All businesses which are involved in transactions with
consumers, including those in the financial services industry.
a proposed ban on unfair contract terms
increased enforcement powers for state-based consumer
regulators and the ACCC
a consistent national approach to consumer protection law.
On 17 February 2009, the Federal Government released a
consultation paper in relation to the proposed new Australian
Consumer Law. It follows an earlier Productivity Commission report
which recommended sweeping changes to consumer laws in
Currently, each state and territory has its own consumer
protection legislation. This legislation is consistent with the
generic consumer protection provisions in the Commonwealth
Trade Practices Act. However, specific consumer protection
laws vary widely between the states and territories. This can
create difficulties for businesses, particularly those which
operate across several states or which use "standard
The proposed Australian Consumer Law is intended to establish a
uniform national consumer protection system. The national approach
has been agreed upon by all Australian governments. According to
the Federal Government, it will be modelled on the "best
practice" consumer protection provisions in each state. It
remains to be seen whether this aim will be achieved by the
legislation, which is yet to be finalised.
The reforms are limited to standard form, non-negotiated
consumer contracts. They will not apply to contracts between
businesses or which are negotiated between the parties.
One of the key aims of the Australian Consumer Law is to
"crack down" on unfair contracts.
Unfair contracts are contracts which contain terms which
"cause a significant imbalance in the parties' rights
and obligations ... and are not reasonably necessary to protect the
legitimate interests of the supplier", according to the
Examples of the types of terms which may be considered
where the supplier can vary the terms of the contract without
reference to the customer;
where the supplier can assign the contract to the
customer's detriment, without the customer's consent;
where the customer is prevented from cancelling the
It may also include the following types of terms, where they
cause a significant imbalance to the customer's detriment:
an acknowledgement that the customer has read or understood the
"entire agreement" clauses that deny the existence of
oral representations; and
clauses which require early termination fees to be paid, where
such fees are not genuine pre-estimates of the supplier's
Unfair terms would be banned under the proposed Australian
Consumer Law, and additional enforcement powers given to the
regulators to ensure compliance by businesses.
The proposed powers include:
civil pecuniary penalties, which may be up to $1.1 million for
corporations and $220,000 for individuals depending on the final
form of the legislation;
substantiation notices, which would require businesses to
provide evidence to support their claims regarding their goods or
disqualification orders, banning individuals from managing
corporations and also specific forms of conduct; and
an expanded "public warning" (naming and shaming)
There are also a number of other changes proposed as part of the
Australian Consumer Law.
changing the name of the Trade Practices Act to the
"Competition and Consumer Act";
introducing a consistent definition of a "consumer";
specific changes in relation to door to door marketing, lay-by
sales, telemarketing, and minimum standards for the appearance of
documents (eg font size and disclaimers).
When will it come into effect?
Submissions on the proposed Australian Consumer Law are due by
17 March 2009.
It is expected that the form of legislation will be finalised by
July 2010 and passed by the Commonwealth and all states and
territories by the end of 2010.
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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