Australia: Businesses gain some breathing space under new ACL Regulations

Last Updated: 25 November 2010

By Murray Deakin, Joanne Daniels and Irena Apostopoulos

Stage 1: Regulatory requirements commencing on 1 January 2011

Prescribed requirements for asserting a right to payment

The ACL prohibits a person from asserting a right to payment for unsolicited goods or services when there is no basis for doing so. Section 10 of the ACL provides for a presumption that a person asserts a right to payment, amongst other things, if they send an invoice or other document that seeks payment without complying with the requirements prescribed in the Regulations.

Regulations 77 and 78 aim to avoid consumer confusion about obligations to pay other people money in response to an invoice or other document that asserts a right to payment. The Regulations prescribe that an invoice or other document requesting payment for unsolicited goods or services include the statement "This is not a bill. You are not required to pay any money". This must be the most prominent text in the document. A person who complies with this requirement can seek payment for goods or services accepted by a consumer.

Agreements that are not unsolicited consumer agreements

The ACL introduces a number of disclosure requirements and termination rights that apply to unsolicited consumer agreements. To avoid the imposition of a disproportionate business compliance burden on some suppliers, Regulation 81 prescribes that certain agreements are not unsolicited consumer agreements and are exempt from these new requirements. These include:

  • a business to business contract
  • an agreement made following discontinued negotiations
  • an agreement made in the course of a party plan event
  • an agreement which renews a pre-existing agreement, including for the supply of telecommunications, electricity, gas and club memberships
  • fresh agreements (with a cumulative value of A$500 or less) which are entered into within three months after entering into a contract for the same kind of goods or services.

Requirements for unsolicited consumer agreements

The Regulations prescribe information which must be included in an unsolicited consumer agreement relating to the identification of the dealer, 10 day cooling off period, consumer cancellation rights and other details relating to signatures, dates and termination.

Exempted persons

Section 43(3)(a) of the ACL provides an exemption from certain provisions of the ACL for publishers of publications who have an audited circulation of 10,000 copies or more per week. Regulation 79 prescribes the Audit Bureau of Circulations as the relevant body to determine publishers who are eligible for this exemption.

Section 43(3)(d) of the ACL provides an exemption from the requirements for asserting a right to payment for unauthorised entries and advertisements for persons specified in the Regulations. Large proprietary companies, listed corporations and their subsidiaries (as defined under s9 of the Corporations Act 2001) have been prescribed to fall within this exemption (Regulation 80).

Emergency repair contracts exempt

Regulation 88 provides that after a natural disaster a supplier may approach consumers on an unsolicited basis to offer to supply urgent goods or services without the 10 business day cooling-off period or a prohibition on supply and payment for 10 business days. This exemption is limited to the provision of emergency repairs to a person's property damaged by a natural disaster and is limited to the area that a state of emergency declaration covers. The urgent work must be undertaken to rectify a property hazard, protect people's health and safety or prevent substantial property damage. The supplier under the emergency repair contract also needs to hold a licence that is in force in the relevant jurisdiction.

Exemption for contracts for the supply of electricity or gas

Regulation 89 provides an exemption from the unsolicited selling regime for certain contracts relating to the supply of electricity or gas.

Section 86 (s. 86) of the ACL provides that a supplier who has entered into an unsolicited consumer agreement must not supply goods or services, or accept or require any payment for those goods or services for 10 business days. Where a supplier is supplying electricity or gas to premises where these supplies are not connected or, where they are connected, no electricity or gas is being supplied, they are exempt from complying with section 86 of the ACL.

Exemption from reporting requirements for consumer goods associated with death, serious injury or illness

The Regulations exempt the agricultural and veterinary chemicals industry, the automotive industry, the pharmaceutical industry and the food industry from the ACL notification requirements in relation to goods that have been supplied which have caused, or may have caused, death or serious injury or illness (Regulation 92). These industries are already subject to comprehensive regulatory safety regimes.

Transitional provisions – saving State or Territory laws for compliance with regulation 82 and regulations 83 to 87

Currently there are State and Territory laws which require the production of information related to the identity of dealers involved in negotiating unsolicited consumer agreements (also prescribed in Regulation 82) and which relate to information about termination periods, the termination notice to be provided to consumers and the requirements for an agreement to be signed and dated by a consumer (also prescribed in Regulations 83 to 87).

Regulation 93 is a transitional provision that allows persons involved in unsolicited selling to continue to comply with pre-existing State and Territory laws until 30 June 2011. From 1 January 2011 to 30 June 2011 businesses may comply with either existing State and Territory laws dealing with these matters or Regulations 82 to 87.

Transitional provisions – application of s. 86 of the ACL

State and Territory laws prohibiting payment for and the supply of goods and services during a cooling-off period currently differ significantly between jurisdictions. In NSW the law currently prohibits only the receipt of payment for services but not goods during the cooling-off period. This applies to agreements negotiated face to face and over the telephone. Section 86 of the ACL creates a standard prohibition on the supply and payment for goods and services for 10 business days.

The Regulations allows businesses to comply with the existing prohibitions in a State or Territory rather than complying with s. 86 of the ACL from 1 January 2011 until 31 December 2011.

A business may comply with either the relevant pre-existing State or Territory law or comply with s. 86 of the ACL until 31 December 2011 (other than in relation to telemarketing in Queensland, Tasmania, South Australia, Western Australia and the Northern Territory where s. 86 will apply from 1 January 2011).

Stage 2: Regulatory requirements commencing on 1 July 2011

Notice relating to repair of goods

The prescribed notice requirements for the repair of goods have been deferred until 1 July 2011.

Regulation 91 prescribes that consumers seeking to repair consumer goods which are capable of retaining user generated data (such as files on a computer) must be notified that the repair may result in the loss of data. Notice must also be given to a consumer if, in relation to repairing a consumer's defective goods, it is the repairer's practice to either provide or use refurbished goods in the repair.

The notice must include the words "Goods presented for repair may be replaced by refurbished goods of the same type rather than being repaired. Refurbished parts may be used to repair the goods".

Stage 3: Regulatory requirements commencing on 1 January 2012

Requirements for warranties against defects

The prescribed warranty requirements have been deferred until 1 January 2012, allowing businesses more time to adjust to the new requirements.

Regulation 90 prescribes that a warranty against defects must be contained in a document that is transparent and easily understandable. It must include:

  • what the person who gives the warranty must do so that the warranty may be honoured
  • what the consumer must do to entitle them to claim the warranty
  • the statement "Our goods come with guarantees that cannot be excluded under the Australian Consumer Law. You are entitled to a replacement or refund for a major failure and for compensation for any other reasonably foreseeable loss or damage. You are also entitled to have the goods repaired or replaced if the goods fail to be of acceptable quality and the failure does not amount to a major failure"
  • identification information about the person who is giving the warranty
  • the period during which a defect in the goods or services must appear for the consumer to be entitled to claim the warranty
  • the procedure for the consumer to claim the warranty, including the address to which a claim may be sent
  • identity of who will bear the expense of claiming the warranty
  • a statement that the benefits given by the warranty are in addition to other rights and remedies which are available to the consumer.

Failure to comply with these requirements will result in a contravention of section 102 of the ACL.

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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