All advertising claims and other promotional
activities must be true
 Gifts and prizes must be provided as offered
 Firms cannot advertise part of the price
 Firms must have stock to meet advertised specials
 Referral selling not permitted as a method of
inducing sales
 Firms payment may not be accepted unless intent
is to deliver the order

Obligations under the Trade
Practices Act 1974 (TPA)
 No
undue coercion or harassment to
obtain sale
 Pyramid selling not permitted
 No unsolicited credit/debit cards
 No payment claims for unsolicited goods
 Not knowingly take advantage of
consumers
7. Trade Practices Act Compliance
Program
Australian Standards program AS3806 – approved
by ACCC
 Australian Standards have drawn up a compliance
program (AS3806) which has the approval of the
ACCC.
 The Australian Standard AS3806-1988:
Compliance Programs was originally developed in
response to the ACCC's need for an objective
benchmark against which to assess the
effectiveness of compliance programs.
The program is designed around the
following matters:
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Commitment to the program ---the firm must demonstrate a
top-level commitment not to breach the Trade Practices Act.
This starts with the board of directors.
Compliance policy ---the firm must have a well-articulated,
visible compliance policy. The policy should apply to agents
and contractors.
Line management responsibility ---compliance should be
part of each manager’s responsibility, not just the
compliance officer’s.
Resources and authority ---the firm must support the
program with adequate resources and managers and
compliance officers with the necessary authority.
The program is designed around the
following matters:
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Identification of compliance issues ---the firm must identify areas of
risk. This is best done through an audit of the firm’s various units.
The risks may be behavioural or procedural. Both need to be
addressed.
Complaints handling system and record keeping. (There is an
Australian Standard for complaints handling ---AS4269--- which
direct marketers must comply with: Direct Marketing Code of
Practice, Part B, clause 40. This is discussed below.)
Reporting and monitoring
Review and accountability ---the compliance program ought to be
reviewed each two years. This will require the development of a
review process including key performance indicators.
8. Contract between Seller and
Consumer
Express obligations
 In every sale the seller must comply with any express
promises or warranties made by the seller prior to or at he
time of sale. This is a normal rule of contract law.
 A contractual promise or warranty does not have to be in
writing. Verbal promises or representations can be binding.
 However, not all ‘sales-talk’ becomes part of the contract.
It depends on whether a reasonable person would have
regarded it as a contractual promise.
Implied obligations
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In each sale the seller must also comply with certain
implied requirements.
Broadly speaking, a consumer contract is any contract
for the sale of goods or services where either the price is
less than $40,000 or the goods or services are of a type
normally bought for personal, domestic or household use,
provided the goods or services are not being bought to
be resold (as would be the case with a retailer buying
stock) or to be used up in a process of manufacturing or
repair (for example, raw materials or component parts).
Each state has similar legislation although, unfortunately,
the precise details do vary from state to state.
Sales of goods:
In a sale of goods the seller must ensure:
 The goods correspond with the description by which they are sold --the description may be words or a photograph
 The goods are of merchantable quality ---this means that the goods
must be reasonably fit for their normal purpose or purposes having
regard to all the factors of the sale including the price; not every
imperfection in a good makes them unmerchantable
 The goods are fit for any special purpose made known by the buyer
at the time of sale, provided that in the circumstances it was
reasonable for the consumer to rely on the seller’s skill and
judgment.
 The bulk of the goods conform with any sample by which they were
sold
Sales of services
In sales of services the supplier must ensure：
 The services are supplied with reasonable
care and skill
 The services are reasonably fit for the
purpose for which they were acquired
 Any goods supplied with the service are
reasonably fit for the purpose
Delivery
The law requires that the goods be delivered on
the data named for delivery in the contract or ,
where no data is agreed upon, within a
reasonable time.
 This is reflected in the Direct Marketing Code of
Conduct, although the code goes further than
the law by specifying that a reasonable time
shall not exceed thirty days.

