In March 2016, the Federal Court found that the refund policy of
American on-line gaming company Valve Corporation
(Valve) (incorporated in Washington State, having
no Australian office or presence) violated the Australian Consumer
Law (ACL). Valve's website stated (in all
caps) "ALL STEAM FEES ARE PAYABLE IN ADVANCE AND ARE NOT
REFUNDABLE IN WHOLE OR IN PART," which the court found to be
(i) misleading and deceptive (in contravention of s 18(a) of the
ACL) and (ii) comprised false or misleading representations about
the existence or effect of the consumer guarantees (in
contravention of s 29(1)(m) of the ACL).
In Australian Competition and Consumer Commission v Valve
Corporation (No. 3)  FCA 196, the court accepted
the "Steam Subscriber Agreement"
(SSA) contractual choice of law was Washington
State (US) (set out in the terms and conditions on the Valve
Washington State law:
does not prohibit non-refundable subscriber video game content;
permits consumers to enter contracts that disclaim all
guarantees for online services or software.
The Court held that, notwithstanding that SSA purported to
substitute Washington State law for all (or a portion of) the ACL,
the ACL continued to apply in relation to the supply under the
contract. S 276 of the ACL makes a term of a contract void to the
extent that it attempts to modify or exclude a remedy for breach of
a consumer guarantee.
In summary, the ACL's consumer guarantees apply generally to
a supply of goods to an Australian consumer. Regardless of the
limited contact that a foreign company has with Australia, when it
sells products to Australian consumers, the foreign company may not
obviate the ACL by excluding consumer guarantees with terms and
conditions governed by foreign law. Having determined that the ACL
may not be superseded by foreign law, the Court applied the
well-settled principle that an incorrect statement of the law (such
as a disclaimer stating that fees "are not refundable in
whole or in part" despite the ACLs providing a consumer
guarantee that "goods are of acceptable quality"
and consumer remedies if they are not) can be misleading and
deceptive conduct, and held Valve's conduct contravened of s
18(a) and s 29(1)(m) of the ACL.
Coming up...On-line foreign companies
caught by the ACL "doing business in
In Part 2 of this article we discuss the Valve
court's analysis of the "conduct" of a foreign
company that comprises "doing business in Australia",
notwithstanding that the foreign company has no office, employees
or bank accounts in Australia and primarily transacts business
on-line or through third-party service providers.
We will continue to follow Australian Competition and
Consumer Commission v Valve Corporation, currently listed for
a hearing as to remedies, and any appeals that may follow.
Solicitors should think carefully before disclosing sensitive information to experts in a letter of instruction.
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