The Trade Practices Act 1974 is now being
replaced with the Competition and Consumer Act 2010. The Trade Practices
Amendment (Australian Consumer Law) Bill 2010 (ACL) has recently been passed.
WHO
WILL BE IMPACTED AND BY WHEN?
Essentially, any industry where a client is
an individual who acquires goods, services or interests for personal or
household consumption, will be greatly impacted by the new Act.
Developers involved in real estate
transactions with consumers, intending to sell land under standard form
contracts, will also need to carefully review the terms within those contracts.
These changes will be implemented in two
phases: post 1 July 2010 will deal with unfair contract provisions and 1
January 2011 onwards will focus on the remaining aspects of the ACL.
WHAT ARE
THE KEY CHANGES?
- Overall, the consumer reforms are aimed
at delivering better quality, increased protection to consumers and
providing consistency throughout the country.
- The ACL will regulate consumer
contracts for the sale of land for personal or domestic use. Contracts
which grant an interest in land for private or residential use will be
viewed stringently once the Act comes into force.
- Sales for
investment purposes will not come under the Act.
- Unfair contract terms will form the key
focus under the new regime. If a term of the contract is considered unfair
or if a standard form contract is being used, the ACL will declare that term void.
- Consumers will receive significant
protection under the ACL as Australian
Securities and
Investments Commission (ASIC) and the Australian Competition and Consumer
Commission (ACCC) will now have enhanced enforcement options in helping
aggrieved consumers.
WHAT
SHOULD YOU DO?
- Ensuring that the entire contract
complies with the new Act will be at the heart of all business discussions
from now on. As a good starting point, familiarize yourself with the
changes being introduced.
- Needless to say, businesses and
consumers should carefully review the terms of contracts before entering
into transactions.
- Unfair terms should be pointed out
quickly and rectified before signing.
- The risk of the contract being declared
unfair and penalties being incurred should be avoided.