Many businesses rely on standard terms and conditions of trade to protect their interests and limit their potential liability when providing goods or services to customers. Over time these standard terms and conditions often become outdated as the legal framework underpinning the terms and conditions changes.
With the introduction of the Australian Consumer Law (ACL) under the Competition and Consumer Act 2010 in January 2011 a fundamental shift has occurred in the way businesses providing consumer goods or services interact with their customers. In particular, the ACL has replaced the implied conditions and warranties regime of the Trade Practices Act 1974 with a statutory regime of consumer guarantees.
One of the key elements of this new regime is that consumers are now able to rely on statutory remedies for breach of a consumer guarantee, rather than enforcing their rights as a breach of contract. The type of remedy available to a consumer under the ACL depends on the extent of the failure of the supplier to comply with the relevant consumer guarantee. For example, under the ACL, where the failure to comply with the guarantee cannot be remedied, the consumer may require the supplier to refund the purchase price of the goods or services.
Businesses supplying goods or services to consumers cannot contract out of the statutory guarantees regime and are bound to provide consumers with remedies to which they are entitled under the ACL. The requirement to provide the remedies set out in the ACL changes the circumstances in which a supplier can limit its liability in its standard terms and conditions. Under the Trade Practices Act suppliers often limited their liability for a breach of an implied warranty to the resupply of goods or the resupply of the relevant services. Under the new regime, this type of clause may be void as it does not allow for the consumer to require a remedy to which it is entitled under the ACL.
To ensure that your business can rely on its limitations of liability and is adequately protected by its terms and conditions, standard terms and conditions should be regularly checked and where necessary updated to adapt to the changing legal framework.
With the implementation of the ACL and the soon to be introduced Personal Property Securities reform now is a good time to check whether your standard terms and conditions are adequate.
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.
