Common law was inadequate, courts couldn't easily develop criteria (political policy decisions and diff treatment of business and consumers)
Legislative developments about abuse of power generally, e.g.
Trade Practices Act 1974 (Cth): Part IVA (unconscionable conduct), Part V Div 1 (s52 unfair practises, s56 bait advertising, s65 unsolicited goods), Part V Div 2 (implied conditions and warranties as to title , description and quality)
Fair Trading Act 1989 (QLD) mirrored much of this
Exclusion of implied terms
Pre-TPA, SOGA Qld: s56 allowed exclusion by express agreement or course of dealing
Meant business had freedom of contract, consumers disadvantaged. Result:
In business sale contracts, freedom of contract prevailed
For consumers, was nearly always better to rely on TPA
Vienna Convention (Qld)
Art.6 parties may exclude application of convention
TPA: S.68 made void any term that excluded, restricted or modified rights conferred by Act
S.68A allowed limitation of liability in some circumstance. e.g. to repair/replacement
CCA 2010 Australian Consumer Law s.64 and s.64A (must know)
Legislative developments on exemption clauses in Europe, UK
Change in Australia
2008 Productivity Commission review found recommended a single generic consumer law as there was a disparate national framework with diff definitions and objects. Based on TPA, but wide reform to create consistency and improvement (generic terms to protect consumers)
Oct 2008 COAG (Council of Australian Government) agreed with productivity commission and enforced it through ACCC (Australian Competition and Consumer Commission)
Feb 2009 MCCA (Ministerial Council on Consumer Affairs) encouraged this to create confident consumers and created first doc
May 2009 SOCA (Standing Committee of Officials of Consumer Affair) oversaw drafting of ACL
July 2009 COAG signs IGA (intergovernmental Agreement for the Australian Consumer Law)
TPA (ACL) Bill 2010: Introduced ACL, deals with application, admin and amendment and contains unfair terms provisions
TPA (ACL) Bill (No. 2) 2010: moved fair trading and consumer protection provisions to ACL, new national schemes for statutory consumer guarantees, amended other legislation to conform with ACL and changed name of TPA to CCA, CCA 2010 Part XI and Schedule 2 contains complete ACL
National Consumer Credit Protection Bill 2009
December 2009 MCCA Agreed some further changes to ACL. Both passed. ACL to commence on 01/01/11
Statutory Guarantees CCA 2010 Part 3-2, Division 1: for goods and services
Exclusion: ACL s.64: Makes void any term of a contract that excludes, restricts or modifies: application of provisions, exercise of right given by act or any liability for failure to comply.
Limitation: Should businesses not be allowed any restrictions: (cheap software = great financial loss).
s.64A(1) Goods: can limit to repair/replacement (or money equivalent)
s.64A(2) Services: can limit to repeating the service (or money equivalent)
Provided not ordinarily acquired for personal, domestic/household use of guarantee (ss51-53)
residual power for court to determine power imbalances v freedom of contract
S.64A(3): limits not allowed if buyer proves it was not fair or reasonable for supplier to rely on
s.64A(4): consider all circumstances, strength of bargaining position, inducements, alternatives and goods specially made/adapted
strong protection, to courts discretion s64A(3). Only relates to exclusion of listed new guarantees, what about exclusion of other express or implied obligations?
ACL
Productivity Commission’s concern: having generic provisions dealing with unfair practises and conduct, but no generic measures to deal with unreasonable and one-sided contracts, esp. SFC
Reform choices: Consumer inability to negotiate, or weakness? all standard form contracts, or non-negotiated contracts only? absolute prohibitions of certain clauses, or indicative list and retain court discretion? all terms/obligations covered or exclude certain main terms, eg price? individuals only or Small businesses also? action on detriment or pre-emtive? Create new afresh or use existing models.
recommendation: heavily based on the EC Directive, but with common law influence, 6 main sections reads much more coherently
EC: Civil law influence, broad general provisions. If term not individually negotiated shall be unfair if: contrary to “good faith”, causes significant imbalance, to detriment of consumer. Indicative list of unfair terms in annex (plain intelligible language requirement). not binding if unfair
Enacted CCA 2010, ACL, Part 2-3 (possible gaps)
State concurrent legislation to give effect to ACL, uniform law applicable from 01/01/11
FTA, ACL 2010 (Qld) does not reprint the ACL but refers directly to it, ensuring there is no difference in wording and allowing for future amendments in ACL. Allows local administrations.
