Guidance on unfair contract terms provisions

1 April 2010

Last week we reported that the Trade Practices Amendment (Australian Consumer Law) Bill 2009 (Cth) is awaiting Royal Assent. This legislation introduced laws regulating unfair contract terms (UCT). Under these laws a term in a consumer contract is unfair if:

it would cause a significant imbalance in the parties' rights and obligations arising under the contract; and
the term is not reasonably necessary 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.

The UCT provisions will apply only to standard form consumer contracts. The ACCC website states that the UCT provisions will commence on 1 July 2010.

As an initiative to assist businesses, legal practitioners, consumers and industry organisations to understand the new unfair contract terms laws, the ACCC has released a draft publication Australian Consumer Law: A guide to unfair contract terms. This guide provides information on the types of contracts and contract terms which may be affected by these new laws.

To ensure that the development of guidance on unfair contract terms assists stakeholders to understand the requirements and obligations on business under the new laws, the ACCC, the Australian Securities and Investment Commission (ASIC) and state and territory consumer protection agencies are now inviting stakeholder comment on the draft guide.

Specifically, the ACCC is seeking comment on the following questions:

Does the guide clearly outline the obligations on business arising from the new laws?
What types of information would better assist stakeholders understand the requirements on businesses arising from the laws?
What if any additional information would better assist stakeholders to understand the new laws?

Further details are available from the ACCC's website. Submissions must be received no later than 12 April 2010.

For further information, please contact:

Chris Hargreaves | Associate
Mullins Lawyers
t +61 7 3224 0232
f +61 7 3224 0333
chargreaves@mullinslaw.com.au