Termination of contract
A serious breach includes:
 Failing to deliver on the agreed delivery date, or where
no date is agreed upon, within a reasonable time
 Delivering goods that do not correspond with the
description or sample by which they were sold
 Delivering goods that are not of merchantable quality
 Delivering goods that are unfit for the buyer’s purpose
where the buyer has made that purpose known to the
seller at or before the contract was finalized
Contracts with Minors
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The Direct Marketing Code of Practice directs marketers to have
appropriate procedures in place to limit the sale of restricted goods
or services to minors.
Marketers should also be aware of some of the contractual problems
in dealing with minors. In many cases the contract may be
unenforceable.
Each state has its own law regulating contracts with minors. In all
states and territories a minor is a person under the age of 18 years.
Except in NSW a contract with a minor is not enforceable unless the
goods sold are necessaries.
Necessaries are goods or services suitable to the condition in life of
the minor and to the particular minor’s actual requirements at the
time of the sale and delivery.
9. Non-Contractual Obligations
Defective goods
Contractual liability is limited by the need to have a contract
between the parties.
However, the person who suffers as a result of a defective
good or service may not have a contract with the firm.
For example, a grandparent buys a toy for their grandchild.
The toy is defective. It is not fit for its purpose. The child is
injured as a result of this defect.
As there is no contract between the firm and the child the
child cannot sue for breach of contract. The grandparent
cannot sue because the loss was suffered by the child not
by the grandparent.
In these circumstances the child has a number of options.
Negligence — the retailer
 One option is to sue the retailer for failing to take
reasonable care in choosing the products sold.
Where the product sold is a known proprietary
brand it is unlikely that the child would succeed
against the retailer.
Negligence — the manufacturer
 Another option is to sue the manufacturer for
failing to take reasonable care in manufacturing
the product. The right to sue the manufacturer
for negligence was established in one of the
most famous legal cases of the twentieth century.
Marketing — the manufacturer
Manufacturers are defined by the Trade Practices Act as
including:
 The Importer (where the manufacturer is overseas)
 Own branders ---that is, any firm that attaches its own
brand to the product even though that firm did not
manufacture the product
 Assemblers
Breach of obligation — manufacturer
Manufacturers are defined by the Trade Practices Act as
including:
 The Importer (where the manufacturer is overseas)
 Own branders ---that is, any firm that attaches its own
brand to the product even though that firm did not
manufacture the product
 Assemblers
Under the Trade Practices Act the
manufacturer owes an obligation to:
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Ensure goods comply with any express warranty give
Ensure goods are fit for any specified purpose
Ensure goods correspond to the description given to
them by the manufacture
Ensure goods are of merchantable qualit
Ensure goods conform to any sample by which they
were sol
Take reasonable steps to ensure that facilities for repair
and spare parts are reasonably available for a
reasonable period of time
Defective services
 A person
who is injured by a defective
service may have an action against the
supplier of the service even though there
is no contract between the injured person
and the supplier.
 This law is an extension of the rule
established in Donoghue v Stevenson..
DELL
 http://www.seoip.net/SEO/Article720.htm
 http://www.dell.com.cn/
10. E-commerce
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Consumers expect some protection. Traders expect a fair trading
environment. The singularity of e-commerce lies in the technology.
There is no reason to adopt a whole new range of rules just for ecommerce.
The government has adopted a light-handed regulatory approach to
facilitate the development of electronic commerce by removing legal
impediments.
The legislation will be based upon the recommendations of the
Electronic Commerce Expert Group and the Model Law on Electronic
Commerce developed by the united nations commission on
international trade law.
The growth of e-commerce could be constricted by the public’s
perception that details of credit cards and bank accounts are not safe
on the internet.
Other areas of importance
consumer protection
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Ensure protection for consumers against deceptive
conduct and defective products in a global marketplace.
The trade practices act, supported more recently by
codes of conduct. Each country has its owe consumer
protection law and significant variations do exist.
Eventually any international agreement on consumer
protection would have to be supported by an agreed
dispute resolution mechanism. There is considerable
international debate on all aspects of distance selling,
particularly e-commerce.
11. The direct marketing code of
practice and e-commerce
 The
OECD guidelines for e-commerce.
 This should offer some protection to both
the customer and the market against one
of the problem associated with doing
business on the internet.
Handling complaints
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Commitment :there should be a commitment to efficient and fair
resolution of complaints by people in the organization at all levels.
Fairness: a complaints handling process should recognize the need
to be fair to both the complainant and the organization.
Visibility: a complaints handling process should be well publicized to
consumers and staff
Access: a complaints handling process should be accessible to all
and ensure that information is readily available on the details of
making and resolving complaints.
responsiveness:
Charges: complaints handling should be at no charge to the
complainant
Remedies: there should be a capacity to determine and implement
remedies
Handling complaints
 Data
collection
 Systemic and recurring problems:
 Accountability
 Reviews: a rapidly changing global market
environment necessitates ongoing
evaluation of the complaints body’s role
and activities.
 External
12. Consumer credit
 Uniform
consumer credit code (uccc).
Unlike the direct marketing code of
practice, the uccc is law. The basic
principles underpinning the UCCC are
disclosure and fairness.
When does the uccc apply?
 The uccc applies to all credit that is
provided or intended to be provided wholly
or predominantly for personal domestic or
household purposes and a charge is made
for providing the credit
 The uccc applies to hire purchase
contracts.
 The borrower must be a natural person.
 The uccc applies to all trading and
financial institutions who lend money for a
fee for consumer consumption purposes.
When doesn’t the UCCC apply.？
 Short term credit for less than 62 days
 Continuing credit for which there is only an
account charge payable which is fixed.
 Insurance premiums paid by installments.
13. Advertising credit
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The advertisement must not make false or misleading representations
Any reference to the interest rate or other cost of credit must be in the
manner prescribed by the UCCC
What are the pre-contractual requirements imposed by the UCCC?
Name of the creditor
Amount of credit
Interest charges and the applicable rates including default rate.
Any other charges or fees
Repayment terms
Commission (if any)
Insurance details
Details of any security required
14. The contract
All consumer credit contracts or leases must be
in writing and signed by the creditor and debtor.
 The contract must contain the details required by
the pre-contractual statement.
 The contract must conform with the other
provisions of the UCCC, including the maximum
interest rates to be charged and the
circumstances in which default interest can be
charged.
 The direct marketing code of practice requires
certain information to be supplied no later than
the time of delivery.

