• Home
  • Law
  • Word limit: 2000 words Please discuss question 1 and question 2 as set out below: Question 1 The Australian Consumer Law 2010 (the “ACL”) which replaced the Trade Practices Act 1974 (amongst other pieces of consumer legislation) took effect from 1

Word limit: 2000 words Please discuss question 1 and question 2 as set out below: Question 1 The Australian Consumer Law 2010 (the “ACL”) which replaced the Trade Practices Act 1974 (amongst other pieces of consumer legislation) took effect from 1 Essay Example

  • Category:
  • Document type:
  • Level:
  • Page:
  • Words:


Australian Consumer Law

Australian Consumer Law

Question One

With the enactment of the Trade Practices Amendment (Australian Consumer Law) Bill 2009 vast changes were effected in the commercial sector of Australia. Essentially, a new consumer law came into force, and this law was founded upon the Trade Practices Act 1974. In the context of financial services, the Australian Consumer and Competition Commission and the Australian Securities and Investment Commission have been vested with the responsibility of enforcing the Australian Consumer Law (ACL), which is applicable throughout the Commonwealth (Redfern & Smith, 2010).

The ACL engenders change in the area of standard form consumer contracts, by introducing several remedies and rights at the national level. These interventions pertain to unfair terms in such contracts (Legislation and Regulation, 2011). Furthermore, this piece of legislation empowers the Australian Consumer and Competition Commission and the Australian Securities and Investment Commission (Redfern & Smith, 2010).

As a result, these entities can impose monetary penalties; issue disqualification orders for the violation of consumer laws; issue offers to address the loss sustained by a non – party consumer; and issue substantiation, infringement and public warning notices (Redfern & Smith, 2010).

This new legislation intends to review the provisions of the Trade Practices Act 1974, in the area of unconscionable conduct. This stands to benefit small business interests. However, small business will have to incur greater initial expenditure and increased uncertainty, with regard to the employment of standard form contracts (Redfern & Smith, 2010).

On the other hand, consumers obtain a much wider range of remedies. Some of the areas where consumers stand to benefit are internet services, banking and credit services. Additional expenditure will have to be borne by business, on account of providing training to staff, compliance costs in reviewing contracts, and the use of standard form contracts (Redfern & Smith, 2010). Over time, such harmonization of consumer laws at the national level will provide substantial reduction in costs. This process will be promoted by the Australian Consumer and Competition Commission and the Australian Securities and Investment Commission.

The new Australian Consumer Law (ACL) depicts the seriousness with which the changes in the consumer markets are being viewed, by the authorities. There has been an unprecedented proliferation of standard form contracts, and there is grave concern that the existing regulatory framework is incapable of providing sufficient relief from the basic unfairness of consumer transactions (Pettit, 2011).

The ACL introduces several critical changes to the Victorian regime. This Act does not exclude contractual terms that describe the central feature of the contract or describes the upfront price payable. In fact, the ACL concentrates on the unclearly worded and ambiguous contractual terms, which the consumer may fail to notice. However, this Act does not apply to insurance contracts, on account of the manner in which the Insurance Contracts Act 1984 (Cth) has been drafted. In order to cope with this situation, the Productivity Commission and the Senate Economics Committee have recommended that the ACL be extended to even the insurance contracts (Gillett, 2010, p. 6).

The existing regulatory framework, which is based on traditional laws that regulate contractual relations, is unsuitable for the modern consumer economy. This regulatory framework cannot address the new challenges under the global economy effectively. Complaints about unfair trading practices tend to be dealt with in an ineffective manner (Gillett, 2010, p. 5). Consequently, the interests of the consumers are not protected.

This situation exposes consumers to unfair trade practices, who are ruthlessly exploited by the sellers in many instances. The government of Australia recognized this unfavorable situation and made efforts to protect consumers from being exploited by unfair trading practices. As part of its efforts, special legislation was designed and enacted (Gillett, 2010, p. 1).

The fundamental goal of this legislation is to protect the interests of the consumers. The Trade Practices Amendment is a powerful and effective legislation enacted by the government of Australia. Schedule One of this Act introduces legislation to deal with unfair contract terms in consumer contracts (Gillett, 2010, p. 5).

The provisions of this Act establish a national regime for the regulation of unfair contractual terms in standard form consumer contracts. The Act determines a contractual term as unfair if that term causes a substantial imbalance to the rights and obligations of the parties to the contract. Moreover, a term is deemed to be an unfair term if it is not reasonably required for the protection of the interests of one of the parties. Furthermore, a contractual term is deemed to be unfair under this Act if it causes a detriment to one of the parties, on being relied upon or applied (Gillett, 2010, p. 6).

In addition, the Act describes terms that could be construed to be unfair terms. Some of these are; attempt to avoid or limit the performance of the contract; terminate the contract; vary the terms of the contract; terms that change the price of the goods or services, without allowing the other party to terminate the contract; and terms that change the characteristics of the goods or services to be provided (Gillett, 2010, p. 6).

The ACL is to be enacted at the federal and state level, and does not require any formal referral of powers from the State or Territory Governments. The enactment of the ACL establishes a single legislative regime throughout Australia. Moreover, the State and Territory Governments will implement the ACL as one of their domestic laws (Morrison, Abraham, & Sheargold, 2010, p. 356). On the other hand, the Commonwealth will assume the role of lawmaker.

The ACL can be amended, only if a number of Australian governments agree upon this. This requirement is in accordance with an Inter-Governmental Agreement. The ACL provides the same enforcement tools and powers to the Australian jurisdictions. In addition, a Memorandum of Understanding is to be undertaken by the consumer affairs agencies of the States and Territories (Morrison, Abraham, & Sheargold, 2010, p. 357). This initiative will commit these agencies to facilitate compliance with and enforcement of the ACL.

Question Two

Standard form contracts have become quite common in transactions between traders and consumers. Such contracts incorporate fixed terms and conditions and the consumer accepts them without any negotiation. Prior to the year 2010, consumers who had accepted a contract on standard terms, were not entitled to evade their contractual obligations on the grounds that some of the terms were unfair. This changed with the coming into effect of an important element of the Australian Consumer Law that pertained to unfair contractual terms (New Laws Target Unfair Contracts, 2010).

This change to consumer law, was occasioned by the fact that a significant of these contracts were made in busy shopping centers, on the telephone or by means of a mouse click on the internet. In such instances, the consumer usually would not go through the finer details of the contract. Some of the principal areas where such contracts occur are car hiring, fitness centers, tickets for cinemas, finance, and utilities (New Laws Target Unfair Contracts, 2010).

The courts denote a contract as being in the standard form, if one of the parties enjoys a dominant position, whether the contract had been prepared by one of the parties in the absence of any negotiation with the other party, and whether the other party merely had the option of either accepting or rejecting the contract. The courts also ascertain, whether the consumer had been permitted to negotiate the terms or whether the individual characteristics of the consumer or that specific transaction had been accounted for in the contract (New Laws Target Unfair Contracts, 2010).

Contractual terms that are unfair are deemed to be void. Whenever an allegation is made regarding the unfairness of a contractual term, it is upto the party that derives a benefit from such term to establish that the term is reasonably required, in order to safeguard legitimate interests. Consequently, it would be prudent for a supplier who relies on a potentially unfair term to meticulously document the basis for that term (Redfern & Smith, 2010). While assessing the unfairness of a contractual term, it is incumbent upon the court to consider the contract as a whole and to examine that term for the degree of transparency that it exhibits.

The ACL protects the consumers even if they had read and agreed to the inclusion of unfair terms into the contract. This is a powerful feature of this Act, because it does not address the behavior of the parties at the time of entering into a contract. Thus, it does not concentrate on the unconscionable, misleading or deceptive conduct of the parties at the time of forming the contract, and directly deals with the agreement as such (Gillett, 2010, p. 6). The Act entitles consumers to initiate legal action against the party that had included an unfair term in the contract. Moreover, a contractual term deemed to be unfair will be void. The ACL protects the interests of the consumer by ignoring their mistakes at the time of entering contracts.

Another important feature of the ACL is that it provides consumers with the opportunity to obtain help from the various industry based dispute resolution mechanisms. Therefore, consumers can procure the help of the Financial Ombudsman Service, Telecommunications Industry Ombudsman or the Energy and Water Ombudsman (Gillett, 2010, p. 6). The services provided by these entities will be free of charge..

