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Australian Consumer Law

Russell Kennedy Special Counsel, David Littlejohn, takes us through the development of Australian consumer legislation, including:
- Trade Practices Act 1974
- Competition and Consumer Act 2010
- Schedule 2: Australian Consumer Law

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Australian Consumer Law

  1. 1. Australian Consumer Law David Littlejohn Special Counsel 21 March 2014 3350069v1
  2. 2. • Trade Practices Act 1974 • Competition and Consumer Act 2010 • Schedule 2: Australian Consumer Law (“ACL”) 2 Development of Australian consumer legislation
  3. 3. • Protection • Fair trading • Consistency • Simple, clear and concise law 3 Purpose of the legislation
  4. 4. • Freedom of contract • Equal footing/bargaining power • Free to walk away • Genuine negotiation • Literacy 4 Assumptions in the current consumer market
  5. 5. • Standard form contracts • Little opportunity for negotiation • “Take it or leave it” 5 Realities of the consumer market
  6. 6. • Information asymmetry • Opportunity to read • Literacy 6 Realities of the consumer market (continued
  7. 7. • Goods • Services • Interest in land • Financial products or services • Personal, domestic or household use 7 Consumer contracts
  8. 8. • The elements of a standard form contract are generally considered to consist of a pre-printed form offered on a “take it or leave it” basis to all consumers for that particular type of transaction. 8 Standard form contracts
  9. 9. • Subject matter of contract • Upfront price • Terms required by law 9 Terms to which section 23 does NOT apply
  10. 10. • Under the ACL, a term is unfair if: • it would cause a significant imbalance in the parties' rights and obligations arising under the contract; and • it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; and • it would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on.31 10 When is a term unfair?
  11. 11. • Significant imbalance in the parties’ rights and obligations arising under the contract 11 Significant imbalance
  12. 12. • “Reasonably necessary to protect the legitimate interests of the party who would be advantaged by the term” 12 Reasonably necessary
  13. 13. Would the term cause detriment if it were to be applied or relied upon? • It is not necessary that a term be enforced to be found that it is unfair. • The detriment caused by the term does not need to cause purely financial detriment. 13 Detriment
  14. 14. 14 The effect of “unfairness” in a contract The term once declared as being ‘unfair’ is void. If the term is not a fundamental term of the contract and is severable from the contract the term will be void and the contract will continue to operate as if the unfair term did not exist. If however, the term is an essential part of the contract and the contract is impossible to perform in the absence of the unfair term, the unfair term invalidates the entire contract.52 The assessment as to whether the contract can continue to operate without the term rests solely with the court.
  15. 15. 15 Mobile phone contracts Suppliers should ensure their contracts do not contain any of the following unfair contract terms, which Consumer Affairs Victoria considers unfair. These are terms that: - give suppliers the right to unilaterally vary prices and other terms and conditions - restrict the liability of the supplier or its employees or agents. - penalise the consumer for breach or termination of a contract. - prevent or restrict the consumer’s dispute resolution options.
  16. 16. 16 Gym membership contracts Suppliers should ensure their contracts do not contain any of the following contract terms, which Consumer Affairs Victoria considers unfair. These are terms that: - result in the automatic renewal of memberships - allow the health and fitness centre to vary any or all aspects of the services it provides - make it difficult for consumers to terminate memberships - penalise consumers for terminating memberships - penalise consumers for breach of contract.
  17. 17. 17 Unfair contract term: Yes or No?
  18. 18. Questions? 18

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Russell Kennedy Special Counsel, David Littlejohn, takes us through the development of Australian consumer legislation, including: - Trade Practices Act 1974 - Competition and Consumer Act 2010 - Schedule 2: Australian Consumer Law

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