Australia: Newsflash: Trade Practices Act – Australian Consumer Law Reforms in Effect Tomorrow


In a wave of recent amendments to the Trade Practices Act 1974, the first of three tranches of Australian Consumer Law reforms comes into effect tomorrow and the second tranche was passed by Parliament on Friday.

These Australian Consumer Law reforms harmonise and streamline consumer laws in Australia and have been heralded by the Government as the most significant changes to the Trade Practices Ac since its introduction in 1974.

Tranche 1

The Trade Practices Amendment (Australian Consumer Law) Act (No 1) 2010 contains the first tranche of reforms, namely the national unfair contract terms law, that will come into effect tomorrow. The following is a reminder of our April Newsflash in respect of the unfair contract terms law.


The national unfair contract terms law applies to standard form consumer contracts (not business to business contracts) entered into from 1 July 2010 and renewals and amendments to pre-existing contracts which are made on or after 1 July 2010.

A term is unfair if:

  • it would cause a significant imbalance in the parties' rights and obligations arising under the contract; and
  • it is not reasonably necessary in order to protect the legitimate interests of the party advantaged by the term; and
  • it would cause detriment to a party if it were to be applied or relied upon.

Effect of unfair term:

  • An unfair term will be void. There is also some risk that a local or federal regulator could commence enforcement action.

Practical steps

It is essential that you review your existing standard form consumer contracts. Real consideration must be given as to whether inclusion of each term is necessary to protect legitimate business interests.

You should consider adopting the practice of negotiating consumer contracts, rather than using standard form contracts, in order to avoid the application of the unfair contract terms law.

Tranche 2

The Trade Practices Amendment (Australian Consumer Law) Bill (No. 2) 2010 contains the second tranche of reforms. It is currently awaiting Royal Assent. The second tranche of reforms is expected to commence on 1 January 2011, assuming the amendments are adopted by the State Governments by that time.

The enactment of the second tranche of reforms will assist in the rationalisation of 17 national, state and territory consumer protection laws, including the fair trading acts, that have typically differed across jurisdictions leading to consumer uncertainty and high compliance costs to business.

In addition to preserving some of the key consumer law concepts already contained in the Trade Practices Act, such as misleading or deceptive conduct, the second tranche of the consumer law reforms will include:

  • the expansion of the consumer protection provisions to incorporate 'best practice' provisions for specific practices including unsolicited selling (such as door to door and direct sales and the right to a cooling off period) and lay-by agreements;
  • the establishment of a national scheme for statutory "consumer guarantees". Such "consumer guarantees" will replace the implied conditions and warranties provisions in the Trade Practices Act with a view to clarifying the nature of the obligations and entitlements; and
  • the establishment of a national scheme for product safety standards for certain goods or services.

The Trade Practices Act will be renamed the Competition and Consumer Act. The change reflects Parliament's focus on making the law more accessible and directly focused on its objects.

Tranche 3

Although tranche three, the Competition and Consumer Legislation Amendment Bill 2010, is yet to be passed by Parliament, it is intended to commence immediately after tranche two comes into effect. In essence, tranche three will amend the law on the competition treatment of creeping acquisitions, in the context of mergers, and clarify customer and business rights in respect of unconscionable conduct.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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