Persons Regulated:
23) 1) Term in a consumer contract is void if term is unfair, and SFC (term not individually negotiated)
23) 2) contract continues is it is capable of operation without the unfair term
Plaintiffs: ACL Part 2-3 (UCT) s.23(3) “Consumer contract” protected
contract type – e.g. corporation, supples of goods/services; grant of interest in land
To an individual only (small businesses not included, unless eg sole trader)
Individual use must be wholly or predominantly for personal, domestic, or household use/consumption. Reference to subjective intention in acquisition rather than nature.
if not consumer contract ACL Part 2-3 (UCT) does not apply. Apply term as at common law.
Defendants
Corporations: s130 CCA restricted interstate trade or commerce by constitution.
Businesses: FTA, part 3 ACL (Qld) s4A (1) applies to and in relation to (a) persons carrying on business within Qld; or (c) persons ordinarily resident in this jurisdiction
Contracts Regulated – ACL Part 2-3 (UCT)
S23(1)(b) “SFC”, s2(3) for supply of goods/services; sale grant of interest in land
S. 27 definition
1) Burden of proof reversed: Consumer alleges SFC, corporation has burden of showing not
2) Court unfettered power to decide what is relevant to SFC, but must take into account:
(a) one party has all/most bargaining power; (elderly, unable to speak English, first home buyer, related/fiduciary party. can neutralise by negotiation through an independent legal representative)
(b) contract prepared by one party before discussion;
(c) required either to accept or reject the terms in form presented;
(d) given effective opportunity to negotiate;
(e) terms take into account specific characteristics of party or transaction;
(f) any other matter prescribed by regulations.
Which Contracts Are Regulated?
If not STF, does not apply (even if STF is only slightly altered). If it is SFC its not automatically void, term must be unfair.
Some Contracts excluded completely: s. 28 some shipping contracts and company constitutions, CCA s131A supply of financial services and Insurance contracts (own act)
Protection Given – Unfairness ACL Part 2-3 (UCT)
If one term void, rest of contract can stand – s.23(2)
S24 no express good faith obligation, PC has recommended good faith but COAG rejected it
s.24(1) Unfairness of term requires (court duty to take 2 factors into account, but discretion as to others)
Significant imbalance in rights/obligations [fact] (Consumer to show) (consider: other terms benefiting consumer, legible and easy to understand, meaning readily apparent, brought to consumers attention at time of contract, common within industry, essential to bargain
Reasonably necessary to protect D’s legitimate interest (Defendant to show use to courts discretion) (nature of subject matter, price, terms as a whole, industry norms, state of market, financial positions of parties)
Detriment (financial or otherwise) if applied/relied on (Consumer to show). Difficult to prove, esp now “Substantial likelihood of detriment” dropped from Bill (Actual detriment not necessary if there is threat, no requirement to quantify detriment, not to third party, disadvantaged has onus, failure to provide evidence probably fatal. Broad discretion to consider other elements)
Court may consider what it thinks relevant, but must consider: s.24(2)a) Extent to which term “transparent”, b) contract as a whole
examples of unfair terms, s.25 (gov can add more) no black list like germany, just grey list of examples
(a) one party avoids or limits performance (e.g right to terminate contract for defects, excluding liability for failure to perform)
(b) permit one party to terminate contract (where right to termination was disproportionate to breach of other party (e.g. breach for not notifying of changed address) (Eldersie Test)
(c) penalises one party (but not another party) for breach or termination (liquidated damages, exit fees ect. Cant be extravagant and unconscionable in comparison with the greatest loss conceivably resulting from breach)
(d) permits one party to vary terms (esp when no notice given, could be ok when: circumstances are clearly expressed in contract or consumer has right to cancel contract without penalty)
(e) permits one party to renew or not renew contract (as above)
(f) permits one party to vary the upfront price without the right of other to terminate;
(g) permits one party unilaterally to vary characteristics of goods/services/interest in land (ok if option to terminate)
(h) permits one party unilaterally to determine whether contract breached or to interpret meaning (fairer for independent assessment)
(i) limits one party’s vicarious liability for its agents;
(j) permits one party to assign contract to the detriment of other without consent (allows trader to assign contracts to another party without consent)
(k) limits one party’s right to sue another party; (reversing onus of proof, limiting remedies available, requiring consumer sue in another jurisdiction)
(l) limits evidence one party can adduce (restricting evidence to terms of contract, oral representations denied)
(m) imposes evidential burden on one party
(n) prescribed by regulations
Consequences if term within list: not automatically unfair, some variation clauses necessary (bank interest rates)
