Recent amendments to the Trade Practices Act 1974 (Commonwealth) (TPA) as part of the Australian Consumer Law (ACL) initiative see the introduction of new statutory consumer guarantees which come into force on 1 January 2011.

The consumer guarantees replace the existing implied conditions and warranties under the TPA and the State and Territory fair trading laws. As many existing terms and conditions refer to the TPA provisions, we recommend that these should now be reviewed to see if changes are required and to include references to the ACL.

Who is a consumer?

The ACL is Schedule 1 to the amended TPA and provides in section 3(1) that:

'A person is taken to have acquired particular goods as a consumer if, and only if:

(a) the amount paid or payable for the goods did not exceed:
 (i) $40,000; or
 (ii) if a greater amount is prescribed for the purposes of this paragraph
 - that greater amount; or
(b) the goods were of a kind ordinarily acquired for personal, domestic or household use or consumption; or
(c) the goods consisted of a vehicle or trailer acquired for use principally in the transport of goods on public roads.'

Section 3(3) is a similar provision in relation to the acquiring of services as a consumer.

Unfair contract terms

Section 23 renders a term of a consumer contract void if the term is unfair or is a standard form contract.

Section 24 provides that a term of a consumer contract is unfair if it would cause a significant imbalance in the parties' rights and obligations arising under the contract, and is not reasonably necessary to protect legitimate interests of the party who would be advantaged by that term and if it would cause detriment to a party if it were to be applied or relied on.

However the provisions in relation to unfair contract terms do not apply to:

  • A contract of marine salvage or towage
  • A charter party of a ship
  • A contract for the carriage of goods by a ship. (Section 28)

Consumer guarantees

Prior to the introduction of the ACL there were implied terms in contracts that goods would be of acceptable quality and fit for their purpose. Contracts for services were subject to an implied warranty that the services would be rendered with due care and skill.

The implied warranties have now been replaced by guarantees relating to the quality, fitness and suitability of goods and that services will be rendered with due care and skill.

However, as was the case previously with the implied warranties, the guarantees in relation to the supply of services do not apply to services that are supplied under a contract for or in relation to the transportation or storage of goods for the purposes of a business, trade, profession or occupation carried on or engaged in by the person for whom the goods are transported or stored.

The implied guarantees in relation to services also do not apply to contracts of insurance.

Summary

The changes made are more significant in form than in substance for those who provide transport services, merely replacing implied warranties in consumer contracts with guarantees.

However, as many carriers' terms and conditions refer to the TPA provisions now is an ideal time to review the wording of terms and conditions to refer to the ACL and to check at the same time whether other amendments are necessary.

© DLA Phillips Fox

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This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances.