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.
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
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.
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
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
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
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.
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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