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Trade Practices Amendment (Australian Consumer Law) Bill (No. 2) 2010

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2009-2010

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

Trade practices amendment

(Australian Consumer Law) bill (No.2) 2010

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

(Circulated by the authority of the

Minister for Competition Policy and Consumer Affairs,

the Hon Dr Craig Emerson MP)



T able of contents

Glossary.......................................................................................................... 1

General outline and financial impact........................................................ 3

Chapter 1            Preliminary matters....................................................... 19

Chapter 2            Introduction.................................................................... 21

Chapter 3            Misleading or deceptive conduct................................ 35

Chapter 4            Unconscionable conduct............................................. 41

Chapter 5            Unfair contract terms.................................................... 57

Chapter 6            Unfair practices.............................................................. 77

Chapter 7            Consumer Guarantees.............................................. 177

Chapter 8            Unsolicited selling...................................................... 211

Chapter 9            Lay-by sales................................................................. 233

Chapter 10         Safety of consumer goods and product related services......................................................................... 241

Chapter 11         Information standards................................................ 279

Chapter 12         Liability of manufacturers for goods with safety defects........................................................................... 289

Chapter 13         Offences....................................................................... 303

Chapter 14         Enforcement................................................................ 317

Chapter 15         Remedies..................................................................... 329

Chapter 16         Country of origin representations............................ 361

Chapter 17         Application of the Australian Consumer Law........ 373

Chapter 18         Commonwealth enforcement and administration 385

Chapter 19         Administration and enforcement of consumer product safety.............................................................. 395

Chapter 20         Liability of suppliers and credit providers................ 427

Chapter 21         Infringement notices.................................................. 435

Chapter 22         Amendments to Part IVB of the TP Act................... 445

Chapter 23         Regulation Impact Statement: The Australian Consumer Law — Reforms based on best practice in State and Territory consumer laws.......................... 455

Chapter 24         Regulatory Impact Statement: The Australian Consumer Law — Aspects of the new national product safety law....................................................... 565

Chapter 25         Regulatory Impact Statement: The Australian Consumer Law — A national consumer guarantees law................................................................................. 595

Index........................................................................................................... 637

 

Do not remove section break.



The following abbreviations and acronyms are used throughout this explanatory memorandum.

Abbreviation

Definition

ACCC

Australian Competition and Consumer Commission

ACL

Australian Consumer Law

ACL Bill or Bill

Trade Practices Amendment (Australian Consumer Law) Bill (No. 2) 2010

Applied ACL

Applied Australian Consumer Law

ASIC Act

Australian Securities and Investments Commission Act 2001 (Cth)

CC Act

Competition and Consumer Act 2010

Corporations Act

Corporations Act 2001 (Cth)

Corporations law

The ASIC Act and the Corporations Act 2001 (Cth)

COAG

Council of Australian Governments

Federal Court

Federal Court of Australia

first ACL Bill

Trade Practices Amendment (Australian Consumer Law) Bill 2009

FT Act or FT Acts

State and Territory Fair Trading Legislation, including Fair Trading Act 1987 (New South Wales), Fair Trading Act 1999 (Victoria), Fair Trading Act 1989 (Queensland), Fair Trading Act 1987 and Consumer Transactions Act 1972 (South Australia), Fair Trading Act 1987 and Consumer Affairs Act 1971 (Western Australia), Fair Trading Act 1990 (Tasmania), Fair Trading Act 1987 and Fair Trading (Consumer Affairs) Act 1973 (Australian Capital Territory) and Consumer Affairs and Fair Trading Act 1990 (Northern Territory).

 

Abbreviation

Definition

IGA

Intergovernmental Agreement for the Australian Consumer Law signed on 2 July 2009 by COAG

LI Act

Legislative Instruments Act 2003 (Cth)

MCCA

Ministerial Council on Consumer Affairs

NPA

National Partnership Agreement to Deliver a Seamless National Economy

PC

Productivity Commission

Regulators

The ACCC and the consumer agencies of the States and Territories, including: NSW Office of Fair Trading, Consumer Affairs Victoria, Queensland Office of Fair Trading, Department of Commerce — Consumer Protection (Western Australia), Office of Consumer and Business Affairs (South Australia), Department of Justice — Consumer Affairs and Fair Trading (Tasmania), Department of Justice — Consumer Affairs (Northern Territory) and Department of Justice and Community Safety — Office of Regulatory Services — Fair Trading (Australian Capital Territory)

TP Act

Trade Practices Act 1974 (Cth)



Outline

The Trade Practices Amendment (Australian Consumer Law) Bill 2010 (the ACL Bill) is a Bill for an Act to amend the Trade Practices Act 1974 (TP Act) to complete the initial text of the Australian Consumer Law (ACL), to make related amendments to the TP Act, the Australian Securities and Investments Commission Act 2001 (ASIC Act), the Corporations Act 2001 (Corporations Act) and to make consequential amendments to other Commonwealth Acts.

The ACL Bill will deliver the agreements of the Council of Australian Government (COAG) made on July 2008 and October 2008, to create a single national consumer law for Australia, including a national product safety law.  The Trade Practices Amendment (Australian Consumer Law) Bill 2009 (first ACL Bill) will implement the first tranche of these reforms. 

The first ACL Bill creates a new Part XI of the TP Act, which makes provision for the application, administration and amendment of the ACL.  The text of the ACL is contained in Schedule 2 of the TP Act.  The first ACL Bill will also implement the new national unfair contract terms law.

The measures in the ACL Bill complete the initial text of the ACL by:

•        incorporating the fair trading and consumer protection provisions of the TP Act into the ACL, including unfair contract terms and provisions implementing enhanced enforcement powers, penalties and redress options;

•        creating a national legislative scheme for consumer product safety, to replace the existing Commonwealth, State and Territory regulatory schemes;

•        creating a national legislative scheme for statutory consumer guarantees, to replace the existing Commonwealth and State and Territory legislation concerning implied conditions and warranties in consumer transactions; and

•        augmenting the fair trading and consumer protection provisions of the TP Act with changes drawn from existing provisions of the consumer laws of the States and Territories, as agreed by the Ministerial Council on Consumer Affairs (MCCA) at its meeting on 4 December 2009.

The ACL Bill also creates an infringement notice regime that will apply to specified provisions of the ACL.  The infringement notice regime will be a law of the Commonwealth but may used as the basis for provisions in the application Act of a State or Territory to complement enforcement of the ACL in that jurisdiction.  The infringement notice provisions are not included in the ACL as some States have their own State-wide infringement notice schemes. 

In addition, the ACL Bill implements other measures:

•        changing the name of the TP Act to the Competition and Consumer Act 2010 (CC Act) and making necessary consequential changes to the TP Act and other Acts;

•        amending the consumer protection provisions of the ASIC Act and Corporations Act, where relevant, to maintain consistency with the ACL;

•        providing for Commonwealth-specific enforcement and administrative provisions, to enable Commonwealth agencies and judicial bodies to enforce the ACL as a law of the Commonwealth; and

•        making changes to the enforcement powers for Part IVB of the TP Act, which implements key elements of the Australian Government’s response to the Parliamentary Joint Committee on Corporations and Financial Services inquiry Opportunity not opportunism: improving conduct in Australian franchising  

The Australian Consumer Law

Legislative arrangements for the administration and enforcement of the ACL are provided in Part XI of the TP Act.  The text of the ACL is contained in Schedule 2 of the TP Act.  Currently, the ACL contains only the provisions relating to unfair contract terms.

On 2 July 2009, COAG signed the Intergovernmental Agreement for the Australian Consumer Law (IGA).  The IGA sets out the arrangements for creating the initial text of the ACL, as well as procedures for future changes to the ACL by agreement of the Australian, State and Territory Governments. 

The Bill completes the text of the ACL, in accordance with the requirements of the IGA.  Under the IGA, the ACL is to commence on 1 January 2011. 

The IGA requires that the ACL is based on the fair trading and consumer protection provisions of the TP Act, modified as agreed by MCCA. 

The TP Act fair trading and consumer protection provisions comprise:

•        Part IVA (unconscionable conduct);

•        Part V (consumer protection);

•        Part VA (liability of manufacturers and importers for defective goods);

•        Part VC (offences); and

•        relevant parts of Part VI (enforcement and remedies). 

At its meeting on 4 December 2009, MCCA agreed to amendments to the TP Act fair trading and consumer protection provisions to be included in the ACL.  MCCA also agreed to include in the ACL some fair trading and consumer protection provisions that currently exist in the FT Acts of the States and Territories only.

The ACL is a generic law that applies to all sectors of the economy.  However, separate laws dealing with financial products and services are necessary, due to constitutional issues relating to the States’ referral of those powers under the Corporations Agreement 2002 .  The IGA requires the Commonwealth to enact changes to the investor protection provisions of the ASIC Act and, to the extent necessary, the Corporations Act, to ensure that they are consistent with the ACL.  This Bill enacts changes to the ASIC Act and Corporations Act, consistent with the objectives of the IGA. 

Commonwealth, State and Territory industry-specific legislation will continue to apply in some areas to the extent that it does not duplicate or is inconsistent with the ACL.  Under the IGA, the Australian Government and the governments of the States and Territories are to repeal or modify any laws which duplicate or are inconsistent with the ACL. 

MCCA will commence a process of reviewing existing sector-specific laws to remove inconsistent or duplicative provisions following commencement of the ACL. 

Administration and enforcement

In October 2008, COAG agreed that the ACL will be administered jointly by the Australian Governments and the governments of the States and Territories. 

Through the Standing Committee of Officials of Consumer Affairs, the Australian Competition and Consumer Commission (ACCC), the Australian Securities and Investments Commission (ASIC) and the State and Territory offices of fair trading (regulators) are developing a Memorandum of Understanding (MOU) and supporting frameworks to guide coordinated administration of the ACL. 

New Zealand’s Ministry of Economic Development and Commerce Commission will also participate in the MOU to facilitate greater coordination of consumer law administration and enforcement between Australia and New Zealand. 

Product safety

The ACL Bill creates a national consumer product safety regulatory regime as part of the ACL. 

The national consumer product safety provisions in the ACL replace the product safety provisions in Part V, Division 1A of the TP Act and equivalent provisions in State and Territory FT Acts. 

Product safety law and regulation differs between jurisdictions.  In broad terms current Commonwealth, State and Territory consumer product safety laws are similar and allow governments to:

•        regulate the supply of products that pose a risk to consumers, through the imposition of mandatory standards for the design, manufacture and labelling of such products;

•        prohibit outright the supply of products that pose a risk to consumers, through the imposition or interim or permanent bans; and

•        monitor or direct recalls of consumer products that have already been supplied. 

Under the ACL, permanent product bans and mandatory safety standards will only be able to be made to apply nationally.  This ensures that product safety concerns that are identified in one jurisdiction can be addressed consistently on a national basis. 

Individual State and Territory Ministers retain the ability to issue interim bans and to conduct recalls.  Interim bans and recalls are temporary regulatory measures that usually need to be implemented rapidly after a consumer safety hazard is identified. 

As is the case with the other provisions of the ACL, the national product safety law is to be administered jointly by the ACCC and the State and Territory regulators. 

The product safety provisions of the ACL implement a number of recommendations made by the Productivity Commission (PC) in its Review of the Australian Consumer Product Safety System , including:

•        expanding the scope of product safety regulation to cover services related to the supply, installation or maintenance of consumer goods in all jurisdictions;

•        allowing product safety standards, bans and recalls to be put in place where a reasonable foreseeable use, or misuse, may render an otherwise safe product dangerous;

•        allowing regulators to undertake product recalls directly where no supplier can be found; and

•        requiring suppliers to report serious product incidents to regulators.

The ACL Bill also streamlines the operation of the temporary exemption process for product bans and standards under the Mutual Recognition Agreement and the Trans-Tasman Mutual Recognition Agreement .

In addition to the legislative reforms contained in the ACL Bill, MCCA charged the ACCC and State and Territory product safety agencies with implementing a number of non-legislative reforms to the product safety framework.  These reforms include:

•        creating a hazard identification system based on a clearing house approach;

•        creating a national system for exchange of consumer product safety complaint information;

•        establishing an internet based consumer product safety ‘one stop shop’;  

•        undertaking a review of existing recall guidelines to determine how recalls might be improved;

•        developing guidelines for encouraging suppliers to explain to consumers and retailers how they can notify the supplier of unsafe products; and

•        moving to a ‘hazard focused’, rather than ‘product focused’ approach to developing mandatory safety standards.

These non-legislative reforms will be implemented throughout 2010 in time for commencement of the ACL on 1 January 2011. 

Consumer guarantees

The ACL Bill provides for statutory consumer guarantees that will apply uniformly across Australia.  Statutory consumer guarantees replace conditions and warranties that were implied into contracts by the TP Act and FT Acts. 

The ACL provides consumers with the following guarantees in respect of supplies of goods:

•        a guarantee that the supplier has the right to sell the goods;

•        a guarantee that goods are free from any undisclosed security;

•        a guarantee that the consumer will have undisturbed possession of the goods;

•        a guarantee that goods are of ‘acceptable quality’;

•        a guarantee that goods are fit for a purpose that the consumer makes known to the supplier;

•        a guarantee that goods match their description or a sample;

•        a guarantee that spare parts and facilities for the repair of goods are reasonably available for a reasonable period; and

•        a guarantee that any express warranty is complied with.

The ACL provides the following guarantees in respect of supplies of services:

•        a guarantee that the services are carried out with due care and skill;

•        a guarantee that services are fit for a purpose made known to the supplier; and

•        a guarantee that services are provided within a reasonable time.

The ACL sets out the remedies that are available to consumers when goods or services fail to meet consumer guarantees.  The appropriate remedy varies depending on whether a failure to comply with a guarantee is major or not major, but generally includes refunds, repairs and replacements.  Damages are also available against suppliers and manufacturers in certain circumstances.

Offences, enforcement and remedies

The ACL contains a single set of enforcement powers, penalties, remedies and redress provisions applicable to breaches of the consumer protection provisions, which will apply nationally and in each State and Territory. 

These provisions allow for:

•        court-enforceable undertakings to allow administrative resolution with the regulator for minor breaches;

•        injunctions to restrain conduct or require something to be done;

•        damages to redress loss or damage caused by a breach;

•        non-punitive orders such as orders for community service;

•        punitive orders — adverse publicity orders, which require a person to publish particular information;

•        compensatory orders to allow compensation for breaches of the ACL;

•        civil pecuniary penalties of up to $1.1 million for bodies corporate and $220,000 for persons other than a body corporate for breaches of many provisions of the ACL;

•        disqualification orders to prevent a person from managing a corporation;

•        substantiation notices to allow a regulator to assess claims relating to goods or services;

•        infringement notices to allow regulators to issue a penalty that a person can (but does not have to) pay to avoid liability to further court action;

•        redress provisions allowing regulators to seek redress for consumers that are not identified as a party to proceedings to receive redress such as refunds or variation of contract; and

•        public warning notices for regulators to warn the public about conduct.   

These enforcement powers, penalties and remedies apply to the majority of the provisions in the ACL.  Each enforcement, penalty or remedy provision identifies those other provisions of the ACL to which it applies.

Many of the consumer protection provisions have corresponding criminal offences with maximum fines of up to $1.1 million for bodies corporate and $220,000 for persons other than a body corporate. 

Product safety

The ACL includes an enhanced market surveillance and enforcement framework for the new national product safety law.  The framework recognises the greater role of the responsible Commonwealth Minister and the ACCC will play under the national product safety law as well as the focus of product safety regulatory activity on proactively removing hazardous products from the marketplace.  Product safety market surveillance enforcement powers include the power to:

•        enter premises to which the public has access in order to inspect, take photographs of, or purchase any consumer goods or product related services;

•        require a person who supplies consumer goods or product related services in trade or commerce, to provide the ACCC or the Minister with information, documents or evidence about those goods or services; and

•        enter premises under a search warrant, or without a warrant in cases where the occupier has consented or there is an immediate danger to life or public safety, and exercise search-related powers.

Amendments that do not form part of the ACL

Amendments to facilitate administration and enforcement of the ACL by the Commonwealth

Schedule 2 of the Bill provides Commonwealth-specific administrative and enforcement provisions.  These provisions relate to:

•        procedures to be followed by the ACCC when undertaking investigations or bringing proceedings for alleged breaches of the ACL;

•        rules to be followed by Commonwealth Courts in conducting proceedings or making findings or awards in respect of the ACL; and

•        saving of State and Territory laws and equitable and common law principles, where appropriate.

Similar provisions may be included in State and Territory ACL application legislation, as required. 

Schedule 2 of the Bill provides for an infringement notice scheme in respect of specified provisions of the ACL.

In Schedule 5 of the Bill, the short title of the TP Act is changed to the Competition and Consumer Act 2010 .  The long title of the CC Act is changed to ‘An Act relating to competition, fair trading and consumer protection, and for other purposes’. 

In Schedules 5 and 6, consequential amendments are made to the CC Act and other Acts to reflect this and to alter references to sections of the TP Act that are repealed and replaced by sections in the ACL. 

Amendments to the corporations law

Separate laws dealing with financial products and services are necessary, due to constitutional issues relating to the States’ referral of powers to regulate those matters under the Corporations Agreement 2002 .

Part 2, Division 2 of the ASIC Act currently contains consumer protection provisions in respect of financial services.  Schedule 4 of the ACL Bill amends certain provisions of the ASIC Act to maintain consistency with the ACL.   

In addition, Schedule 4 of the ACL Bill makes some amendments to the Corporations Act to facilitate the disqualification of persons from managing corporations, in respect of breaches of the ACL. 

Government response to the Parliamentary Joint Committee on Corporations and Financial Services

The ACL Bill implements a strengthened enforcement and redress regime for industry codes of conduct prescribed under Part IVB of the TP Act. 

These measures were announced in the Australian Government’s response to the Parliamentary Joint Committee’s franchising inquiry and comprise:

•        substantiation notices for suspected breaches of prescribed industry codes;

•        public warning notices for repeated or serious breaches of prescribed industry codes;

•        non-party redress where there has been a breach of a prescribed industry code; and

•        a random audit power to allow the ACCC to inspect documents or records required to be kept pursuant to a prescribed industry code.

The ACCC is responsible for enforcing industry codes prescribed under Part IVB.

Part IVB of the TP Act does not form part of the ACL.

Date of effect The ACL Bill will commence on different dates for different purposes.

Sections 1 to 3 of the ACL Bill and the remaining provisions of the Bill not included in Schedules 1 to 7 commence on the day of Royal Assent.

Schedules 1 to 5, Schedule 6, items 1 to 46, Schedule, items 48 to 141, Schedule 6, items 143 to 191 and Schedule 7 commence on the later of 1 January 2011 or the commencement of Schedule 1 of the Trade Practices Amendment (Australian Consumer Law) Bill 2009 (the first ACL Bill).  The first ACL Bill is currently before the Parliament. 

The remaining items of Schedule 6 commence either on the date of the commencement of the remainder of Schedule 6, or a later date, to be determined by reference to the passage of other legislation. 

The Australian, State and Territory governments have agreed, in accordance with the National Partnership Agreement to Deliver a Seamless National Economy (NPA), to enact the ACL as a law of each f their respective jurisdictions by 1 January 2011.

Proposal announced On 2 October 2008, the COAG agreed to a new consumer policy framework comprising a single national consumer law, having agreed to develop a national consumer law on 3 July 2008. 

In so doing, COAG based its decision on the proposals of MCCA, which were announced on 15 August 2008.

At its meeting on 4 December 2009, MCCA agreed to the final form of the ACL.

Financial impact This Bill has no significant financial impact on Commonwealth expenditure or revenue at this time. 

Compliance cost impact :  Moderate.  The ACL Bill applies regulatory provisions and concepts in a single national law, drawing on Commonwealth and State and Territory laws that exist in only some jurisdictions presently. 

Four Regulation Impact Statements (RIS) have been prepared in respect of measures included in the ACL.  All four of these RISs were considered by MCCA in the context of developing the ACL. 

•        Framework and unfair contract terms .  This RIS examined recommendations made by the Productivity Commission in its Review of Australia’s Consumer Policy Framework .  These recommendations form the basis of the ACL. 

The measures considered in this RIS will be implemented by first ACL Bill and the RIS is published in the explanatory memorandum to that Bill. 

•        Reforms based on best practice in State and Territory consumer laws .  This RIS examined measures intended to modify or augment the existing consumer protection provisions of the TP Act, based on existing best practice provisions in State and Territory consumer laws.  These reforms are of two types:  those that which create a single, simplified national law; and those which draw on best practice in State and Territory laws. 

The full text of this RIS is included at Chapter 23.

•        Product safety .  This RIS examines the case for implementing legislative recommendations made by the Productivity Commission in its Review of the Australian Consumer Product Safety System

The full text of this RIS is included at Chapter 24. 

A separate RIS was prepared in May 2008 to support the agreement of MCCA to create a national product safety system. 

•        Consumer guarantees .  This RIS examines the case for implementing the findings of the Commonwealth Consumer Affairs Advisory Committee’s report Consumer rights:  Reforming statutory implied conditions and warranties

The full text of this RIS is included at Chapter 25.

Summary of regulation impact statement

Regulation Impact: Reforms based on best practice in State and Territory laws

Impact:

Moderate.  This Bill establishes a single, national consumer law framework and, in doing so, promotes consistency and protections across all Australian jurisdictions.  This framework will reduce multi-jurisdictional complexities and result in lower compliance costs for businesses operating nationally.  Once implemented, major parts of 17 jurisdictional laws dealing with generic consumer protections will be reduced to one law, substantially reducing business compliance costs.