The ACL introduces radical changes to the existing laws dealing with consumer transactions and consumer oriented business transactions. These changes protect consumers throughout the nation. Furthermore, the ACL engendered change will have considerable significance for foreign business ventures conducting business in Australia (Morrison, Abraham, & Sheargold, 2010, p. 353).

Thus, any foreign corporation that supplies or intends to supply consumer services or products in Australia has to make itself cognizant with these changes. Product safety has been given considerable importance in the ACL. This is a welcome development, as the extant product safety laws have not been updated to any appreciable extent, since the time of their introduction in the year 1986 (Morrison, Abraham, & Sheargold, 2010, p. 353).

The legal system of Australia has long been criticized for favoring the plaintiff in any litigation. However, with the advent of the ACL, this nation is on the verge of harmonizing its laws, effecting reform and establishing itself internationally in the area of consumer product safety regulation and legislation. This will serve to allay the fears of the international business community, regarding the bias that the Australian legal system had shown towards the plaintiff (Morrison, Abraham, & Sheargold, 2010, p. 365).

The ACL makes amendments to the Trade Practices Act 1974, the Australian Securities and Investments Commission Act 2001 and the Corporations Act 2001. Parliament’s response in respect of the new law is that it enacts a consumer law regime at the national level. This regime will address consumer protections; conduct that is deceptive and misleading; unfair practices, unconscionable conduct; consumer transactions; statutory consumer guarantees and product related services. In addition, the ACL renames the Trade Practices Act 1974 as the Competition and Consumer Act 2010 (Trade Practices Amendment (Australian Consumer Law) Bill (No. 2) 2010, 2010).

The novel benefits provided by the ACL are to be extended to financial products and services, so that the latter will be dealt with in the same manner as consumer goods and services. To this end, changes have been contemplated to the consumer law (Australian Consumer Law: What you need to know, 2010)

The ACL provides the same protection to consumers and all over Australia. In addition, consumers can expect similar business conduct through the length and breadth of this nation. Likewise, businesses in Australia will be placed under the same obligations, irrespective of the place of operation. The ACL mandates the presence of fairness and honest trading in business dealings.

List of References

Australian Consumer Law Act No.1 (Cth). (2010). Australia.

Australian Consumer Law. (2011, January 1). Australia.

Australian Consumer Law: What you need to know. (2010). Retrieved September 18, 2011, from http://www.accc.gov.au/content/item.phtml?itemId=963190&nodeId=262df176f493f1e19fd1580ca060c2af&fn=Business%20Snapshot_ACL%20what%20you%20need%20to%20know.pdf

Australian Securities and Investments Commission Act . (2001).

Corporations Act . (2001).

Gillett, P. (2010). Unfair Contract Terms . Legaldate , 22(2), 5 – 7.

Insurance Contracts Act (Cth) . (1984 ).

Legislation and Regulation. (2011). Retrieved September 17, 2011, from Small Business Development Corporation: http://www.smallbusiness.wa.gov.au/legislation-and-regulation/

Morrison , A., Abraham , R., & Sheargold, M. (2010). Alignment: Impact of the Proposed Australian Consumer Law. Defense Counsel Journal, 77(3), 353 – 365.

New Laws Target Unfair Contracts. (2010, August). Retrieved September 17, 2011, from Better Trading: http://www.docep.wa.gov.au/ConsumerProtection/PDF/Publications/bettertrading_017.pdf

Pettit, D. (2011, March 17 ). The Effect of the New Australian Consumer Law on the Use of Standards Form Contracts within the Australian Construction Industry . Retrieved September 18 , 2011, from http://ascelibrary.org/lao/resource/1/jladxx/v1/i1/p24_s1?isA

Redfern, J., & Smith, R. (2010, March). The new Australian Consumer Law and Unfair Contract Terms. Retrieved September 17, 2011, from http://www.sparke.com.au/sparke/news/publications/the_new_australian_consumer_law_and_unfair_contract_terms.jsp

Trade Practices Act. (1974). Australia.

Trade Practices Amendment (Australian Consumer Law) Bill . (2009 ).

Trade Practices Amendment (Australian Consumer Law) Bill (No. 2) 2010. (2010, August). Retrieved September 19, 2011, from Parliament of Australia: http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fbillhome%2Fr4335%22