The unfair contract terms came into effect on 1 July 2010 as
part of the Australian Consumer Law ("ACL") in the
Competition and Consumer Act (Cth) 2010.
ACCC's latest report released in March 2013 puts all
businesses on notice that the ACCC is moving to an enforcement
response to resolve non-compliance by businesses of the unfair
contract terms provisions set out in the ACL. This follows ACCC
revealing that 79% of the consumer contracts issued by major
airlines incorporated problematic terms and the problem may be more
widespread across all businesses issuing standard form consumer
contracts. Are you in their sights?
The following table summarises how the unfair contract terms
differ from the consumer guarantees:
Are you in the ACCC's sights?
ACCC has put businesses on notice that it is in the process of
considering whether or not further action should be taken and in
some cases whether court action is warranted against those
businesses that continue to issue contracts to consumers that are
deemed to be unfair.
Why should businesses review their standard form
A consumer contract containing an unfair contract term may be
challenged by a consumer, ACCC or ASIC, who may:
raise an unfair contract term as a defence to an action by
business enforcing a term in a consumer contract;
bring an action seeking various remedies, including
compensation, under the unfair contract term provisions that arise
due to the businesses continued use of the unfair contract term;
bring a pre-emptive action seeking a declaration that a term in
a consumer contract is unfair, so as to prevent the business from
relying on that term in the future.
Any term that goes beyond what is permitted pursuant to the ACL,
will be void. Furthermore, there is a risk that the Court will
consider the whole contract to be void if that contract is unable
to operate without that term.
What should businesses look for?
All businesses should be aware that a term in a standard form
consumer contract will be considered to be unfair if:
it would cause a significant imbalance in the parties'
rights and obligations under the contract;
it is not reasonably necessary to protect the legitimate
interest of a party to the contract; and
it would cause detriment to a party to the contract if it were
to be applied or relied upon.
If all three elements are satisfied it is very likely that the
term in the contract will be unfair.
In its industry report on Unfair Contract Terms, the ACCC has
identified the following addition terms that it will focus on in
addition to those unfair contract terms set out in the ACL as
terms that allow a business to alter the contract without the
consent from the consumer;
terms that cause confusion about the agency arrangements that
apply and seek to unfairly absolve the agent from liability;
terms that unfairly restrict the consumer's right to
terminate the contract;
terms that suspend or terminate the services being provided to
the consumer under the contract;
terms that prevent the consumer from relying on representations
made by the business or its agents;
terms that limit the consumer guarantee rights; and
terms that seek to remove the consumer's rights to a credit
card chargeback facility when buying the services through an
ACCC has also identified broader non-compliance of the CCA and
privacy laws by businesses across a range of industries including
the vehicle rental industry and online operating businesses. ACCC
has also found significant issues with respect to transparency of
contracts and lack of plain-English use in them. In addition, the
ACCC has identified online consumer issues as a priority, which
online terms and conditions;
online competition between online traders; and
If any of the contracts your business issues to individual
consumers are standard form contracts, these should be reviewed
promptly to ensure that each standard form consumer contract
complies with the unfair contract terms.
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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