There will be a transitional cost for these businesses as they adjust to the operation of the new, national regime and, specifically, to the new unfair contract terms provisions.

The compliance cost in relation to the new penalties, enforcement and consumer redress powers will be minimal, as these provisions provide for additional powers to deal with existing breaches of, or the investigation of suspected breaches of, the ACL and the new unfair contract terms provisions.  Once the ACL takes effect, there will be common national enforcement powers covering all of Australia’s consumer law agencies.

The publication of national guidance on subjects under the ACL, developed jointly by the ACCC and the State and Territory regulators (and, where appropriate, ASIC), will assist business in compliance with the ACL. 

Once the initial period of implementation is completed, ongoing compliance with the ACL will not impose significantly greater costs on businesses, as they should already comply with provisions in the ACL as they are either similar to existing laws or the same as existing national, State and Territory obligations.

Main points:

•        The PC estimated that the implementation of a national consumer law could result in benefits to Australian consumers of between $1.5 billion and $4.5 billion a year.

•        Businesses will benefit from consistent national regulation, which will reduce complexity and compliance costs by eliminating significant jurisdictional variation.  This will provide:

-       savings for businesses currently operating nationally;

-       incentives for expansion and innovation for businesses previously unwilling to deal with the complexity of multi-jurisdictional regulation;

-       greater incentives for new entrants to markets due to a simpler regulatory framework; 

-       greater clarity and certainty in relation to consumer law, allowing for more efficiency in the markets;

-       easier understanding of consumer contracts and greater opportunities for exercising choice when considering consumption possibilities; and

-       greater consistency in enforcement for businesses and a realignment of resources as more emphasis can be placed on effective enforcement by the most appropriate consumer law agency. 

•        Consumers will also benefit from the changes through:

-       greater confidence in dealing with businesses due to more consistent laws;

-       easier understanding of consumer contracts and greater opportunities for exercising choice when considering consumption possibilities;

-       greater confidence in dealing with businesses due to greater consistency in the enforcement of these laws; and

-       lower prices for goods and services to the extent that businesses pass on the benefits of lower compliance costs to their customers.

Regulation Impact: Product Safety

Impact :  Moderate.  This measure affects suppliers of consumer goods or product related services, to the extent that they are required to comply with a consumer safety order (such as a safety standard, ban or recall) or a reporting requirement.  The consumer safety provisions of the ACL are modelled on the current product safety provisions of the TP Act and State and Territory FT Acts.

Where a supplier is already required to comply with a similar safety requirement in respect of a good or service, the additional compliance costs, if any, associated with a safety order made under the national consumer law will be minimal.  Separate regulatory impact analysis must be undertaken on a case-by-case basis before bans, standards or recalls can be issued under the ACL. 

Main points :

•        Product safety regulatory actions impose requirements only on suppliers where particular consumer goods or product related services are judged to pose a risk of injury.

•        The ACL will create a single national set of product safety standards and permanent bans that will apply in all jurisdictions. 

Reasonable foreseeable use or misuse

•        Incorporating the concept of ‘reasonably foreseeable use or misuse’ into the threshold tests for imposing safety bans and recalls may impose additional compliance burdens on suppliers as bans and recalls will no longer be confined to circumstances where the primary, normal or intended use of a good creates a risk of injury.  Suppliers will also have to consider the possibility that an improper or unintended use or misuse of the goods, which is foreseeable, may pose a risk of injury. 

Product related services

•        Where applicable, the consumer safety provisions of the ACL extend to cover product related services.  Suppliers of such services would incur compliance costs, but only if the services they supply are of the kind to which a safety order relates. 

•        Suppliers of services required to comply with requirements under industry-specific regulation would need to continue observing those requirements, together with any extra requirement in a safety order made under the generic consumer safety provisions of the ACL, with the more industry-specific requirement prevailing to the extent of any inconsistency between the two requirements.

Mandatory reporting

•        The requirement for suppliers to report incidents where consumer goods or product related services have been associated with death or serious injury would impact on suppliers only to the extent that they become aware of incidents within their ordinary course of business.  This provision does not require suppliers to gather information they would not otherwise have gathered. 

Regulator-led recalls

•        Where regulators undertake a recall directly, there would be no compliance cost impact on businesses.  Rather this measure will help manage consumer expectations and concerns about unsafe goods where no supplier of the goods can be found.

Regulation Impact: Consumer Guarantees

Impact :  Moderate.  This measure affects businesses that supply goods or services to consumers.  The obligations imposed upon such businesses are similar to those that apply under pre-existing law.  Compliance costs for business are expected to be reduced under a national system of consumer guarantees, when compared to laws that imply conditions and warranties that vary slightly across each jurisdiction within Australia.  This is especially the case for suppliers who trade in more than one State or Territory of Australia.

Main points:

•        Statutory consumer guarantees provide consumers with a basis for seeking redress when goods or services do not meet the standards that they are entitled to expect.

•        Statutory consumer guarantees replace conditions and warranties that were implied into contracts by the TP Act and the FT Acts.  The substantive rights and obligations under statutory consumer guarantees are broadly similar to those that were implied under pre-existing laws.

•        Implied conditions and warranties are difficult for consumers and businesses to understand, leading to confusion, increased disputation and increased costs. 

•        Statutory consumer guarantees will be more readily understood by businesses and consumers since archaic terms, such as ‘merchantable quality’, will be replaced and, in some instances, defined, when previously the meaning of these terms was determined only by judicial pronouncement. 

•        Remedies applicable to consumer guarantees are set out in the ACL.  Previously, businesses and consumers required an understanding of remedies under the law of contract to effectively apply implied conditions and warranties to their particular situation.  By setting out the applicable remedies, the ACL will reduce costs for businesses and consumers when they seek to assert, or defend, their rights.



C hapter 1     

Preliminary matters

Outline of chapter

1.1                    The ACL Bill changes the long title and short title of the Trade Practices Act 1974 (TP Act). 

Context of amendments

1.2                    On 24 June 2009, the Minister for Competition Policy and Consumer Affairs announced that the name of the TP Act will be changed to the Competition and Consumer Act 2010.

Detailed explanation of new law

Competition and Consumer Act 2010

1.3                    The long title of the TP Act is changed from ‘An Act relating to certain Trade Practices’ to ‘An Act relating to competition, fair trading and consumer protection, and for other purposes’.  [Schedule 5, item 1]

1.4                    The short title of the TP Act is changed from ‘ Trade Practices Act 1974 ’ to ‘Competition and Consumer Act 2010’.  [Schedule 5, item 2]

Application and transitional provisions

1.5                    The ACL commences on the later of 1 January 2011 or the commencement of Schedule 1 of the Trade Practices Amendment (Australian Consumer Law) Bill 2009 (the first ACL Bill).  The first ACL Bill is currently before the Parliament.  [Section 2]



Consequential amendments

1.6                    Consequential amendments are made to the CC Act and a wide range of Commonwealth Acts which refer to the TP Act by name, or to sections of the TP Act which are now repealed and replaced by sections of the applied ACL as a law of the Commonwealth.  [Schedule 5, items 1 to 129 and Schedule 6, items 1 to 191]



C hapter 2     

Introduction

Outline of chapter

2.1                    The Australian Consumer Law (ACL) includes definitions, application and miscellaneous provisions in Chapter 1. 

Context of amendments

2.2                    At its meeting on 4 December 2009, the Ministerial Council on Consumer Affairs (MCCA), agreed to the final form of the ACL. 

2.3                    The provisions of the ACL Bill build upon the first ACL Bill.  The first ACL Bill creates the ACL as a schedule to the TP Act and introduced unfair contract terms regulation into the schedule.  The first ACL Bill also introduces a range of penalties, enforcement and redress provisions into the TP Act. 

2.4                    The first ACL Bill makes similar amendments to the Australian Securities and Investments Commission Act 2001 (ASIC Act), to maintain consistency between the consumer protection provisions of the TP Act and ASIC Act. 

2.5                    The States and Territories are able to apply schedule version of the ACL, containing only the unfair contract terms provisions, as laws of their jurisdictions from 1 July 2010, if they choose to do so. 

Summary of new law

2.6                    Chapter 1 of the ACL covers the defined terms and other definitions that are relied on throughout the ACL. 

Detailed explanation of new law

Definitions

2.7                    The ACL applies to the extent provided by Part XI of the CC Act or a State or Territory’s application law.  [Schedule 1, item 1: Chapter 1, section 1]

2.8                    Section 2 of the ACL defines terms that are relevant to the understanding, interpretation and application of the provisions of the ACL. [Schedule 1, item 1: Chapter 1, section 2]  

2.9                    These terms are explained in the context of the provisions in which they are used, as they are discussed in this explanatory memorandum.

The meaning of ‘consumer’

2.10                For many purposes the provisions of the ACL apply to all persons and are not limited to a defined class of consumers.  However, for some purposes, provisions apply with respect to a defined class of consumer on the basis that it is not appropriate to extend the protection afforded by the relevant provision more broadly.

2.11                A reference to a supply of goods or services to a consumer in the ACL, is a reference to a supply to a person who is taken to have acquired them as a consumer within the meaning of section 3 of the ACL.  [Schedule 1, item 1: Chapter 1, subsection 3(5)]  

2.12                The definition of a consumer is relevant to the following provisions in the ACL:

•        consumer guarantees; [Schedule 1, item 1: Chapter 3, Part 3-2, Division 1]

•        unsolicited consumer agreements; [Schedule 1, item 1: Chapter 3, Part 3-2, Division 2]

•        lay-by sales agreements; [Schedule 1, item 1: Chapter 3, Part 3-2, Division 3]

•        the provision of itemised bills; [Schedule 1, item 1: Chapter 3, Part 3-2, Division 4, section 101]

•        the definition of continuing credit contracts ; [Schedule 1, item 1: Chapter 1, section 14]

•        linked credit contracts.  [Schedule 1, item 1: Chapter 5, Part 5-5, Division 1]

2.13                The use of the term consumer in the unconscionable conduct provisions of Part 2-2 of the ACL [Schedule 1, item 1: Chapter 2, Part 2-2] is not linked to the definition of consumer in section 3.  A consumer for the purposes of the unconscionable conduct provisions is the other person to whom a person supplies or will possibly supply with goods and services.  [Schedule 1, item 1: Chapter 2, Part 2-2, section 21(1)]

2.14                The definitions of consumer good in section 2 and consumer contract in section 23 of the ACL are couched in similar terms to the definition of consumer in section 3, but are not subject to that definition.

2.15                The definition of non-party consumer in section 2 of the ACL is not defined by reference to the definition of consumer in section 3.

2.16                The definition establishes when a person is a consumer, which is determined by reference to the nature of the goods or services acquired or to be acquired.  [Schedule 1, item 1: Chapter 1, section 3]   The concept of consumer is defined separately with respect to the supply of goods and the supply of services. 

