Unfair contract terms has certainly been a buzz phrase in Australian politics in the last few years. It looks like Australia will see the introduction of three different legislative regimes on this topic in a five year period, and there may be more to come. So where does that leave us and where are the overlaps?

In this article we compare the two current, and one pending, legislative regimes, being:

  • the ‘business to consumer’ (B2C) unfair contract term provisions in The Australian Consumer Law (ACL) (forming part of the Competition and Consumer Act 2010 (Cth)) (CCA) (B2C Legislation)
  • the ‘unfair contracts and unjust conduct’ provisions of the New South Wales Motor Dealers and Repairers Act 2010 (NSW) (Motor Vehicle Legislation)
  • the ‘business to business’ (B2B) unfair contract term provisions proposed by the current Federal Government (Proposed B2B Legislation).

The second round of public consultation on the Proposed B2B Legislation only ended on 12 May 2015, so we are yet to see the final form of the Bill. However, given the small window for second round submissions, and the Government’s commitment to the legislation, it seems the final Bill will be very similar to the exposure draft.

The Government sees the B2C Legislation and the Proposed B2B Legislation as complementary, and they will definitely operate in tandem. However, both the Motor Vehicle Legislation and the Proposed B2B Legislation will overlap in the regulation of B2B transactions.

In our attached document, we have answered some of the key questions about the structure and operation of each piece of legislation, and provided a snapshot of their similarities and differences. In short, the Proposed B2B Legislation will, if enacted, operate using the same structure as the existing B2C Legislation. The B2C Legislation currently provides protections to individuals entering standard form consumer contracts. The Proposed B2B Legislation will provide essentially the same protections to ‘small businesses’.

The Motor Vehicle Legislation, whilst picking up on some of the terms and themes of the B2C Legislation, has a much wider scope. This is not unexpected, given it was enacted in the absence of formal consultation. This legislation regulates not only unfair terms, but also ‘unjust conduct’, the latter being an entirely new concept that is not seen in the CCA. In this article we have focused on the Act’s regulation of unfair terms, but have also noted how it extends to the much wider concept of unjust conduct. The other fundamental differences between the Motor Vehicle Legislation and the other legislation are that:

  • the Motor Vehicle Legislation gives standing to not only motor vehicle dealers, but motor industry groups to bring a complaint under the legislation
  • the Motor Vehicle Legislation allows complaints to be brought to the Small Business Commissioner, and then a Tribunal, whereas breaches of the ACL are heard and determined by a Court
  • breaches of the unfair term provisions of the ACL legislation lead, or are proposed to lead, only to the term being deemed to be unfair. However, under the Motor Vehicle Legislation the Tribunal can make a range of orders, including orders for compensation.