New national legislation to challenge unfair contract terms is
being accelerated ahead of other consumer law reforms.
The new legislation will be introduced to Parliament by
mid-2009 and come into force from the beginning of 2010.
Businesses should start reviewing the terms in their standard
form contracts to ensure the terms will not be deemed
Minister for Competition Policy & Consumer Affairs, Chris
Bowen MP, has recently confirmed that "unfair" terms in
non-negotiated standard form contracts will be targeted under the
first of the new consumer law reforms to be enacted. The Minister
has announced the Rudd Government's intentions to accelerate
these new amendments to the Trade Practices Act by
foreshadowing that a Bill will be introduced to Parliament in June
this year. It is expected that the new provisions will be in
operation by the beginning of 2010.
The Minister has stated that:
the legislation will allow consumers, businesses and regulators
to challenge "unfair" terms in standard form
"consumers facing unfair penalty or exit fees may find
redress in the Government's new unfair contract terms
What is an unfair contract term?
Under the new legislation:
a term will be deemed to be "unfair" when it causes a
significant imbalance in the parties' rights and obligations
under the standard contract and which is not reasonably necessary
to protect the legitimate interests of the supplier
the term must be part of a standard form, non-negotiated
terms offering upfront prices of the good or service would be
excluded but terms applying indirect costs such as exit or default
fees will be reviewable
terms found to be "unfair" will be unenforceable
other remedies will only be available where the claimant shows
detriment or a substantial likelihood of detriment to the consumer
or a class of consumers
the legislation will apply to all sectors of the economy,
including the banking and financial institution sectors.
review their contract formation procedures and use of standard
review their standard form contracts to ensure compliance with
the proposed new legislation.
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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