Consumer protection and unfair business practices have been
consolidated into ACL (schedule to the Competition and Consumer Act
2010 (CCA)). The CCA is a national law.
ACL is now in operation and all businesses must understand their
changed and new obligations to consumers and other businesses.
Unfair business practices
The unfair business practices regime applies to 'consumer
contracts' – standard form contracts for the supply
of goods, services or sale or grant of an interest in land to an
individual (whose acquisition of the goods, services or interest is
wholly or predominantly for personal, domestic or household use or
consumption). Any 'unfair' term will be declared void.
To avoid a term being declared 'unfair' consider the
Is the contract in plain easy to understand language?
Does the contract contain unilateral rights or terms that
reserve discretion in favour of the supplier? If so, are they
Does the contract contain a severance clause - so, at worst,
the 'unfair term' is severed?
Is there an opportunity for the consumer to negotiate?
We recommend that businesses not only review their contracts but
also their internal policies. At a minimum, file notes in respect
to contract formation and negotiations should be kept.
Consumer guarantees (forms part of the consumer protection part
of ACL) applies to businesses and affects manufacturers, suppliers
and importers. There have been significant reforms to remedies
pecuniary penalties regarding display notices; and
compensation for consequential loss if a consumer guarantee is
Consumer guarantees replace the previous system under the Trade
Practices Act of implied warranties. They are automatic guarantees
for consumers and any clause in a contract that restricts, excludes
or modifies the application of the exercise of rights under or
liability for failing to comply with the consumer guarantee
provisions will be void.
Consumer guarantees apply to:
goods and services costing up to $40,000 (subject to some
goods and services that cost more than $40,000 if ordinarily
required for personal, domestic or household uses (subject to
vehicles and trailers regardless of cost.
However, franchisors should note the exceptions including goods
that are on-sold.
Franchisors must update their systems to ensure compliance with
ACL. Franchisors should also be aware that the ACCC has been
granted increased investigative, audit and enforcement powers and
there are substantial penalties for offences and civil penalties.
If a franchisee is investigated by the ACCC, it is likely that the
ACCC will extend that investigation into all the businesses within
that franchise network.
For further information, attend our upcoming breakfast seminar
on Wednesday 3 August, Legal essentials update for franchisors -
PPSA and Consumer Law.
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 Sportscraft refunds and returns policy limitations went beyond consumer's rights under the Australian Consumer Law.
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