The Commonwealth Government moved to introduce a new national consumer protection law in June this year (2009) when it passed Trade Practices Amendment (Australian Consumer Law) Bill 2009. This new law is modelled on a successful trial that has been operating in Victoria over the last few years and it is due to come into effect around the country on 1 January 2010.
What does it mean for Consumers?
The new law is designed to protect consumers from unfair contract terms and strengthen the power of the regulators.
The “unfair contract terms” legislation, which will replace each States own laws, seeks to protect consumers from unfair terms such as unreasonable exit fees, penalty fees and “unfair” clauses that permit one party to change or cancel a contract.
As a consumer dealing with a hire car company, a telecommunications company, financial institution or even a gym, we are often presented with what is generally known as a “standard form contract”. It is usually provided as a “take it or leave it” contract, which makes no allowance for negotiation of terms, because of the imbalance in the bargaining power of the parties. Most consumers are not even afforded the opportunity to read or digest these terms, let alone consider their implications.
You may have been hit with excessive fees from banks, strange exclusions from insurance companies, excessive termination penalties for changing a mobile phone plan or the frustration of trying to cancel an unwanted gym membership. Well, the good news is from 1 Jan 2010 ASIC and the ACCC will be granted the power to look into these “unfair clauses” and have contract terms voided that are deemed to be unfair.
What does it mean for Businesses?
Standard form contracts are also common in a range of business transactions including software licence agreements, website conditions and membership agreements as well as those mentioned above. It should be noted that the new consumer protection laws that are being introduced will only apply to business-to-consumer contracts although the scheme is likely to be expanded to include business-to-business contracts in the near future. Businesses using standard form contracts, particularly for provision to consumers, will need to review their current contractual arrangements well in advance of the January 2010 start date.
The lawyers at The Quinn Group are able to help you to address factors including transparency and whether specific terms and conditions of your contract/s may cause significant imbalance between the contracting parties. These inconsistencies, if not accurately rectified could result in clauses being voided by the regulators.
For more information and advice regarding your business’ preparation for the changes or if you are a consumer and require assistance with a contract that you have signed, or are about to sign, contact us on 1300 QUINNS or click here to submit an online enquiry.