In a historic day for consumer protection, the first tranche of
Australian consumer law reform, the Trade Practices Amendment
(Australian Consumer Law) Bill 2009 (Bill), was passed earlier
this week by the Senate. The new legislation amends the Trade
Practices Act (TPA) and the Australian Securities Investments
Commission Act 2001 (ASIC Act). The Bill:
introduces national unfair contract terms prohibitions which
means that unfair terms found in standard form contracts between
business and consumers will be prohibited
makes companies that engage in unconscionable conduct or make
false or misleading representations liable for fines of up to A$1.1
inserts a new Part IX into the TPA to facilitate the
application of the Australian Consumer Law (ACL) across the
Commonwealth, facilitate its application as a law in each State and
Territory, and make provision for its administration, enforcement
These laws are likely to come into force on 1 July 2010. The
national unfair contract terms provisions will apply to consumer
contract terms entered into after the commencement date, and those
renewed or varied on or after commencement.
Unfair contract terms
Under the new legislation, a term in standard form consumer
contracts will be prohibited where:
the term causes a significant imbalance in the parties'
rights and obligations, is not reasonably necessary to protect the
legitimate interests of the party advantaged by that term, and
would cause detriment (whether financial or otherwise) if it was
relied upon or applied
the term is part of a standard form, non-negotiated consumer
the term is part of a contract entered into after the
commencement date, or renewed or varied on or after
The unfair contract terms prohibition will not apply to
The unfair contract terms provisions of the TPA will also not
apply to the supply of financial services and financial products.
However, the same unfair contract terms prohibitions will now be
incorporated into the ASIC Act, which will apply to the supply of
financial services and financial products.
In passing the legislation, the Senate introduced a number of
amendments to the legislation, including:
amendments to the unfairness test which will align it more with
the approach under the Victoria Fair Trading Act 1999. A
third limb has been introduced to the unfairness test whereby the
Court is to also consider whether the term would cause financial or
non-financial detriment to a party if that term were to be applied
or relied upon
before prescribing any future additional examples of unfair
terms, the Minister must consider three factors: the detriment that
a term of that kind would cause to consumers, the impact on
business generally of prescribing that kind of term, and the public
the Minister's powers to prescribe prohibited terms by
regulation has been removed
individual parties to a consumer contract will be able to seek
a declaration that a term is unfair in Court and Tribunal
The ACL Bill
The Trade Practices Amendment (Australian Consumer Law) Bill
(No 2) 2010 (ACL Bill) was also this week introduced into
Parliament as part of the second tranche of the consumer law
The ACL Bill aims to complete the agreements of the Council of
Australian Government (COAG) made in July and October 2008. The
effect of the new proposed legislation includes:
creating a national legislative scheme for consumer product
creating a national legislative scheme for statutory consumer
incorporating fair trading and consumer protection provisions
of the TPA into the ACL regime creating an infringement notice
regime to apply to certain provisions of the ACL as a law of the
changing the name of the TPA to the Competition and
Consumer Act 2010
increasing enforcement powers, penalties and redress options
for regulators and the Court.
immediately review their standard form consumer contracts to
ensure the terms comply with the new legislation
immediately review their staff's business practices and
dealings to ensure behaviours do not offend the unconscionable
be mindful of the new proposed national laws under the ACL Bill
relating to consumer guarantees, unsolicited selling, product
safety, and enforcement powers of the regulators.
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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