The Trade Practices Amendment (Australian Consumer Law) Bill
2009, which will enact unfair contract terms provisions into
Australian Federal law, was introduced into Parliament today.
Significantly, although it had been foreshadowed that the unfair
contract term provisions would apply to standard form business
contracts, their application will be limited to standard form
"consumer contracts" only. The test for a consumer
contract will be whether the purpose is wholly or predominantly for
personal, domestic or household purposes.
The unfair contract terms provisions will apply to all new
standard from consumer contracts entered into after the legislation
commences and to any renewal or variation of an existing consumer
contract after the legislation commences. The unfair terms
provisions are anticipated to commence on 1 January 2010.
Enforcement And Remedies
The Bill also includes, for the first time the detail of the
proposed amendments foreshadowed by the Government in its
discussion paper "An Australian Consumer Law: Fair Markets
– Confident Consumers" to enforcement and remedies
under the Trade Practices Act 1974.
Readers may recall that these reforms:
give the Courts additional powers to impose civil penalties on
corporations and individuals for breaches of certain unfair
competition and consumer protection provisions of the Act of up to
$1.1 million for a corporation and $220,000 depending upon the
nature of the offence and to make an order disqualifying a person
from managing a corporation, if the person has been "involved
in a contravention"
allow a Court to make an order against a company in breach of
certain unfair competition and consumer protection provisions of
the Act to redress the loss or damage suffered by third parties and
consumers. A redress order may require, for example, the variation
or cancellation of contracts, the refund of money, the repair or
provision of party for goods, the resupply of services
allows the ACCC the power to issue a notice requiring a party
to provide information and or documents to substantiate claims in
relation to the supply of goods and services
gives the ACCC the power to issue an infringement notice to
companies and individuals within 12 months after an alleged
contravention of certain unfair competition and consumer protection
provisions imposing a fine of up to $6,600 for a company and $1,320
for an individual
allows ACCC to issue a public warning notice if the Commission
has reasonable grounds to suspect that certain conduct may
contravene certain provisions of the unfair competition and
consumer protection provisions of the Act or if a person refuses or
fails to comply with a substantiation notice.
The potential impact of these reforms for companies who do not
hold substantiation for their claims and/or which might have relied
upon the Government having more limited or less effective powers in
the past is clear. Given the short time period allowed for
substantiation (21 days with a possible extension), companies may
find it timely to revisit their compliance procedures.
These provisions will commence on the day after Royal Assent is
given (which is not yet known).
We will be updating our detailed paper on this proposed
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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We discuss whether certain clauses commonly found in ordinary commercial contracts could be considered to be penalties.
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