Assistant Treasurer and Minister for Competition Policy and Consumer Affairs
3 December 2007 - 8 June 2009
Consultation on National Unfair Contract Terms Provision
Consumer Affairs Minister, Chris Bowen MP, today released the Rudd Government's draft national unfair contract terms provision for public comment.
The draft national unfair contract terms provision reflects the model agreed by Ministerial Council on Consumer Affairs on 15 August 2008 and confirmed by COAG on 2 October 2008.
"A national unfair contract terms provision is an important part of the first tranche of the Australian Consumer Law – that will fold in nine separate consumer laws into a single, national consumer law," Mr Bowen said.
"This new provision will give all Australian consumers access to protection from unfair contract terms in standard-form contracts.
"Under the Rudd Government's national unfair contract terms provision, action will be able to taken against 'unfair' terms in standard-form contracts by individual consumers, small business or Commonwealth or State consumer protection agencies."
The draft national unfair contract terms provision includes the following features:
- it will be implemented by the ACL, generally, and as part of the Australian Securities and Investments Commission Act, in respect of financial services;
- a non-exhaustive, indicative 'grey-list' of types of terms that may considered to be unfair;
- a regulation-making power for the Minister to prohibit terms in a standard-form contract that are considered to be, in all circumstances unfair;
- the exclusion of terms 'required, or expressly permitted, by a law of the Commonwealth or a State or Territory';
- it will apply to all:
- new standard-form contracts entered into on or after the commencement date (1 January 2010)
- contracts that are renewed or varied on or after the commencement date, to the extent of the renewal or variation.
As outlined previously, the draft national unfair contract terms provision includes:
- a term is deemed to be 'unfair' when it causes a significant imbalance in the parties' rights and obligations arising under the contract and it is not reasonably necessary to protect the legitimate interests of the supplier;
- a remedy could only be applied where the claimant shows detriment, or a substantial likelihood of detriment, to the consumer;
- it would relate only to standard-form contracts;
- it would exclude the upfront price of the good or service;
- the provision should apply to all sectors of the economy as part of the generic national consumer law.
The unfair contract terms provisions will be included in a Bill which is scheduled to be introduced into the Australian Parliament in June 2009. This legislation will also include new enforcement powers for the Australian Competition and Consumer Commission, another key plank in the Australian Consumer Law agreed by COAG in October 2008.
As part of the COAG agreement on a national unfair contract terms provision, Australia's consumer enforcement agencies will issue common national guidance in relation to the enforcement of the unfair contract terms provisions. The national guidance will be available prior to the commencement of the unfair contract terms provisions.
A consultation paper with the draft unfair contract term provisions is available at the Treasury website at www.treasury.gov.au.
Submissions close on the 22nd May 2009.
Following the passage of the Bill through the House of Representatives, the Government will be referring the Bill to a Senate Committee to allow further scrutiny and consultation.