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Contract Law News, June 2011

The new Australian Consumer Law

We have provided a number of features on the changes to the Australian Consumer law over the past year and we provide a wrap of the latest provisions introduced at the beginning of 2011.

The new Australian Consumer Law (ACL), introduced in January 2011 is designed to protect consumers and improve business efficiency in our modern economy, one which involves a greater level of anonymity. 

Unfair terms

Consumers are generally now protected in acquisition of goods, services, financial products and services or interests in land for personal use where standard from contracts are used. This has been achieved by the ‘unfair terms’ provisions that will allow any unfair terms to be challenged by consumers while not affecting transactions between businesses and thus ensuring business efficiency.

Consumer guarantees

The new consumer guarantee provisions are driven towards increasing business efficiency. While the consumer guarantees are not able to be restricted by suppliers, a consumer is required to establish a major failure in the goods being fit for their purpose, of acceptable quality or services provided with due care and skill before a refund will be required. While this does not afford the same protection to consumers as the previous Trade Practices legislation it will improve business efficiency. 

Impact on businesses

The introduction of the ACL, saw the consolidation of 17 statutes aimed to protect consumers throughout Australia. The advantage of this consolidation suggests businesses will not need to provide different terms and conditions dependent on which state they are trading in, increasing the ease with which businesses would be able to operate across states. However, in reality, many pieces of state legislation are still in operation and as such businesses should be aware of such provisions. This is especially so for ‘recreational services’ that tend not to be uniform across states.

The legislation has also created uncertainty in the definition of ‘consumer’, stated to be a person acquiring goods or services valued at less than $40,000.00, or a person acquiring goods of a kind ordinarily acquired for personal, domestic or household use or consumption or a person acquiring a commercial road vehicle. This will cause difficulty for suppliers who may be unaware of the status of their clientele. 

Businesses should also be aware that under the new ACL ASIC, the ACCC and the courts will have increased powers such that a breach may have serious consequences, including penalties of up to $1.1 million for Corporations or the issue of public warnings. 

Further, Suppliers of consumer goods and product-related services are now required to report if they become aware of any death, serious injury or illness caused by the use, or foreseeable misuse, of a consumer good to the ACCC. There is no obligation to report if the death, serious illness or injury was not caused by the use or misuse of the product or if reporting is already required under other legislation. Failure to make a report when required is a criminal offence punishable by a fine of $3,300.00 for an individual and $16,500.00 for a corporation. This means suppliers should evaluate their complaints handling process to allow efficiency in monitoring complaints and responding to relevant incidents. Suppliers should be aware that notification to ACCC of any such incidences will not be an admission of liability and the process will be confidential unless the supplier consents otherwise. However, as the criminal liability for not reporting is a strict liability, when in doubt, suppliers should report to the ACCC, which can be as simple as completing an online form. 

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