The passing of the Trade Practices Amendment (Australian Consumer Law) Act (No. 1) 2010 (Cth) and the Trade Practices Amendment (Australian Consumer Law) Act (No. 2) 2010 (Cth) has brought about a revolution in consumer law in Australia culminating in the creation of the Australian Consumer Law (ACL) located in Schedule 2 of the Competition and Consumer Act 2010 (Cth) (CCA), the new name for the Trade Practices Act 1974 (Cth) (TPA).

The most significant of these amendments are new provisions dealing with unfair contract terms and introducing consumer guarantees to replace the implied conditions and warranties previously contained in the TPA.  

The ACL and CCA commenced on 1 January 2011. However:

  1. the TPA as in force immediately before 1 January 2011 continues to apply, after that date, in relation to acts or omissions that occurred before that date;i
  2. the TPA as in force immediately before 1 January 2011 continues to apply to or in relation to any proceedings, under or in relation to that Act, that were commenced, but not concluded, before that date.ii  

Therefore, the ACL will only apply to acts or omissions that occur on or after 1 January 2011.  

Unfair Contract Terms

A term of a consumer contractiii is void if it is unfair and the contract is a standard form contract.iv A term will be “unfair” if:v

  1. it would cause a significant imbalance in the parties’ rights and obligations arising under the contract; and  
  2. it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; and  
  3. it would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on.  

Examples of unfair terms include:vi  

  1. a term that permits, or has the effect of permitting, one party (but not another party) to terminate the contract; and  
  2. a term that permits, or has the effect of permitting, one party (but not another party) to vary the terms of the contract.  

Although an unfair term may be void, if the contract is capable of operating without the unfair term, it continues to bind the parties.vii  

Consumer Guarantees

The new consumer guarantees replace the implied conditions and warranties provisions that were contained in the TPA. These guarantees apply if the amount paid for the goods or services did not exceed $40,000 or were of a kind ordinarily acquired for personal, domestic or household use or consumption.viii

A supplier of goods guarantees that:  

  1. they have clear title and a right to sell the goods;ix  
  2. the consumer has a right to undisturbed possession of the goods;x  
  3. the goods do not have undisclosed securities, charges or encumbrances;xi  
  4. the goods are of acceptable quality.xii This standard replaces the old “merchantable quality”. Goods are of “acceptable quality” if they are fit for all purposes, acceptable in appearance and finish, free from defects, safe and durable;xiii  
  5. the goods are fit for any disclosed purpose;xiv  
  6. if the goods are supplied by description, they are in accordance with their description;xv  
  7. if the goods are supplied by reference to a sample or demonstration model:xvi  
    1. the goods correspond with the sample or demonstration model in quality, state or condition;  
    2. the consumer will have a reasonable opportunity to compare the goods with the sample; and  
    3. the goods are free from any defect that would not be apparent on reasonable examination of the sample or demonstration model and would cause the goods not to be of acceptable quality;
  8. the manufacturer of the goods will take reasonable action to ensure that repairs and spare parts for the goods are reasonably available for a reasonable period after the goods are supplied;xvii
  9. the manufacturer of the goods will comply with any express warranty given or made by the manufacturer in relation to the goods;xviii and  
  10. they will comply with any express warranty they give or make in relation to the goods.xix  

If a supplier fails to comply with one of these guarantees in regard to goods, a consumer is generally entitled to have the goods repaired or replaced or a refund of the purchase price within a reasonable time.xx  

A supplier of services guarantees that:  

  1. the services will be rendered with due care and skill;  
  2. the services, and any product resulting from the services, will be:  
    1. reasonably fit for any specified purpose;  
    2. of such nature, and quality, state or condition, that they might reasonably be expected to achieve any specified result the consumer wishes the services to achieve;  
  3. the services will be supplied within a reasonable time.  

If a supplier fails to comply with one of these guarantees in regard to services, a consumer may require the supplier to remedy the failure within a reasonable time.xxi  

In certain circumstances, a consumer may be able to commence legal proceedings against the supplier and/or the manufacturer to recover damages for loss or damage suffered because of a failure to comply with one of the above guarantees or compensation for the reduction in value of any goods or services.xxii  

Further, in certain circumstances a manufacturer must indemnify a supplier for a failure to comply with one of the above guarantees.xxiii  

Other Provisions

The provisions dealing with misleading or deceptive conduct, unconscionable conduct and unfair practices previously found in the TPA are now found in the ACL.xxiv Further, as many of these provisions mirror those that were contained in the TPA, the jurisprudence associated with the understanding and interpretation of the old TPA provisions are still relevant to the equivalent provisions of the ACL.xxv

The following is a table comparing the old TPA provisions with the equivalent ACL provisions:

Click here for table

Application of the ACL

The ACL applies to the extent provided by Part XI of the CCA or an applicable law.xxvi

Commonwealth

According to s 131 of the CCA:  

  1. Schedule 2 applies as a law of the Commonwealth to the conduct of a corporation, and in relation to contraventions of Chapter 2, 3 or 4 of Schedule 2 by corporations.

Note: Sections 5 and 6 of this Act extend the application of this Part (and therefore extend the application of the Australian Consumer Law as a law of the Commonwealth).

  1. Without limiting subsection (1):  
    1. section 22 of Schedule 2 also applies as a law of the Commonwealth in relation to:  
      1. a supply or possible supply of goods or services by any person to a corporation (other than a listed public company); or  
      2. an acquisition or possible acquisition of goods or services from any person by a corporation (other than a listed public company); ...

States

Queensland enacted the Fair Trading (Australian Consumer Law) Amendment Act 2010 that amended the Fair Trading Act 1954 (Qld) (FTA) to replace “Part 3 (Trade Practices)” and incorporate the application of the ACL as a law of Queensland.xxvii

This amending Act inserts new sections in the FTA which provide that:

  1. the ACL applies as a law of Queensland and may be referred to as the Australian Consumer Law (Queensland);xxviii  
  2. The Acts Interpretation Act 1901 (Cth) applies as a law of Queensland to the Australian Consumer Law (Queensland) and the Acts Interpretation Act 1954 (Qld) does not apply to the Australian Consumer Law (Queensland) or any instrument under that law.xxix