The Commonwealth is likely to take control of consumer
protection following proposals to amend the Trade Practices
Act and hand over responsibility for many areas covered by the
state's Fair Trading Acts. Importantly, the proposals include
the power to review unfair contract terms, including terms in loan
Following a review of Australia's consumer policy framework
by the Productivity Commission, all Australian governments agreed
to a new consumer policy framework, comprising a single national
consumer law and streamlined enforcement arrangements. Any new
legislation is likely to commence in 2010.
A key feature of the proposed amendments is the provision for
dealing with 'unfair contract terms', which will relate
exclusively to 'take it or leave it' standard form,
non-negotiated contracts with consumers. A consumer (an individual
or business) will be entitled to a remedy under the proposed
provisions if the consumer, as an individual or as a member of a
class, can establish detriment or a substantial likelihood of
detriment. Detriment is not limited to financial detriment.
This provision is far reaching and if enacted, will result in
many businesses having to review their standard form agreements or
face the possibility of being involved in a contractual dispute
The likely definition of 'an unfair term' to be adopted
in the proposed Australian Consumer Law is:
'A term is unfair when it causes significant imbalance
in the parties' rights and obligations arising under the
contract, and it is not reasonably necessary to protect the
legitimate interests of the supplier.'
Some examples of terms identified by the consultation paper that
might be caught by the 'unfair contract term' provision
include terms that:
permit a supplier to unilaterally vary the terms of a
prevent the consumer from cancelling a contract
exclude liability for harm resulting from the actions of a
supplier or its agent
penalise the consumer but not the supplier for breaches of
terms of the contract
purport to limit a consumer's right to take legal action
against a supplier.
The types of contracts identified by the consultation paper that
would be covered by an 'unfair contract terms' regulation
include a very broad range of commercial activities, such as:
banking and financial services
software end user licences, e-commerce and online auctions
public and private transport services
professional services (lawyers, engineers, surveyors,
The 'unfair contract terms' provision will ban certain
unfair contract terms. Consideration is given to the banning of the
following types of terms:
terms retaining title for suppliers in goods that cannot be
removed from consumers' premises without damage; terms allowing
suppliers to repossess such goods
terms denying the existence or validity of pre or post
contractual representations made to consumers
terms under which consumers acknowledge that they have read or
understood the contract
flat/fixed early termination fees and those requiring the
paying out of a contract
terms allowing suppliers to retain, debit or set off disputed
The Consumer Credit (Victoria) and Other Acts Amendment
Bill 2008, in provisions yet to commence, extends
Victoria's existing unfair contract terms legislation to credit
contracts. It is unknown whether this initiative will be put on
hold pending the Commonwealth initiative being implemented.
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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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