Wednesday 17 March 2010 was an historic day for Australian consumers. The Senate passed a Bill creating the Australian Consumer Law (ACL), dubbed by Dr Craig Emerson, the Minister for Competition Policy and Consumer Affairs, as 'the biggest reform of consumer protection laws since the passage of the Trade Practices Act by the Whitlam Government in 1974'.
Unfair contract terms
A key element of the ACL is a provision which will make unfair contract terms in 'consumer contracts' void. A new definition of a consumer contract will replace the existing definition in the Trade Practices Act 1974 (Cth) (Act). A 'consumer contract' will be a contract for the provision of goods or services or the sale of an interest in land to an individual whose acquisition of the goods, services or land is wholly or predominantly for personal, domestic or household use or consumption.
Unfair contract terms are those which cause a significant imbalance in the rights and obligations of the parties to the detriment of the consumer, where the term is not reasonably necessary to protect the supplier's legitimate interests.
Unfair contract terms may include, among others, terms which:
- allow the provider to vary terms or exercise powers unilaterally;
- limit a supplier's liability to consumers;
- impose unreasonable penalties for failure to perform contractual obligations; or
- require the consumer to make certain acknowledgements regarding their understanding of the contract.
There will be no statutory penalties for breaching the ACL, nor will damages be available to consumers, due to amendments made by the Senate. However consumers will be able to obtain injunctions and declarations that certain terms are unfair (and consequently void).
Misleading and unconscionable conduct
In addition to creating the unfair contract terms regime, the Bill has introduced penalties for companies that breach existing provisions of the Act prohibiting misleading and false representations and unconscionable conduct
Commencement
The exact commencement date of the ACL has not yet been confirmed, but should be no later than six months after the Bill receives the Governor General's assent.
Further protections in sight
Rather than resting on his laurels, Dr Emerson introduced further legislation on the same day into the House of Representatives.
The new Bill will consolidate existing consumer protections under the ACL, in addition to introducing some new protections, including clarifications on consumers' rights to refund or repairs under warranties and curfews on door to door sales.
Hall & Wilcox will provide further information on the extended application of the ACL in due course.
Victorian experience
The unfair contract terms provisions of the ACL have been modelled on existing Victorian laws, which have been in operation since 2003.
Hall & Wilcox has monitored the progress of the ACL closely and has experience in advising Victorian clients in relation to consumer contract terms.
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