2.17                A person is taken to have acquired goods as a consumer if:

•        the goods were of a kind ordinarily acquired for personal, domestic or household use or consumption [Schedule 1, item 1: Chapter 1, paragraph 3(1)(a)] .  This is an objective assessment based on the nature and usual purpose of the goods; or

•        the goods consisted of a vehicle or trailer acquired for use principally in the transport of goods on public roads [Schedule 1, item 1: Chapter 1, paragraph 3(1)(b)] .  Neither ‘vehicle’ nor ‘trailer’ is defined in section 2 of the ACL or elsewhere in the ACL.  The question of whether a vehicle or trailer is acquired as a consumer is determined subjectively with reference to the actual purpose for which the vehicle or trailer were acquired. 

2.18                A person is taken not to have acquired goods as a consumer if the person acquired the goods, or held himself or herself out as acquiring the goods for commercial purposes, including for the purpose of:

•        re-supply; or

•        using them up in the course of trade or commence. 

[Schedule 1, item 1: Chapter 1, subsection 3(2)]

2.19                A person is taken to have acquired services as a consumer if, and only if, the services were of a kind ordinarily acquired for personal, domestic or household use or consumption.  [Schedule 1, item 1: Chapter 1, subsection 3(3)]  

2.20                With regard to the interpretation of goods or services ‘of a kind ordinarily acquired for personal, domestic or household use or consumption’ the jurisprudence relating to section 4B of the TP Act is relevant. 

2.21                There is a rebuttable presumption that a person is a consumer with respect to the acquisition or possible acquisition of goods and services.  Where a claimant has alleged that he or she is a consumer, then it is for the respondent to prove, according to the civil standard of proof, that the claimant is not a consumer within the meaning of section 3 of the ACL.  [Schedule 1, item 1: Chapter 1, section 3]

Misleading representations with respect to future matters

2.22                Section 4 of the ACL includes a provision that replaces section 51A of the TP Act.  It places an evidentiary burden on a defendant who is alleged to have made a representation as to a future matter that is misleading.  When compared to section 51A, the new provision seeks to clarify that [Schedule 1, item 1: Chapter 1, section 4]

•        the burden of proof under this section is evidentiary in nature and does not place a legal burden on defendants to prove that representations were not misleading;

•        satisfying the burden of proof under this section does not constitute a substantive defence for breach of any other section of the ACL; and

•        the section can operate in proceedings against accessories to contraventions as well as primary contraveners.

2.23                The clarification of the burden as requiring only evidence of reasonable grounds to be adduced is to reverse the effect of some past court decisions, such as Australian Competition & Consumer Commission v IMB Group Pty Ltd [1] , that have interpreted section 51A of the TP Act as requiring a respondent to prove that he, she or it had reasonable grounds.

2.24                In certain cases, Section 51A of the TP Act was interpreted in such a way to, by implication, provide that proving reasonable grounds is a substantive defence to an allegation of misleading conduct. [2]   To reverse the effect of such decisions, section 4 of the ACL states explicitly that it does not imply that a representation as to a future matter is not misleading merely because the person had reasonable grounds for making the representation. 

2.25                Section 51A of the TP Act has been interpreted to not allow the provision to apply to alleged accessories to a contravention because it was worded as to require the ‘corporation’ to adduce evidence [3] .  Section 4 of the ACL reverses the effect of such decisions to allow its application to accessories. 

2.26                The drafting of section 4 of the ACL clarifies the operation of this provision and ensures that it has the effect of facilitating the presentation of evidence to the court when a representation of a future matter is alleged to be misleading.  [Schedule 1, Item 1: Chapter 1, section 4]

2.27                Section 12BB of the ASIC Act is in the same terms as section 51A of the TP Act.  The changes made to section 51A for the purposes of its inclusion in the ACL have been mirrored in the ASIC Act.  [Schedule 3, Item 6: section 12BB] .

When donations are treated as supplies or acquisitions

2.28                For the purposes of the provisions of the ACL except those concerning the safety of consumer goods and product related services [Schedule 1, item 1: Chapter 3, Part 3-3] , information standards [Schedule 1, item 1: Chapter 3, Part 3-4] and offences relating to safety of consumer goods and product related services [Schedule 1, item 1: Chapter 3, Part 4-3] a donation is not treated as a supply of the goods unless the donation of the goods is for promotional purposes.  Nor is the receipt of a donation of goods or services treated as an acquisition of those goods or services unless the donation is for promotional purposes.  Neither ‘donation’ nor ‘promotional purposes’ are defined specifically in the ACL.  [Schedule 1, item 1: Chapter 1, Subsection 5(1)]

2.29                For the purposes of the provisions of the ACL concerning the safety of consumer goods and product related services [Schedule 1, item 1: Chapter 3, Part 3-3] , information standards [Schedule 1, item 1: Chapter 3, Part 3-4] and offences relating to safety of consumer goods and product related services [Schedule 1, item 1: Chapter 3, Part 4-3] any donation is treated as a supply of the goods and the receipt of a donation of goods or services is treated as an acquisition of those goods or services.  [Schedule 1, item 1: Chapter 1, Subsection 5(2)]

Related bodies corporate

2.30                It is recognised that, for the purposes of the ACL, there are many potential applications of the Law that could be:

•        avoided or frustrated unless the activities of all corporations forming part of a corporate group are treated in the same way and taken together; or

•        may apply inconsistently or inappropriately if the activities of a corporate group are not recognised and treated accordingly. 

2.31                The ACL imports the meaning of related bodies corporate from section 4A(5) of the CC Act [Schedule 1, item 1: Chapter 1, Subsection 6(1)]   Subsection 4A(5) of the CC Act deems a body corporate to be related to another body corporate where the first-mentioned body corporate is:

•        the holding company of another body corporate;

•        a subsidiary of another body corporate; or

•        a subsidiary of the holding company of another body corporate.

2.32                For the purposes of the ACL, it is presumed that bodies corporate are not related to each other.  [Schedule 1, item 1: Chapter 1, Subsection 6(1)]

2.33                The provisions are relevant to circumstances in which a body corporate is either subject to an obligation or a liability under the ACL. 

2.34                With regard to the interpretation of ‘related bodies corporate’ the jurisprudence relating to section 4A of the TP Act is relevant.  Further guidance on the interpretation of concepts associated with the concept of a ‘body corporate’ may be found in the Corporations Act and related jurisprudence. 

The meaning of ‘manufacturer’

2.35                The meaning of manufacturer is relevant to the consumer guarantees [Schedule 1, item 1: Chapter 3, Parts 3-2 and 5-4] , liability of manufacturers for defective goods [Schedule 1, item 1: Chapter 3, Part 3-5] and country of origin representations [Schedule 1, item 1: Chapter 1, Part 5-3] of the ACL. 

2.36                The meaning of manufacturer in section 7 of the ACL draws on the definition of ‘manufactured’ is the repealed section 74A of the TP Act.  The jurisprudence relating to that definition may be relevant to the interpretation or understanding of the meaning of manufacturer under the ACL, insofar as those provisions are similar.

2.37                The meaning of manufacturer encompasses a wide range of activities that that represent the first point in the chain of distribution of a product into an Australian market, whether directly by a person or in that person’s name or brand. 

2.38                For the purposes of the ACL, the activities of a manufacturer include:

•        the activities of a person (being the manufacturer for these purposes) of growing, extracting, producing, processing or assembling the goods.  [Schedule 1, item 1: Chapter 1, paragraph 7(1)(a)]  These activities encompass a very wide range of agricultural, mining, forestry, fishing and aquacultural, manufacturing, product assembly, trade, craft and artisanal activities.

•        the activities of a person (being the manufacturer for these purposes) who holds himself or herself out to the public as the manufacturer of the goods.  [Schedule 1, item 1: Chapter 1, paragraph 7(1)(b)]   This covers, among other things, a range of activities that relate to the activities of importers and agents and entities acting as the local representative of manufacturers. 

•        the activities of a person (being the manufacturer for these purposes) who causes or permits the name of the person, a name by which the person carries on business or a brand or mark of the person to be applied to goods supplied to the person.  [Schedule 1, item 1: Chapter 1, paragraph 7(1)(c)]   This covers, among other things, a range of activities that relate to the activities of importers and agents and entities acting as the local representative of manufacturers.

•        the activities of a person (the ‘first person’, being the manufacturer for these purposes)  who causes or permits another person, in connection with the supply or possible supply, or the promotion of the supply, of the goods, to hold out the first person to the public as the manufacturer of the goods.  [Schedule 1, item 1: Chapter 1, paragraph 7(1)(d)]   This covers, among other things, a range of activities that relate to the activities of importers and agents and entities acting as the local representative of manufacturers.

•        the activities of a person (being the manufacturer for these purposes) who imports goods into Australia if that person is not the actual manufacturer of the goods and, at the time of the importation of the goods, the manufacturer does not have a place of business in Australia.  [Schedule 1, item 1: Chapter 1, paragraph 7(1)(e)]  ‘Import’ is not specifically defined for the purposes of the ACL.

2.39                A person is taken to have associated their name or brand with a product if their name, brand or mark is:

•        woven in, impressed on, worked into or annexed or affixed to the goods;

•        it is applied to a covering, label, reel or thing in or with which the goods are supplied.  [Schedule 1, item 1: Chapter 1, paragraph 7(2)(a)]

2.40                It is presumed for the purposes of the ACL that if a person’s name, brand or mark is applied to goods, then that person caused their name, brand or mark to be so applied.  [Schedule 1, item 1: Chapter 1, paragraph 7(2)(b)]  

2.41                If goods are imported into Australia on behalf of a person, that person is taken to have imported the goods.  [Schedule 1, item 1: Chapter 1, subsection 7(3)]

Goods affixed to land or premises

2.42                For the purposes of the ACL, goods are taken to be supplied to a consumer (within the meaning of section 3) even if they are affixed to land or premises at the time of the supply.  Goods supplied in relation to another transaction, for example the transfer of an interest in a property, are subject to the ACL for certain purposes.  This could include, for example, kitchen or laundry fittings supplied as part of a home construction contract, which would otherwise become fixtures at the time of their installation.  [Schedule 1, item 1: Chapter 1, section 8]

The meaning of ‘safety defect’ in relation to goods

2.43                The meaning of safety defect is relevant to the provisions of the ACL dealing with the liability of manufacturers for goods with safety defects.  [Schedule 1, item 1: Chapter 5, Part 5-3]  

2.44                The general test for the existence of a safety defect in a good is whether the safety of the goods is not such as persons generally are entitled to expect.  [Schedule 1, item 1: Chapter 1, subsection 9(1)]

2.45                The concept of safety or what a person is generally entitled to expect is not defined.  However the provision sets out a non-exhaustive set of principles to which a court or tribunal may have regard in determining this question.  [Schedule 1, item 1: Chapter 1, subsection 9(2)]

2.46                The question of whether a good has a safety defect is an absolute, rather than relative, proposition and must be determined with reference to the state of scientific or technical knowledge that existed at the time the goods were supplied.  The ACL provides that an inference is not to be made that a good has a safety defect only because:

