The start date for the unfair contract terms provisions of the
Trade Practices Amendment (Australia Consumer Law) Act (No
1) 2010 has been confirmed to be 1 July 2010.
To refresh your memory, this Act amends the Trade Practices
Act 1974 (TPA) and Australian Securities
and Investment Commission Act 2001 (ASIC Act)
to prohibit unfair contract terms in consumer contracts.
The Act states that a term of a consumer contract will be unfair
if the term:
would cause significant imbalance in the parties' rights
and obligations arising under the contract;
is not reasonably necessary in order to protect the legitimate
interests of the party who will be advantaged by the term; and
would cause detriment (whether financial or otherwise) to a
party if the term were to be applied or relied on.
A 'consumer contract' is a contract for the supply of
goods or services (or sale or grant of an interest in land) to an
individual whose acquisition of the goods, services or interest is
wholly or predominantly for personal, domestic or household use or
The Act only applies to standard form contracts and will not
impact business to business contracts.
Unfair contract terms relating to financial products including
credit will be regulated by similar provisions in the ASIC Act.
Each of the states will pass corresponding legislation, however
the changes to the ASIC Act and TPA that take effect on 1 July 2010
will impact all corporate entities from this date.
Unfair contract terms legislation is not new, it has been in
existence in Victoria for some time – and at common law,
contract terms which are unfair or unconscionable can be varied or
set aside. However, ASIC is likely to be a much more active
You should ensure that all standard contracts with consumers
have been reviewed to ensure they contain no unfair terms. Many
standard clauses (such as default occurring if rates are not paid
on due date) are potentially unfair. It is insufficient to say that
you will never rely on those clauses, as there may be reputational
damage if on audit several clauses in standard agreements are found
to be unfair.
The Sportscraft refunds and returns policy limitations went beyond consumer's rights under the Australian Consumer Law.
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