Australian Consumer Law Update

All Australian Governments have agreed to a new consumer law policy framework, "comprising a single set of national consumer law and streamlined enforcement arrangements".

One important recommendation being considered is that which proposes a national unfair contract regime, based upon the Victorian and UK legislation, which applies to "consumers" (i.e. it does not apply to business-to-business or employment arrangements). Such legislation allows consumers to challenge standard form (take it or leave it) type agreements, covering gym memberships, telephone mobile contracts etc.

 The Government released a consultation paper, "An Australian Consumer Law: Fair Markets - Confident Consumers", on 17 February 2009 which outlined the broad reforms. That paper provided that the ACL "will be enacted both nationally and in each of the States and Territories by means of an application of law scheme" (ie. the federal Government will enact the new laws in a Schedule which would be adopted by each State).

The Government has indicated that it would finalise the legislation by 30 June 2010 with a view to national implementation by 31 December 2010.

The Government released a further consultation paper on 11 May 2009, "The Australian Consumer Law: Consultation on draft provisions on unfair contract terms", which included exposure draft legislation on proposed "unfair contract provisions".

Whilst the intention for the exposure draft legislation appears to be targeted at typical contracts for the provision of goods and services, the exposure draft legislation appears to affect all "standard form contracts". Such contracts are not defined in the draft.

Of importance is the intention that unfair contract laws should apply to both business to consumer and business to business transactions, including independent contractor agreements. This would allow independent contracts with another legal right of review, in addition to remedies under the Independent Contractors Act 2006.

The exposure draft does not indicate what is an "unfair term". Rather, the draft provides a list of examples, of what may be an unfair term and allows the Court to rule that any term is unfair. The effect of an unfair term is that it is void and civil pecuniary penalties can be imposed. The Government can also prescribe "prohibited terms" that must not be included in any standard form contract.

The Government has indicated that "the unfair contract terms provisions will be included in a Bill which is scheduled to be introduced into the Australian Parliament in the Winter sittings (June 2009)."

The Government's website dealing with the consumer law reforms can be accessed here.