•        after they were supplied by their manufacturer, safer goods of the same kind were supplied; or

•        the goods complied with a Commonwealth mandatory standard that was not the safest possible standard having regard to the latest state of scientific or technical knowledge.  [Schedule 1, item 1: Chapter 1, subsections 9(3) and 9(4)]

Asserting a right to payment

2.47                The meaning of asserting a right to payment is relevant to the provisions of the ACL relating to asserting a right to payment for unsolicited goods or services, and unauthorised directory entries or advertisements.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 2, sections 40 and 43] [Chapter 4, Part 4-1, Division 2, sections 162 and 163]

2.48                A person is taken to assert a right to payment from another person if the person takes some action with a view to obtaining payment from the other person.  Such actions could include:

•        making a demand for payment or asserting a present or future right to payment for the goods or services;

•        threatening to commence legal proceedings with a view to obtaining payment;

•        placing or causing to be placed the name of the person on a list of defaulters or debtors, or threatening to do so, with a view to obtaining payment;

•        invoking or causing to be invoked any other collection procedure, or threatening to do so, with a view to obtaining payment;

•        sending any invoice or other document that:

-       states the amount of the payment (to which a right to payment is asserted); or

-       sets out the price of unsolicited goods or unsolicited services (to which a right to payment is asserted); or

-       sets out the charge for placing, in a publication, an entry of advertisement (to which a right to payment is asserted),

and does not contain a statement, to the effect that the payment is not an assertion of a right to payment, that complies with any requirements prescribed by the regulations.  [Schedule 1, item 1: Chapter 1, subsection 10(1)]

2.49                Regulations specifying the requirements for statements concerning the assertion of rights to payment have not yet been prepared. 

2.50                An invoice or other document purporting to have been sent by or on behalf of a person is taken to have been sent by that person unless the contrary is established.  [Schedule 1, item 1: Chapter 1, subsection 10(2)]

ASIC Act

2.51                A provision in similar terms to section 10 of the ACL is included in the ASIC Act.  Section 12BEA of the ASIC Act deals with the meaning of asserting a right to payment in the context of financial services and products.  [Schedule 3, item 8: section 12BEA]

References to acquisition, supply and re-supply

2.52                Section 11 of the ACL is relevant to the many provisions of the ACL covering conduct concerning the acquisition, supply or re-supply of goods and services.  It draws on section 4C of the CC Act, which will continue to apply only for the purposes of the CC Act, and not the ACL.  The jurisprudence relating to section 4C may be relevant to the interpretation or understanding of the meaning of section 11 of the ACL, insofar as those provisions are similar.

2.53                For the purposes of the ACL:

•        a reference to the acquisition of goods includes a reference to the acquisition of property in, or rights in relation to, goods pursuant to a supply of the goods; and

•        a reference to the supply or acquisition of goods or services includes a reference to agreeing to supply or acquire goods or services; and

•        a reference to the supply or acquisition of goods includes a reference to the supply or acquisition of goods together with other property or services, or both; and

•        a reference to the supply or acquisition of services includes a reference to the supply or acquisition of services together with property or other services, or both; and

•        a reference to the re-supply of goods acquired from a person includes a reference to:

-       a supply of the goods to another person in an altered form or condition; and

-       a supply to another person of goods in which the first-mentioned goods have been incorporated; and

•        a reference to the re-supply of services (the ‘original services) acquired from a person (the ‘original supplier’) includes a reference to:

-       a supply of the original services to another person in an altered form or condition; and

-       a supply to another person of other services that are substantially similar to the original services, and could not have been supplied if the original services had not been acquired by the person who acquired them from the original supplier.

[Schedule 1, item 1: Chapter 1, section 11]

2.54                The purpose of this provision is to make clear the circumstances in which transactions may be covered by the ACL. 

Application of Schedule in relation to leases and licenses of land and buildings

2.55                This provision is relevant to any provision of the ACL that applies to a contract which involves a lease of, or licence in respect of, land or a building.  It clarifies that any reference to a contract includes a reference to a lease of, or licence in respect of, land or a building, regardless of whether there are express references to leases or licences in the provisions of the ACL).  [Schedule 1, item 1: Chapter 1, section 12]

2.56                Similarly, a reference to making or entering into a contract for such a lease or licence refers to granting or taking the lease or licence, and a reference to a party to a contract in respect of such a lease or licence includes any person bound by, or entitled to the benefit of, any provision contained in the lease or licence. 

Loss or damage to include injury

2.57                For the purposes of the ACL, references to ‘loss or damage’ includes injury.  [Schedule 1, item 1: Chapter 1, subsection 13(a)]  Injury includes bodily or personal injury and may extend to other forms of harm. 

2.58                A reference to the amount of any loss or damage includes a reference to damages in respect of any injury.  [Schedule 1, item 1: Chapter 1, subsection 13(b)]

2.59                ‘Loss and damage’ is not defined for the purposes of the ACL. 

Continuing credit contract

2.60                Section 12 of the ACL provides, for the purposes of the provisions of the ACL dealing with liability of suppliers and credit providers [Schedule 1, item 1: Chapter 5, Part 5-5] , that a continuing credit contract is one where:

•        a creditor agrees to provide credit for goods or services (either supplied by the creditor or another person) or cash paid to the consumer or another person;

•        they have an arrangement or course of dealing; and

•        the amounts owing and paid are kept in accounts for the purposes of the arrangement or dealing.  [Schedule 1, item 1: Chapter 1, subsection 14(1)]

2.61                Where the credit relates to goods, services or cash provided by another person, the creditor is taken to have provided credit to the consumer even though the payments were not to the consumer.  [Schedule 1, item 1: Chapter 1, subsection 14(2)]



Contraventions of the ACL

2.62                Conduct covered by:

•        the voiding of a unfair contract term under section 23(1) of the ACL;

•        a failure to honour the consumer guarantees set out in Division 1 of Part 3-2; or

•        a failure to meet obligations under the provisions dealing with the liability of manufacturers for goods with safety defects in Part 3-5,

are not contraventions of the ACL.  [Schedule 1, item 1: Chapter 1, section 15]  

Severability

2.63                A provision in a contract which causes that contract to contravene the ACL, is severable from that contract.  The concept of severability means that the contract remains valid and enforceable otherwise than in relation to the particular provision, so far as it can be without that provision.  [Schedule 1, item 1: Chapter 1, subsection 16(1)]

2.64                Where an order made under a provision of Part 5-2, Division 4 of the ACL applies to a contract, the rule created by section 16 of the ACL applies subject to those orders.  [Schedule 1, item 1: Chapter 1, subsection 16(2)]  Part 5-2, Division 4 covers a wide range of potential remedies for breaches of the ACL that may, among other things, include variations to provisions in a contract. 

References to provisions in the ACL

2.65                A reference to a section in the ACL is a reference to that section only, and cannot be taken to be a reference to the same numbered section in the CC Act or any other Act, unless otherwise provided for.  [Schedule 1, item 1: Chapter 1, section 17] 

 



C hapter 3     

Misleading or deceptive conduct

Outline of chapter

3.1                    The ACL contains a general prohibition against misleading and deceptive conduct in trade or commerce. 

Context of amendments

3.2                    The ACL includes a provision to replace the prohibition on misleading or deceptive conduct currently set out in section 52 of the TP Act , without substantive change.  A similar prohibition is in the FT Acts of the States and Territories in substantially the same form as section 52 of the TP Act. 

3.3                    The only change made in including the prohibition in the ACL is to apply the prohibition to ‘a person’ rather than ‘a corporation’.  This reflects the broader application of the ACL. 

3.4                    The jurisprudence associated with the understanding and interpretation of section 52 of the TP Act and the equivalent provisions in State and Territory fair trading laws is still relevant. 

Summary of new law

3.5                    Subsection 18(1) of the ACL provides that a person must not, in trade or commerce, engage in misleading or deceptive conduct or conduct that is likely to mislead or deceive.  This is a general prohibition, which creates a norm of business conduct in the market. 

3.6                    Section 19 of the ACL provides that the provisions relating to misleading or deceptive conduct do not apply to an information provider if the information provider made a publication in the course of carrying on a business of providing information, unless the publication is related directly to the business activities of the person publishing the notice. 

Comparison of key features of new law and current law

New law

Current law

Engaging in misleading or deceptive conduct is prohibited. 

Engaging in misleading or deceptive conduct is prohibited in section 52 of the TP Act.  Provisions in essentially the same form as section 52 of the TP Act exist in the FT Acts of the States and Territories, namely:  

Section 42 NSW FT Act

Section 9 Vic.  FT Act

Section 38 Qld FT Act

Section 56 SA FT Act

Section 10 WA FT Act

Section 14 Tas.  FT Act

Section 12 ACT FT Act

Section 42 NT FT Act

The prohibition of misleading or deceptive conduct does not apply to an information provider if the information provider made the publication in the course of carrying on a business of providing information, unless the publication is:

•        an advertisement;

•        in connection with the supply of certain goods or services; or

in connection with the sale or grant of certain interests in land, or the promotion of such a sale or grant.

A similar provision is contained in section 65A of the TP Act and section 12DN of the ASIC Act.  Provisions with the same effect as section 65A of the TP Act exist in the FT Acts of the States and Territories, namely:

Section 60 NSW FT Act

Section 32 Vic.  FT Act

Section 51 Qld FT Act

Section 63 WA FT Act

Section 74 SA FT Act

Section 28 Tas.  FT Act

Section 31 ACT FT Act

Section 60 NT FT Act

 



Detailed explanation of new law

3.7                    Section 18(1) of the ACL prohibits a person from engaging in  conduct in trade or commerce that is:

•        misleading and deceptive; or

•        likely to mislead or deceive.

[Schedule 1, item 1: Chapter 2, Part 2-1, subsection 18(1)]

3.8                    Section 18(2) provides that the application of section 18(1) is not (and cannot be) limited by the operation of a provision in Chapter 3, Part 3-1, which prohibits specific unfair practices, and the provisions may apply concurrently.  [Schedule 1, item 1: Chapter 2, Part 2-1, subsection 18(2)]

3.9                    The provisions of the ACL apply to all persons — whether they are individual persons or bodies corporate — as it will be a law both of the Commonwealth and of each State and Territory.  Section 131 of the CC Act applies the ACL to the conduct of corporations.  [Schedule 3, item 1: section 131]

3.10                The prohibition on misleading or deceptive conduct creates a broad norm of conduct in the market.  A finding that the prohibition is proven according to the relevant standard of proof does not result in exposure to a criminal sanction or civil penalty under the ACL.  Rather, such a finding exposes the person who has breached the provision to the wide range of remedies available under Chapter 5, Part 5-2 of the ACL, including redress for non-party consumers.  [Schedule 1, item 1: Chapter 5, Part 5-2]

3.11                Section 18 of the ACL replaces the repealed section 52 of the TP Act.  The substance of the drafting of the prohibition has not been changed, other than changing the reference to ‘a corporation’ to ‘a person’.  Accordingly, t he well-developed jurisprudence relating to section 52 of the TP Act is relevant to the interpretation or understanding of the meaning and application of section 18 of the ACL.

