Many businesses rely on standard terms and conditions of trade
to protect their interests and limit their potential liability when
providing goods or services to customers. Over time these standard
terms and conditions often become outdated as the legal framework
underpinning the terms and conditions changes.
With the introduction of the Australian Consumer Law
(ACL) under the Competition and Consumer
Act 2010 in January 2011 a fundamental shift has occurred in
the way businesses providing consumer goods or services interact
with their customers. In particular, the ACL has replaced the
implied conditions and warranties regime of the Trade Practices
Act 1974 with a statutory regime of consumer guarantees.
One of the key elements of this new regime is that consumers are
now able to rely on statutory remedies for breach of a consumer
guarantee, rather than enforcing their rights as a breach of
contract. The type of remedy available to a consumer under the ACL
depends on the extent of the failure of the supplier to comply with
the relevant consumer guarantee. For example, under the ACL, where
the failure to comply with the guarantee cannot be remedied, the
consumer may require the supplier to refund the purchase price of
the goods or services.
Businesses supplying goods or services to consumers cannot
contract out of the statutory guarantees regime and are bound to
provide consumers with remedies to which they are entitled under
the ACL. The requirement to provide the remedies set out in the ACL
changes the circumstances in which a supplier can limit its
liability in its standard terms and conditions. Under the Trade
Practices Act suppliers often limited their liability for a
breach of an implied warranty to the resupply of goods or the
resupply of the relevant services. Under the new regime, this type
of clause may be void as it does not allow for the consumer to
require a remedy to which it is entitled under the ACL.
To ensure that your business can rely on its limitations of
liability and is adequately protected by its terms and conditions,
standard terms and conditions should be regularly checked and where
necessary updated to adapt to the changing legal framework.
With the implementation of the ACL and the soon to be introduced
Personal Property Securities reform now is a good time to check
whether your standard terms and conditions are adequate.
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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The Federal Court decision is likely to encourage the ACCC to maintain unconscionable conduct as an enforcement priority.
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