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The government has passed measures to give ASIC and the Australian Competition and Consumer Commission investigative powers over unfair contract terms.
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Additional powers for ASIC, ACCC with unfair contract terms
22 October 2018
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9 minute read
The passage of Treasury Laws Amendment (Australian Consumer Law Review) Bill 2018 will give regulators investigative powers to assess whether a term in a standard form contract may be unfair, ensuring that small and family businesses are protected from the repeated or widespread use of unfair contract terms.
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The bill makes amendments to clarify and strengthen consumer protections relating to consumer guarantees, unsolicited consumer agreements, product safety, false billing, unconscionable conduct, pricing as well as unfair contract terms.
“The new laws are designed to ensure the Australian Consumer Law delivers effective protection for consumers, while equipping regulators with the tools and teeth they need to address consumer harm,” said Treasurer Josh Frydenburg.
The changes come after ACCC chair Rod Sims called for unfair contract terms to be made illegal after finding that it continues to be a core issue for small business clients.
“The business-to-business unfair contract term law is an extremely valuable law that works to protect small businesses against terms that just should not be found in contracts. However, it does not go far enough, and its limitations really tie our hands as a regulator,” Mr Sims said.
“The regime has two significant flaws: first, unfair contract terms are not illegal; and second, the ACCC cannot seek penalties when the court has declared an unfair contract term void, nor can we issue infringement notices for contract terms that are likely to be unfair.
“The law simply isn’t strong enough. Unfair contract terms should be illegal. As it stands, no real incentive exists for businesses to ensure their standard contracts do not contain such terms, which really means they have incentive to include them and see if they can get away with it.”
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