Termination of contract/reopening
contract/enforcement of security
 The
UCCC gives the debtor the right to
pay out the debt at any time, but the credit
provider may charge an early termination
fee provided this was included in the
contract.
Consumer leases (goods)
The lessor hires the good in the course of a
business
 The lease is for a definite period exceeding four
months
 The goods are leased wholly or predominantly for
personal domestic or household purposes
 The sum of the rental charges and other expenses
exceeds the cash price of the goods

Privacy
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1 Information
One of the issues of most concern to the direct marketing
industry is privacy.
The legislation will be based on the privacy commissioner’s
national privacy principles for the fair handling of personal
information
Provided these codes were based on national privacy
principles for the fair handling of personal information, they
will continue to apply after the legislation is introduced.
2 intrusiveness
3 telemarketing: there are no laws restricting caccess to
customers via the telephone.
15. non-consumer related laws
Protecting confidential information
 This is not about consumer protection and
consequently is not regulated by the direct
marketing code of practice.
 No one owns information/ideas, expect in
the sense that the information or the idea
forms the basis of an invention protected by
a valid patent.
1 the firm must establish that the relevant
information is of a confidential nature.
 2 the information was disclosed in such a way
that the recipient knew or ought to have realised
he or she was under an obligation not to
disclose or use information without permission.
 3 there has been, or is likely to be , unauthorised
disclosure or use.
 Customer lists have not generally been regarded
as trade secrets .the policy behind this is to
protect the employees’ right to use skillls learnt
in one workplace at another workplace.

