The introduction of a national consumer law regime has been a
key priority on the policy agenda of the Rudd government. One of
the main components of the Bill relates to unfair contract terms.
Presently, Victoria is the only state to have laws which
specifically address unfair contract terms.
Nationally, there are currently 13 generic consumer laws. A key
driver of this new national legislation is the desire to reduce the
complexity of the present arrangements and to provide greater
certainty for business and consumers.
The proposed new laws will give regulators greater powers to
investigate alleged breaches of the law. It will also introduce a
range of significant new remedies which regulators will be able to
seek in response to breaches of the law.
Key provisions of the Bill
The Bill was first introduced into Federal Parliament on 24 June
2009 and, if passed, the Bill's provisions relating to unfair
contract terms will commence operation on 1 January 2010.
The Bill proposes to outlaw the inclusion of unfair terms in
non-negotiated (standard form) consumer contracts between
businesses and consumers. Should a contract contain an unfair term,
that provision of the contract will be void, however, the remaining
terms of the contract will continue to be binding.
A consumer contract is defined broadly and will include any
contract for the supply of goods or services or a sale or grant of
an interest in land, made to an individual wholly or predominantly
for personal, domestic or household use. This definition will mean
that the new laws will apply to contracts between consumers and
suppliers, such as standard form accommodation, hire and rental
There are only limited exemptions from the provisions of the
Bill relating to unfair contract terms. These provisions will not
apply to insurance contracts, nor will they apply to "business
to business" contracts.
A term will be unfair if:
it would cause a significant imbalance in the parties'
rights and obligations arising under the contract; and
the term is not reasonably necessary to protect the legitimate
interests of the party who would be advantaged by the supply.
The Bill goes on to list various terms which may be unfair.
Those terms include those that allow the supplier to:
impose fees for terminating the contract early;
vary or terminate the contract for whatever reason;
renew or not renew the contract; or
determine whether the contract has been breached.
In light of the expanded investigatory powers of regulators and
the significant new penalties, which are proposed to commence from
1 January next year, it is important that all businesses which use
standard form customer agreements review those agreements now to
ensure they do not contain terms which would be unfair. If you
require advice on this, please contact us.
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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