There are two important law reforms coming in next year which
will affect most businesses terms of trade and/or credit terms. If
you and your forms are not up to date your terms will be
unenforceable and at worst you may even be in breach of the
Trade Practices Act.
The first reform is the Australian Consumer Law
("ACL") which comes in on the 1st
January 2011. It changes the name of the Trade Practices
Act 1974 to the Competition and Consumer Act 2010,
changes all the section numbers of the sections like 52 (misleading
and deceptive conduct) and more importantly, introduces a set of
"consumer" guarantees (which will apply to business to
business transactions where the price is $40,000 or less). Standard
form terms are already subject to the unfair contracts terms which
came in earlier this year as part of this major reform to consumer
protection in Australia.
We can provide you with an advice that summarises the ACL as it
applies to your business. It is then usually advisable to review
your standard terms of trade as there are harsh penalties for
having terms and conditions in consumer contracts that offend the
The second reform is the Personal Property Securities
Act 2009 which comes into effect in May 2011. It creates one
new register for all personal property securities to be registered
on – many of which have never had to be registered before
(in fact there has been nowhere to register them). For example, if
you have retention of title clauses in your terms of trade or in
your credit terms, these interests will become unenforceable after
1 May 2011 unless you register them on the new Personal Property
Finally, a recent Supreme Court case in NSW concerning personal
guarantees (such as are often included as part of the security for
credit terms), suggests that the form of these guarantees should be
reviewed to include a charge over freehold and leasehold property
to allow you to put on a caveat over the guarantor's real
estate if you need to in a bad debt situation.
If you need any help finding out about the impact of these
reforms or preparing for them, please do not hesitate to contact
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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