Restraint of trade clauses
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1.some protection can be gained by using a restraint of
trade clause in the employment contract.
2. a restraint of trade is any restraint which attempts to stop
a person engaging in conduct in trade which they would
otherwise be entitled to engage in.
3. the clause must be reasonable as between the parties
and also when viewed from the perspective of the public
interest.
4. usually this means must be limited as to time,
geographic operation and the nature of the conduct
restrained.
5 .the later clause is unlimited in time, space or nature of
conduct restrained.
Tort of passing off (p535)
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1. the purpose of the tort of passing off has always been to
protect a trade’s goodwill by protecting the reputation it has
built up in its trade marks and get-up.
2. two types of misrepresentation are restricted to those
where consumers are misled into believing either:
That the products they are buying originate from some
other trader.
The product they are buying, or the trade with whom they
are dealing, is endorsed or approved by some other person.
Protecting trade marks
Trade marks act
 Protection under the Trade Marks Act depends on
registration.
 The purpose of a trade mark is to distinguish one
person’s products from another person’s.
 Marks which describe the product or are
geographic or a surname are generally not
regarded as distinctive.
 Certain words or signs may not be registered.
The registered trade mark:
 1. in relation to the same goods or services in
respect of which the trade mark is registered.
 2. in relation to good or service of the same
description as, or closely related to, those in
respect of which the trade mark is registered and
the use is likely to deceive or cause confusion.
 3. where the registered trade mark is a ‘wellknown’ trade mark and the use is likely to
suggest a trade connection between the trader’s
goods or services and the owner of the
registered trade mark.

Evidence of cases of actual deception is of great
weight in determining whether a mark is deceptively
similar to a registered mark.
Copyright
 Copyright
law is found in the Copyright Act.
It is an act of the federal parliament.
 Copyright does not depend on registration;
there is no system of registration.
Copyright subsists in two categories
of subject matter
Works – any original literary (which
includes computer programs), dramatic,
musical or artistic work
 2. subject matter other than works which
includes sound recording, firm, television
and radio broadcasts and published editions
of works.
 1.
Copyright lasts for
1. Works- life of the creator plus fifty years
 2. sound recordings, films, radio and television
broadcasts –fifty years.
 3. copyright gives the owner the exclusive right
to copy, adapt, perform in public, broadcase or
transmit the copyright work.
 The internet presents copyright problems mainly
because of the difficulty of detecting copying.

Competition law (541)
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Competitors are not permitted to enter into or give effect to agreements
that amount to a boycott. Boycotts include market sharing
arrangements, as well as agreements not to deal with particular
suppliers or buyers.
Firms are not permitted to enter into or give effect to any agreements
that substantially lessen competition within a market.
Suppliers are not permitted to engage in exclusive dealing
arrangement with their buyer if the purpose or effect is to substantially
lessen competition in a market.
Buyers are not permitted to engage in exclusive dealing arrangements
with their suppliers if the purpose or effect is to substantially lessen
competition in the supplier’s or buyer’s market.
Summary
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Morality – a set of standards by which a community or culture measure
their peers and themselves in determining what are acceptable
attitudes and behaviour. Sometimes choices may cause moral
dilemmas.
Direct marketing is regulated by legislation that applies to all marketing
All sellers have contractual requirements under law of contract and the
Trade Practices Act.
E-commerce has introduced new challenges for traders and law
makers and enforcers.
Consumer credit is not regulated by the Trade Practices Act but by a
series of state acts, all of which follow a standard form and together are
referred to as the Uniform Consumer Credit Code.
Privacy is one of the issues of most concern to the industry.
Trade marks and protecting trade insignia are important issues, as are
copyright and anti-competitive conduct.
Thank you for your listening