AIEC, Brisbane 2008 THE LEGAL RAMIFICATIONS OF...

Australian International Education Conference 2008

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THE LEGAL RAMIFICATIONS OF

STUDENTS BEING CONSUMERS

Philip Clarke

AIEC, Brisbane 2008

The liability of universities to international students, in contract

or negligence, for not providing what they reasonably expected.

Overview

� University Marketing and the Law (2003)

� Students as Consumers

� Sources of liability

� Elements of liability and their application to universities

� Relevance of ESOS Act 2000

� Examples of liability arising

� UK responses

� Avoiding liability

� Conclusion


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University Marketing and the Law

Liability under the Trade Practices Act 1974 (or FTA equivalents) for (i) misleading or deceptive conduct

and (ii) under Part IV of the ActCovered advertising or advice or strategies that, for example –

� Contained errors of fact

� Was misleading even though true

� Contained inaccurate predictions

� Did not disclose information material to students

� Expressed groundless opinion

� Made exaggerated claims of

eminence or success

� Strategies involving -• Bans

• Allocating responsibilities or markets

• Requiring students to obtain specified services or goods

• Arrangements that set prices

Concern derived from –

� Universities now operating in trade or commerce

� Expansion of the TPA – both grounds of liability and

penalties

� Aggressive marketing and promotion

� Lack of appreciation

Students as Consumers

� General consumer rights and remedies are now

available to international students

� Those creating a direct cause of action such as s 52 of the TPA.

� Those based on contract

� Students increasingly think of themselves as

consumers and universities as suppliers of services


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Examples of potential grounds for legal action

� Course discontinuance

� Significant changes to courses requirements

or outcomes

� Inadequate teaching

� Inadequate resources or facilities

� Significant reductions to the amount of

teaching offered

� Industrial action by teaching staff

� Not properly following disciplinary procedures

� Not honouring claims made in course

information or promotional material

� Not honouring promises about the quality of tuition

� Not providing assistance when it was

needed

� The course not meeting professional

admission requirements as claimed

� Awarding a fail grade capaciously, or in

bad faith

Sources of Liability

� Misleading conduct

� Contract

� Negligence

NOTE

Education Services for Overseas Students Act 2000 (Cth)

�Imposes obligations on institutions, with penalties for non-compliance

�Does not give international students any rights of action for breach

�Section 30 does allow recovery of fees if a course does not start on time, ceases or is not offered in full


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Liability in Contract

Significance of Contract

� Can provide international students with idiosyncratic rights as well as those that are generic

� Can impose more extensive obligations on universities than other areas of law

� Can result in non-excludable obligations created by the Trade

Practices Act 1974 being imposed upon universities

Elements of a Contract

� Agreement

� Consideration

� Intention

� Formalities

� Capacity

ContractAn enforceable promise

Contract

Consideration or substitute

Intention to create legal

relations

Compliance with any

formalities

CapacityAgreement


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Is there a contract between international students and

their university?

� Private university and student: Orr 1996) and Kwan (2002)

� Griffith University v Tang: (HCt 2005)

� Key elements

� Agreement �� easily satisfied

o Application and enrolment process

o The National Code 2007 – Standard 3.1

� Consideration �� easily satisfied

o Fees

o Promises to abide by rules

o Forgoing other options

o Inconvenience

� Intention �� not so obvious

� Is this the key to University protection?

Contract: some issues

� Is there a contract, or can a university chose not to make the student-university relationship contractual?

� Does National Code Standard 3.1 reference to “agreement’ mean “contract” ?

� If there is a contract –

� When is the contract concluded?

� Initially

� Is there an annual renewal?

� Where is it concluded?

� Whose law governs?

� What are the terms of the contract?


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Terms of the contract:“a multitude of ephemera”

� Constitution and rules of the University: Ogawa v Melbourne; Bayley-Jones v Newcastle; Harding v UNSW

� Enrolment material: Ling; Harding v UNSW

� Promotional material

� Handbooks and course guides: Kwan; Zumbrun

� Oral undertakings or promises

� Trade Practices Act, s 74: implied warranty that services supplied in the course of a “business” to a “consumer” be rendered with “due care

and skill”

Issue: should the Standard 3 agreement set out all the university’s

undertakings?

The terms of a university-student contract may be

derived from the following

Breach of Contract

� Clear and specific promises: Ross

� Academic discretion or judgement : see Kirby J in Tang; Clark;Mahavongsanan

� Course content

� Style of teaching

� Timetabling

� Failure to deliver: Zumbrun; Alsides; Buckingham

� Failure to follow proper procedures: Harding; Bayley-Jones; Clark

� Acting capriciously: Sharick

� Breach of the warranties implied by s 74 of the TPA

� Due skill and care

� Reasonably fit for purpose

� Relevance of the National Code: Standards 2, 3, 6, 14


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Law student wins £30,000 payout BBC News, 31 July 2002

A law student who was unhappy with the quality of teaching on his university course has won £30,000 in an out-of-court settlement. The University of Wolverhampton settled after a preliminary hearing had been adjourned until October. Lawyers said mature

student Mike Austen, 54, had struck a blow for all students who had to pay for their education.

Mr Austen - a retired airline pilot who was representing himself -began his action for breach of contract at the end of his first year of

study last summer. He claimed the course had failed to live up to the "inflated" picture it gave of itself in its prospectus.

"The university made claims about its standards and it represented itself as a place of 'learning excellence'," Mr Austen said.

"It said it delivered courses to the highest possible standards and made claims about its law course too.

Mike Austen had the support of his family

Educational Negligence

� Courts in the UK have recognised a cause of action for “educational

negligence”.

� Liability on this ground may arise when a student suffers loss as a result of

“incompetent or negligent teaching”: Ramsay & Shorten (1996)

� Bedfordshire CC (HL 1995)� Plaintiffs suffered learning difficulties

� Claim that local educational authority was negligent in failing to determine this and take

remedial action

� Dicta: If it comes to the attention of the headmaster that a pupil is underperforming, a duty of

care is owed to take such steps as reasonable teacher would take to deal with this situation.

� Phelps v Hillingdon (HL 2002)� Teachers owe a duty of care to students which can give rise to liability in cases where there

is -

� Manifest incompetence

� specific, identifiable mistakes

� This does not, however, extend to allowing claims for mere “poor teaching”


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Responses in the UK


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The Australian, 1 February 2006


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Possible University Responses

� Avoid committing actionable wrongs

� Ensure all representations and claims are accurate

� Ensure all promises and implied terms are honoured

� Possible sources of protection

� Secure voluntary and informed undertaking by students that they were not influenced by any representations not recorded in their agreement. This may assist in a s 52 of the TPA claim

� Secure a consent form drafted to provide protection against negligence claims

� Avoid making a contract with students by expressly saying that there is no intention to create legal relations

� This could prevent claims for breach of contract based on express promises, university

statutes and rules, or promotional or material

� This could prevent claims based on the implied terms provisions of the TPA

Conclusion

1. The sources of liability have increased as universities have

become more commercial in their operations; in particular as they

-

a. Have engaged in more liability generating activities

b. Have (as a result) come within the scope of the TPA

2. Students are increasingly seeing themselves as consumers and

inclined to seek legal redress

3. Universities in the UK appear to be responding by taking steps to

protect themselves from student claims

4. Australian universities who ignore this issue do so at their peril

5. Holy Grail: recognising the rights of international students as

consumers at minimal cost.

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