3.12                Section 18 of the ACL applies to conduct ‘in trade or commerce’.  ‘Trade or commerce’ is defined as meaning ‘trade or commerce within Australia, or between Australia and places outside Australia, and includes any business or professional activity (whether or not carried on for profit)’.  The ACL applies to conduct engaged in outside of Australia, provided that at least some aspect of the trading relationship between two or more parties has taken place in Australia.  [Schedule 1, item 1: Chapter 1, section 2]

3.13                The High Court has found, for the purposes of section 52 of the TP Act, that ‘trade or commerce’ includes conduct which is itself an aspect or element of activities or transactions which, of their nature, bear a trading or commercial nature. [4]

3.14                ‘Misleading or deceptive’ is not defined for the purposes of the ACL.  The High Court has found that, for conduct to be misleading or deceptive, the conduct must either induce error or be capable of inducing error. [5]  

3.15                Section 18 of the ACL does not specify a requirement for intention on the part of the person engaged in the conduct to be shown.  The High Court has found that intention is not a requirement for a person to have engaged in misleading or deceptive conduct. [6]  

3.16                Section 18 of the ACL refers only to ‘conduct’ which is misleading or deceptive or is likely to mislead or deceive.  The High Court has found that the ambit of ‘conduct’ is not limited to a positive action or representation, and that silence can be considered misleading or deceptive in certain circumstances. [7]  

Enforcement and remedies

3.17                The following enforcement powers and remedies apply to section 18 of the ACL:

•        undertakings;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 1]

•        substantiation notices; [Schedule 1, item 1: Chapter 5, Part 5-1, Division 2]

•         public warning notices;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 3]

•         injunctions;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 2]

•        damages;  [Schedule 1, item 1: Chapter 5, Part 5-2 ,Division 3]

•        compensatory orders;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision A]

•        redress for non-parties; and  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision B]

•        non-punitive orders [Schedule 1, item 1: Chapter 5, Part 5-2, Division 5, section 246]  

3.18                For further information on these powers, remedies and penalties generally see Chapters 14 and 15. 

Information providers

3.19                The prohibition in section 18 of the ACL does not apply to publications by an information provider, where the information provider made the publication in the course of carrying on a business of providing information or, in the case of a radio or television broadcaster, the publication was by radio or television broadcast by the information provider.  This exemption does not apply to:

•        advertisements;

•        a publication in connection with the supply (or promotion of the supply) of goods or services by the information provider; or

•        a publication in connection with the sale or grant (or promotion of the sale or grant) of an interest in land by the information provider.

[Schedule 1, item 1: Chapter 2, Part 2-1, section 19]

3.20                Section 19 of the ACL operates in the same way as the repealed subsections 65A(1) and (2) of the TP Act, and the jurisprudence on the understanding, interpretation and application of those provisions is relevant to section 19.

3.21                   In particular, subsections 19(3) and (4) have been drafted in such a way as to maintain the High Court’s interpretation of section 65A of the TP Act in ACCC v Channel Seven Brisbane Pty Limited [2009] HCA 19.  In that case, the High Court held that the second exception applies for publications made on behalf of, or pursuant to a contract, arrangement or understanding with a person who supplies goods or services, rather than for publications made in connection with relevant goods or services in relation to the information provider.  The exceptions have a wide application rather than a narrow one.  [Schedule 1, item 1: Chapter 2, Part 2-1, subsections 19(2)-(4)]

3.22                Information provider is defined expansively for the purposes of the ACL in subsections 19(5) and (6), and includes media organisations such as radio and television stations (including the Australian Broadcasting Corporation and the Special Broadcasting Service Corporation), as well as publishers of newspapers and magazines.  This definition operates in the same way as the one in the repealed subsection 65A(3) of the TP Act.  [Schedule 1, item 1: Chapter 2, Part 2-1, subsections 19(5) and (6)]

ASIC Act

3.23                Section 12DN of the ASIC Act is repealed and replaced by a new provision which reflects section 19 of the ACL.  [Schedule 3, item 29: section 12DN]

Application and transitional provisions

3.24                The ACL commences on the later of 1 January 2011 or the commencement of Schedule 1 of the Trade Practices Amendment (Australian Consumer Law) Bill 2009 (the first ACL Bill).  The first ACL Bill is currently before the Parliament.  [Section 2]

3.25                Chapter 2, Part 2-1 applies to all relevant conduct occurring in trade or commerce on or after 1 January 2011.

3.26                Conduct occurring prior to 1 January 2011 will remain subject to the repealed (and saved, for those purposes) provisions in the TP Act or the relevant FT Act of a State or Territory.  [Schedule 7, item 6]

3.27                The TP Act, as in force immediately before the commencement of the ACL, continues to apply to or in relation to any proceedings under or in relation to that Act, which were commenced, but not concluded, before that commencement.  [Schedule 7, item 7]

3.28                The Governor-General may make regulations prescribing matters of a transitional, application or saving nature in relation to the amendments and repeals made by the Schedules to this Act.  [Schedule 7, item 12]

Consequential amendments

3.29                References to provisions of the TP Act in other CC Act provisions and provisions of other Acts will be consequentially amended to refer to provisions of the ACL to ensure that the affected provisions continue to apply in the way in which they did under the TP Act.  [Schedules 5 and 6]  



C hapter 4     

Unconscionable conduct

Outline of chapter

4.1                    The Australian Consumer Law (ACL) includes provisions prohibiting persons from engaging in unconscionable conduct towards consumers or businesses. 

Context of amendments

4.2                    Part IVA of the  Trade Practices Act 1974 (TP Act) prohibits corporations from engaging in unconscionable conduct. 

4.3                    There are three substantive prohibitions currently in Part IVA:

•        section 51AA prohibits unconscionable conduct within the meaning of the unwritten law of the States and Territories;

•        section 51AB prohibits conduct in connection with the supply of goods or services to ‘consumers’ that is, in all the circumstances, unconscionable; and

•        section 51AC prohibits conduct in connection with the supply of goods or services to a ‘business consumer’, or in connection with the acquisition of goods or services from a ‘small business supplier’, that is, in all the circumstances, unconscionable.

4.4                    Section 51AB was first inserted into the TP Act in 1986, section 51AA was inserted in 1992 and 51AC was inserted in 1998. 

4.5                    Every State and Territory has similar provisions to 51AB in their FT Acts.  Western Australia, Victoria and Tasmania also have equivalents to section 51AC and Victoria also has an equivalent to section 51AA. 

4.6                    Since 1988, the TP Act unconscionable conduct provisions have been mirrored in Part 2, Division 2, Subdivision C of the Australian Securities and Investments Commission Act 2001 (ASIC Act), which applies in respect of financial services. 

4.7                    Section 51AA defines unconscionable conduct by reference to the unwritten law from time to time of the States and Territories.

4.8                    While, the meaning of unconscionable conduct in the current sections 51AB and 51AC of the TP Act is based in the equitable doctrine, statutory guidance is provided to the courts by lists of factors set out in those sections.  These factors are not an exhaustive list, but are specific factors to which the court may have regard in making a decision about whether unconscionable conduct has occurred.

4.9                    In accordance with the Intergovernmental Agreement for the Australian Consumer Law (IGA), the TP Act unconscionable conduct provisions will be included in the ACL.

Future changes to statutory unconscionable conduct

4.10                In December 2008, the Senate Standing Committee on Economics (Senate Committee) released an inquiry report into the need, scope and content of a definition of unconscionable conduct for the purposes of Part IVA of the TP Act.  The Senate Committee recommended:

•        a clarifying amendment to ensure that section 51AC applies to the behaviour of parties under a contract, in addition to their behaviour during the process of agreeing the terms of the contract;

•        that the Government further consider the need for a guiding statement of principles in the law, with particular regard to the retail tenancy leasing and franchising industries; and

•        that the Australian Competition and Consumer Commission (ACCC) should undertake targeted investigation and funding of unconscionable conduct test cases. 

4.11                An amendment giving effect to the first recommendation of the Senate Committee is included in section 22(2)(j) of the ACL.

4.12                On 5 November 2009, the Australian Government released its response to the Senate Committee.  The Government agreed to a clarifying amendment to the 51AC, along the lines of that recommended by the Senate Committee.  The Government also established an expert panel to consider:

•        whether a list of examples of unconscionable conduct should be incorporated into the TP Act; and

•        the case for amendments to strengthen the Franchising Code of Conduct. 

4.13                The expert panel reported to the Government in February 2010 and on 3 March 2010, the Government responded to the expert panel’s report.  The Government has announced that it will:

•        insert a statement of interpretative principles into the provisions; and

•        redraft sections 51AB and 51AC to either harmonise or unify them. 

4.14                No amendments to implement the Government’s response to the expert panel report are included in the ACL Bill.  The Government has announced that it will implement its response through separate legislative amendments to be introduced later in 2010 and in cooperation with the States and Territories.   

Summary of new law

4.15                Part 2-2 of the ACL includes prohibitions against a person engaging in unconscionable conduct. 

4.16                The concept of ‘unconscionable conduct’ is not defined for the purposes of the ACL.  However:

•        section 20 provides that conduct that is unconscionable within the unwritten law of the States and Territories, from time to time, is unconscionable for the purposes of the ACL;

•        section 21 provides a non-exhaustive list of types of conduct which may be unconscionable in the context of a business’s dealings with consumers; and

•        section 22 provides two non-exhaustive lists of types of conduct that may be unconscionable in the context of a business’s dealings with other businesses, either as a customer or a supplier to those businesses. 

4.17                The inclusion of a prohibition on unconscionable conduct within the ACL ensures that consumers and businesses are able to access a range of remedies under the ACL, and that regulatory agencies are able to access penalties under the ACL, in addition to any remedies courts may provide under the common law or the principles of equity.

4.18                The unconscionable conduct provisions also guide the courts’ application of the common law and equitable principles of unconscionable conduct in the context of consumer and business interactions that take place during the course of trade or commerce. 

Comparison of key features of new law and current law

New law

Current law

A person must not, in trade or commerce, engage in unconscionable conduct within the meaning of the unwritten law.

Section 51AA of the TP Act prohibits a corporation, in trade or commerce, from engaging in unconscionable conduct within the meaning of the unwritten law of the States and Territories.

Section 12CA of the ASIC Act prohibits a person, in trade or commerce, from engaging in conduct in relation to financial services that is unconscionable within the meaning of the unwritten law of the States and Territories.

Section 7 of the Vic FT Act prohibits a person, in trade or commerce, from engaging in unconscionable conduct within the unwritten law.

 

New law

Current law

A person must not, in trade or commerce, in connection with the supply or possible of goods or services to another person, engage in conduct which is in all the circumstances unconscionable.

