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Australian Consumer Law Bill |
Australians are set to get a uniform national Australian Consumer Law in 2010. Businesses that sell to individual consumers should review their consumer contracts, because their existing contracts may contain unfair terms and new penalties and enforcement powers will apply. |
The new laws will also apply to financial services. |
Consumer Contracts |
A consumer contract is for goods or services including land and leases to an individual predominantly for personal, domestic or household use. |
For example this will include utility services, finance, residential tenancies and telephones. |
The Bill will not cover business to business contracts (i.e. non-consumer contracts) but the government will review business contracts in its review of the unconscionable conduct provisions of the Trade Practices Act and the Franchising Code of Conduct. |
What is a standard form contract? |
All contracts will be presumed to be a "standard form contract". It is more likely to be standard form if it was not negotiable and if the business has more power. |
Unfair Terms |
Businesses will have to look out for unfair terms. A term will be unfair where:
- there is a significant imbalance in the parties' rights and obligations;
- the terms is not reasonably necessary to protect the supplier's legitimate interests.
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| All of the circumstances of the contract will be considered including whether the term is expressed clearly and in plain language. |
Unfair contract terms are listed in the Bill. These include terms that allow a supplier to unilaterally:
- get out of the contract;
- terminate;
- change the contract, what is supplied;
- change an upfront price (without the consumer being able to terminate);
- renew or not renew; or
- Charge exit or default fees.
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| If the contract is unfair |
Unfair terms will be void, but the contract will continue if it can still operate without the unfair term. |
| The new law will apply to standard form consumer contracts made, renewed or varied after 1 January 2010. |
New remedies |
The Australian Consumer Law will include new remedies:
- Civil pecuniary penalties for unconscionable conduct under the Trade Practices Act and for product safety and information breaches, still capped at $1.1 million for corporations and $220,000 for individuals.
- Disqualification orders for breaches of unconscionable conduct, unfair practices, pyramid selling, product safety and information and unfair contract terms.
- Substantiation notices by the Australian Competition and Consumer Commission (ACCC) and Australian Securities and Investments Commission (ASIC) requiring a supplier to provide information and to substantiate a representation.
- Infringement Notices by the ACCC and ASIC for breaches of the Australian Consumer Law, with penalties of up to $6,600.
- Public warning notices by the ACCC and ASIC of potentially harmful conduct without a court order.
- Redress Orders from the court on the application of the ACCC and ASIC for consumers who are not parties to enforcement proceedings, for where a large number of consumers suffer similar damage. The redress can include refunds, repairs, variation of contracts and orders to honor representations.
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| New Legislation |
Trade Practices Amendment (Australian Consumer Law) Bill 2009 amends the Trade Practices Act 1974 (Cth) (the TPA) and the Australian Securities and Investments Commission Act 2001 (Cth) (the latter regarding financial services). |
