The Consumer Affairs Minister, Chris Bowen MP, confirmed that consumers and regulators would be able to challenge 'unfair' terms in standard-form contracts under a new national unfair contract terms provision.
"This new law will finally give all Australian consumers access to protection from unfair contract terms in standard-form contracts," Mr Bowen said.
"There is no question that consumers are often frustrated by high penalty or exit fees.
"While the new law will not apply to the upfront price in a contract, it would apply to other indirect costs, including exit, default or penalty fees.
"Consumers facing unfair penalty or exit fees may find redress in the Government's new unfair contract terms provision."
As agreed by the Ministerial Council on Consumer Affairs (MCCA) and the Council of Australian Governments (COAG) the national unfair contract terms provision will have the following features:
- the term is deemed to be 'unfair' when it causes a significant imbalance in the parties' rights and obligations arising under the contract and it is not reasonably necessary to protect the legitimate interests of the supplier;
- a remedy could only be applied where the claimant shows detriment, or a substantial likelihood of detriment, to the consumer (individually or as a class);
- it would relate only to standard form contracts;
- it would exclude the upfront price of the good or service, using the approach currently adopted in the United Kingdom's Unfair Terms in Consumer Contracts Regulations; and
- the provision should apply to all sectors of the economy as part of the generic national consumer law.
An unfair contract terms provision currently exists in Victoria and in the United Kingdom.
The Consumer Affairs Minister has previously issued a consultation paper on the Australian Consumer Law and received just over 90 submissions, and is continuing to consult with State and Territory Governments and key stakeholders on the national unfair contract terms provision.
The legislation will also include new enforcement powers for the Australian Competition and Consumer Commission, another key plank in the Australian Consumer Law agreed by COAG in October 2008.
19 April 2009