Section 51AB of the TP Act provides that a corporation, in trade or commerce, must not in relation to the supply or possible supply of goods or services to a person, engage in conduct which is in all the circumstances unconscionable. 

Section 12CB of the ASIC Act provides that a person must not, in trade or commerce, in connection with the supply or possible supply of financial services to a person, engage in conduct that is, in all the circumstances, unconscionable.

Section 43 of the NSW FT Act

Section 8 of the Vic.  FT Act

Section 39 of the Qld FT Act

Section 11 of the WA FT Act

Section 57 of the SA FT Act

Section 15 of the Tas.  FT Act

Section 13 of the ACT FT Act

Section 43 of the NT CAFT Act

 

New law

Current law

A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services to another person, other than a listed public company, engage in conduct that is in all the circumstances unconscionable. 

Subsection 51AC(1) of the TP Act provides that a corporation must not, in trade or commerce, in connection with the supply or possible supply of goods or services to a person, other than a listed public company, engage in conduct that is in all the circumstances unconscionable. 

 Subsection 51AC(2) of the TP Act provides that a person must not, in trade or commerce, in connection with the supply or possible supply of goods or services to a corporation, other than a listed public company, engage in conduct that is in all the circumstances unconscionable.

Section 12CC of the ASIC provides that a person must not, in trade or commerce, in connection with the supply or possible supply of financial services to another person, other than a listed public company, engage in conduct that is, in all the circumstances, unconscionable.

Section 8A of the Vic.  FT Act

Section 11A of the WA FT Act

Section 15A of the Tas.  FT Act

 

New law

Current law

A person must not, in trade or commerce, in connection with the acquisition or possible acquisition of goods or services from another person, other than a listed public company, engage in conduct that is, in all the circumstances, unconscionable.

Subsection 51AC(1) of the TP Act provides that a corporation must not, in trade or commerce, in connection with the acquisition or possible acquisition of goods or services from another person, other than a listed public company, engage in conduct that is, in all the circumstances, unconscionable.

Subsection 51AC(2) of the TP Act provides that a person must not, in trade or commerce, in connection with the acquisition or possible acquisition of goods or services from a corporation, other than a listed public company, engage in conduct that is, in all the circumstances, unconscionable.

Section 12CC of the ASIC Act provides that a person must not, in trade or commerce, in connection with the acquisition or possible acquisition of financial services from another person, other than a listed public company, engage in conduct that is, in all the circumstances, unconscionable. 

Section 8A of the Vic.  FT Act

Section 11A of the WA FT Act

Section 15A of the Tas.  FT Act

Detailed explanation of new law

Unconscionable conduct within the meaning of the unwritten law

4.19                Section 20 of the ACL creates a general prohibition against a person engaging in unconscionable conduct within the meaning of the unwritten law, from time to time, in the course of trade or commerce.  [Schedule 1, item 1: Chapter 2, Part 2-2, subsection 20(1)]

4.20                Trade or commerce is defined for the purposes of the ACL as meaning ‘trade or commerce within Australia, or between Australia and places outside Australia, and includes any business or professional activity (whether or not carried on for profit)’.  The ACL applies to conduct engaged in outside of Australia, provided that at least some aspect of the trading relationship between two or more parties has taken place in Australia.  [Schedule 1, item 1: Chapter 1, section 2]

4.21                The ‘unwritten law, from time to time’ is the array of common law and equitable principles that have developed in the Australian courts over many years as they apply and relate to the concept of unconscionable conduct.  Previous jurisprudence developed in the courts of England and Wales prior to the independence of the Australian judicial system, which occurred with the reception of the laws and statutes of England and Wales and the establishment of the colonial Supreme Courts in the nineteenth century, is also relevant, as are the decisions of the Privy Council exercising its now ended appellate jurisdiction over State courts.

4.22                The principal purpose and function of section 20 of the ACL is to allow the penalties and remedies available under Chapter 5 of the ACL to be imposed with respect to conduct that is found to be considered to be unconscionable within the meaning of the unwritten law, from time to time. 

4.23                A person contravening section 20 of the ACL is liable to pay a civil pecuniary penalty of up to:

•        $1.1 million for a body corporate;

•        $220,000 for other persons. 

[Schedule 1, item 1: Chapter 5, Part 5-2, Division 1, section 224]

4.24                The following enforcement powers and remedies apply to section 20 of the ACL:

•        undertakings;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 1]

•        substantiation notices; [Schedule 1, item 1: Chapter 5, Part 5-1, Division 2]

•         public warning notices;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 3]

•         injunctions;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 2]

•        damages;  [Schedule 1, item 1: Chapter 5, Part 5-2 ,Division 3]

•        compensatory orders;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision A]

•        redress for non-parties; and  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision B]

•        non-punitive orders.  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 5, section 246]  

4.25                For further information on these powers, remedies and penalties generally see Chapters 14 and 15. 

4.26                The ACCC may issue an infringement notice for a contravention of section 20 of the ACL.  The amount of the penalty specified in the infringement notice is:

•        600 penalty units for a listed corporation;

•        60 penalty units for a body corporate other than a listed corporation; and

•        12 penalty units for any other person.

[Schedule 2, item 1: Part XI, Division 5]

4.27                The prohibition in section 20 applies only to conduct that is not covered by the more specific prohibitions in sections 21 and 22 of the ACL, that is:

•        the supply or possible supply of goods or services to consumers or businesses; or

•        the acquisition or possible acquisition of goods or services from businesses. 

[Schedule 1, item 1: Chapter 2, Part 2-2, subsection 20(2)]

Unconscionable conduct towards consumers

4.28                Section 21 of the ACL prohibits a person from engaging in unconscionable conduct towards another person in connection with the supply or possible supply of goods or services.  [Schedule 1, item 1: Chapter 2, Part 2-2, subsection 21(1)]

4.29                This section does not define ‘unconscionable conduct’, but it also does not limit it to the concept as understood under the ‘unwritten law, from time to time’.

The meaning of ‘consumer’ with respect to unconscionable conduct in the ACL

4.30                Section 21 only applies in respect of persons who are ‘consumers’.  It does not apply the definition of consumer that is contained in section 3 of the ACL, although the provisions are consistent.  The concept of ‘consumer’ used in section 21 limits the application of the section to situations where:

•        the goods or services involved in the conduct are goods or services of a kind ordinarily acquired for personal, domestic or household use or consumption; and

•        supply is not taken to include supply or possible supply for the purposes of re-supply or for the purpose of using goods up or transforming them in trade or commerce.  [Schedule 1, item 1: Chapter 2, Part 2-2, subsections 21(5) and 21(6)

4.31                The concept of ‘ordinarily acquired for personal, domestic or household use or consumption is drawn from the definition of consumer in section 3 of the ACL.  This is an objective concept that is determined with reference to the nature of the goods or services acquired, rather than the actual purpose for which the goods or services were acquired. 

4.32                The concept of ‘supply’ is also drawn from the definition of consumer in section 3 of the ACL.  This is a subjective concept that must be determined with reference to the actual purpose for which particular goods were acquired.

Misleading representations within respect to future matters

4.33                Section 4 of the ACL, concerning the treatment of misleading representations as to future matters, applies in the same way to Chapter 2, Part 2-2 of the ACL as it does to Chapter 3, Part 3-1, Division 1.  [Schedule 1, item 1: Chapter 2, Part 2-2, subsection 21(7)]

Matters to which the court must or may have regard

4.34                A court must consider allegations of unconscionable conduct in the context of all of the circumstances surrounding the relevant parties’ conduct towards each other.  [Schedule 1, item 1: Chapter 2, Part 2-2, subsection 21(1]

4.35                In doing this, the court may have regard to a list of matters specified in subsection 21(2) the ACL, but may also consider any other matter that it thinks relevant.  [Schedule 1, item 1: Chapter 2, Part 2-2, subsection 21(2)] .

4.36                The existence of a legal dispute, manifest in legal proceedings, between two parties is not in itself determinative of unconscionable conduct on behalf of either party.  Subsection 21(3) of the ACL provides that a person is not taken to have engaged in unconscionable conduct merely because the person instituted legal proceedings or another arbitration process against another person.  [Schedule 1, item 1: Chapter 2, Part 2-2, subsection 21(3)]  

4.37                In determining whether conduct is unconscionable, the court must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention.  [Schedule 1, item 1: Chapter 2, Part 2-2, paragraph 21(4)(a)]

4.38                In determining whether conduct is unconscionable, the court may have regard to conduct engaged in, or circumstances existing, before the commencement of section 21 of the ACL (that is, before 1 January 2011).  [Schedule 1, item 1: Chapter 2, Part 2-2, paragraph 21(4)(b)]

Enforcement

4.39                A person contravening section 21 of the ACL is liable to pay a civil pecuniary penalty of up to:

•        $1.1 million for a body corporate;

•        $220,000 for other persons. 

[Schedule 1, item 1: Chapter 5, Part 5-2, Division 1, section 224]

4.40                The following enforcement powers and remedies apply to section 21 of the ACL:

•        undertakings;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 1]

•        substantiation notices; [Schedule 1, item 1: Chapter 5, Part 5-1, Division 2]

•         public warning notices;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 3]

•         injunctions;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 2]

•        damages;  [Schedule 1, item 1: Chapter 5, Part 5-2 ,Division 3]

•        compensatory orders;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision A]

•        redress for non-parties; and   [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision B]

•        non-punitive orders.  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 5, section 246]  

4.41                For further information on these powers, remedies and penalties generally see Chapters 14 and 15. 

4.42                The ACCC may issue an infringement notice for a contravention of section 21 of the ACL.  The amount of the penalty specified in the infringement notice is:

•        600 penalty units for a listed corporation;

•        60 penalty units for a body corporate other than a listed corporation; and

•        12 penalty units for any other person.

[Schedule 2, item 1: Part XI, Division 5]

Unconscionable conduct towards businesses

4.43                Section 22 of the ACL prohibits a person from engaging in unconscionable conduct towards another person in connection with:

•        the supply or possible supply of goods or services in trade or commerce to a person, being a ‘business consumer’; or

•        the acquisition of or possible acquisition of goods and services in  trade or commerce from a person, being a ‘small business supplier’. 

[Schedule 1, item 1: Chapter 2, Part 2-2, subsections 22(1), (6) and (7)]

4.44                This section does not define ‘unconscionable conduct’, but it also does not limit it to the concept as understood under the ‘unwritten law, from time to time’.

4.45                Section 22 does not apply to conduct relating to the supply or possible supply of goods or services to or from a listed public company.  [Schedule 1, item 1: Chapter 2, Part 2-2, paragraphs 22(1)(a) and (b)]  A listed public company is defined in section 2 of the ACL.  [Schedule 1, item 1: section 2]

The meaning of ‘business consumer’ with respect to unconscionable conduct in the ACL

4.46                Section 22(2) of the ACL, which specifies those matters to which the court must have regard in determining whether unconscionable conduct has occurred with respect to the supply of goods and services, applies to persons who are ‘business consumers’.  [Schedule 1, item 1: Chapter 2, Part 2-2, subsection 22(2)]

4.47                It does not apply the definition of consumer that is contained in section 3 of the ACL.  The concept of ‘business consumer’ used in section 22 limits the application of the section to situations where the person to be supplied is not a listed public company. 

