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Contract Law News, November 2010

Recent legislative developments in consumer contracts and consumer credit law

The Commonwealth and State Governments move to consolidate consumer protection

A number of key legislative changes in this area have recently come into force, or will come into force in early 2011.

“Consumer contracts” are contracts for the purchase of goods or services by an individual where the goods or services are acquired wholly or predominantly for personal, domestic or household use or consumption. “Consumer goods” under will be defined under the new legislation as goods that are ordinarily acquired for personal, domestic or household use or consumption and have a value of less than $40,000.

The Competition and Consumer Act 2010 (Cth) will overhaul the Trade Practices act 1974 (Cth). The new national consumer law will introduce a number of reforms, including a national “unfair contractual terms regime” applying to standard form consumer contracts, backed-up by a raft of new enforcement measures and provisions including infringement notices backed by extensive civil pecuniary penalties. The new consumer law regime will be fully in place by January 2011. 

A standard form contract is a contract in which one party has most of the “bargaining power”, and the contract is presented to the consumer with little or no negotiation and on a “take it or leave it” basis. A term in such a contract will be unfair where it is necessary to protect a party's interests, and has the potential to cause detriment to the weaker party. A contractual term may also be unfair where it is written in overly complex or difficult language, is difficult for the party affected by it to access and is not presented clearly. 

It may be noted that contracts of insurance are not affected by the new Acts.

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