The meaning of ‘small business supplier’ with respect to unconscionable conduct in the ACL

4.48                Section 22(3) of the ACL, which specifies those matters to which the court must have regard in determining whether unconscionable conduct has occurred with respect to the acquisition of goods and services, applies to persons who are ‘small business suppliers’.  [Schedule 1, item 1: Chapter 2, Part 2-2, subsection 22(3)]

Misleading representations with respect to future matters

4.49                Section 4 of the ACL, concerning the treatment of misleading representations as to future matters, applies in the same way to Chapter 2, Part 2-2 of the ACL.  [Schedule 1, item 1: Chapter 2, Part 2-2, subsection 22(8)]

Matters to which the court must or may have regard concerning the supply or acquisition of goods and services

4.50                A court must consider allegations of unconscionable conduct in the context of all of the circumstances surrounding the relevant parties’ conduct towards each other.  [Schedule 1, item 1: Chapter 2, Part 2-2, subsection 22(1]

4.51                In doing this, the court, in considering whether there has been unconscionable conduct in a transaction between a supplier for the supply or possible supply of goods and services to a business consumer, may have regard to a list of matters specified in subsection 22(2) the ACL, but may also consider any other matter that it thinks relevant.  [Schedule 1, item 1: Chapter 2, Part 2-2, subsection 22(2)] .

4.52                In doing this, the court, in considering whether there has been unconscionable conduct in a transaction between an acquirer for the acquisition or possible acquisition of goods and services from a small business supplier, may have regard to a list of matters specified in subsection 22(3) the ACL, but may also consider any other matter that it thinks relevant.  [Schedule 1, item 1: Chapter 2, Part 2-2, subsection 22(3)] .

4.53                The existence of a legal dispute, manifest in legal proceedings, between two parties is not in itself determinative of unconscionable conduct on behalf of either party.  Subsection 21(3) of the ACL provides that a person is not taken to have engaged in unconscionable conduct merely because the person instituted legal proceedings or other arbitration process against another person.  [Schedule 1, item 1: Chapter 2, Part 2-2, subsection 22(4)]  

4.54                In determining whether conduct is unconscionable, the court must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention.  [Schedule 1, item 1: Chapter 2, Part 2-2, paragraph 22(5)(a)]

4.55                In determining whether conduct is unconscionable, the court may have regard to conduct engaged in, or circumstances existing, before the commencement of section 21 of the ACL (that is, before 1 January 2011).  [Schedule 1, item 1: Chapter 2, Part 2-2, paragraph 22(5)(b)]

ASIC Act changes

4.56                Section 12CC of the ASIC Act is amended to reflect section 22 of the ACL.  [Schedule 3, items 8, 9, 10, 11, 12 and 13]

Enforcement

4.57                A person contravening section 22 of the ACL is liable to pay a civil pecuniary penalty of up to:

•        $1.1 million for a body corporate;

•        $220,000 for other persons. 

[Schedule 1, item 1: Chapter 5, Part 5-2, Division 1, section 224]

4.58                The following enforcement powers and remedies apply to section 22 of the ACL:

•        undertakings;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 1]

•        substantiation notices; [Schedule 1, item 1: Chapter 5, Part 5-1, Division 2]

•         public warning notices;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 3]

•         injunctions;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 2]

•        damages;  [Schedule 1, item 1: Chapter 5, Part 5-2 ,Division 3]

•        compensatory orders;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision A]

•        redress for non-parties; and  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision B]

•        non-punitive orders.  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 5, section 246]  

4.59                For further information on these powers, remedies and penalties generally see Chapters 14 and 15. 

4.60                The ACCC may issue an infringement notice for a contravention of section 22 of the ACL.  The amount of the penalty specified in the infringement notice is:

•        600 penalty units for a listed corporation;

•        60 penalty units for a body corporate other than a listed corporation; and

•        12 penalty units for any other person.

[Schedule 2, item 1: Part XI, Division 5]

Application and transitional provisions

4.61                The ACL will commence on the later of 1 January 2011 or the commencement of Schedule 1 of the Trade Practices Amendment (Australian Consumer Law) Bill 2009 (the first ACL Bill).  The first ACL Bill is currently before the Parliament.  [Section 2]

4.62                Chapter 2, Part 2-2 applies to all relevant conduct occurring in trade or commerce on or after 1 January 2011.

4.63                Conduct occurring prior to 1 January 2011 will remain subject to the repealed (and saved, for those purposes) provisions in the TP Act or the relevant FT Act of a State or Territory.  [Schedule 7, item 6]

4.64                The TP Act, as in force immediately before the commencement of the ACL, continues to apply to or in relation to any proceedings under or in relation to that Act, which were commenced, but not concluded, before that commencement.  [Schedule 7, item 7]

4.65                The Governor-General may make regulations prescribing matters of a transitional, application or saving nature in relation to the amendments and repeals made by the Schedules to this Act.  [Schedule 7, item 12]

Consequential amendments

4.66                References to provisions of the TP Act in other CC Act provisions and provisions of other Acts will be consequentially amended to refer to provisions of the ACL to ensure that the affected provisions continue to apply in the way in which they did under the TP Act.  [Schedules 5 and 6]  

 



C hapter 5     

Unfair contract terms

Outline of chapter

5.1                    The Australian Consumer Law (ACL) includes provisions that address the use of unfair contract terms in consumer contracts.

Context of amendments

5.2                    On 2 October 2008, the Council of Australian Governments (COAG) agreed to establish a national law addressing unfair contract terms, as proposed by the Ministerial Council on Consumer Affairs (MCCA) on 15 August 2008.

5.3                    The national unfair contracts law is based on the recommendations made by the Productivity Commission (PC).

5.4                    On 15 August 2008, the MCCA considered the PC’s recommendations, and agreed to the introduction of a national consumer law, that includes an unfair contract terms provisions.  The MCCA-agreed model for an unfair contract terms provision would have the following features:

•        the term is 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).  Detriment is not limited to financial detriment;

•        it would relate only to standard form (that is, non-negotiated) contracts.  Should a supplier allege that the contract at issue is not a consumer contract, then the onus will be on the supplier to prove that it is not;

•        it would exclude the upfront price of the good or service, using the approach currently adopted in Regulation 6(2) of the United Kingdom’s Unfair Terms in Consumer Contracts Regulations 1999 ; and

•        it would require all of the circumstances of the contract to be considered, taking into account the broader interests of consumers, as well as the particular consumers affected.

5.5                    MCCA further agreed that:

•        where these criteria are met, the unfair term will be voided only for the contracts of those consumers or class of consumers subject to detriment (or the substantial likelihood thereof), with suppliers also potentially liable to damages for that detriment, along with other remedies available under the  Trade Practices Act 1974 (TP Act);

•        the drafting of any new provision should ensure the potential for private (and regulator-led) representative actions for damages by a class of consumers detrimentally affected by unfair contract terms, in keeping with the PC’s recommendation that representative actions be improved;

•        the provision should also permit the prescription of certain terms that are, in all circumstances, considered to be unfair.  This regulation making power would rest with the Commonwealth Minister, who would prescribe terms in accordance with the national consumer law amendment process set out in the Intergovernmental Agreement (IGA) and the requirements of regulatory impact assessment;

•        the provision should be supported by national guidance on its enforcement, developed by the national and State and Territory regulators, in accordance with a process set out in the IGA ;

•        transitional arrangements should be put in place after enactment, which would give businesses the time to modify their contracts; and

•        the operation and effects of the new provision should be reviewed within seven years of its introduction.

The provisions included in the ACL Bill reflect the provisions as the Government proposes that they be amended in the first ACL Bill, presently before the Parliament.

Summary of new law

5.6                    Chapter 2, Part 2-3 of the ACL includes provisions dealing with the use of unfair contract terms in consumer contracts.

5.7                    The unfair contract terms provisions apply to consumer contracts only.  A consumer contract is defined in the ACL as a contract for a supply of goods or services or a sale or grant of an interest in land to an individual whose acquisition of the goods, services or interest is wholly or predominantly for personal, domestic or household use or consumption.

5.8                    A term in a consumer contract is void if:

•        the term is unfair; and

•        the contract is in a standard form contract. 

5.9                    A term in a consumer contract is unfair if the term:

•        would cause a significant imbalance in the parties’ rights and obligations under the standard form contract; and

•        is not reasonably necessary to protect the legitimate interests of the party who would be advantaged by the term; and

•        would cause financial or non-financial detriment to a party if the term were to be applied or relied on.

5.10                There is a rebuttable presumption that an unfair term is not reasonably necessary to protect the legitimate interests of the party who would be advantaged by the application or reliance on that term, unless that party can prove otherwise.

5.11                In finding that a term in a consumer contract is unfair, a court may take into account any matters it considers relevant.  However, the court must take into account the following:

•        the extent to which a term is transparent; and

•        the contract as a whole.

5.12                Terms that:

•        define the main subject matter of the contract;

•        set the upfront price payable under the consumer contract; or

•        that are required or expressly permitted by a law of the Commonwealth, State or Territory,

are not subject to the unfair contract terms provisions. 

5.13                Examples of terms used in consumer contracts that may be unfair are listed.  The provision setting out the examples does not presume such terms to be unfair.

5.14                The unfair contract terms provisions of the ACL apply to new consumer contracts entered into on or after the commencement of the provisions.  The provisions will not apply to contracts entered into before the date on which the provisions commence, unless such a contract is renewed or varied after that date, but then only to the extent of that renewal or variation. 

Comparison of key features of new law and current law

New law

Current law

A term in a consumer contract is void: if the term is unfair; and the contract is in a standard form contract. 

Part 2 of the ACL as to be applied in the first ACL Bill.

Similar provisions exist in Part 2B of the Vic.  FT Act. 

A consumer contract is defined as a contract for:

•        a supply of goods or services; or

•        a sale or grant of an interest in land;

to an individual whose acquisition of the goods, services or interest is wholly or predominantly for personal, domestic or household use or consumption.

Part 2 of the ACL as to be applied in the first ACL Bill .

Similar provisions exist in Part 2B of the Vic.  FT Act.

 

New law

Current law

A term in a consumer contract is unfair if the term: would cause a significant imbalance in the parties’ rights and obligations under the consumer contract, and is not reasonably necessary to protect the legitimate interests of the party who would be advantaged by the term; and would cause financial or non-financial detriment to a party if the term were to be applied or relied on.

There is a presumption that a term is not reasonably necessary to protect the legitimate interests of the party who would be advantaged by the term, unless that party can prove otherwise.

Part 2 of the ACL as to be applied in the first ACL Bill. 

Similar provisions exist in Part 2B of the Vic.  FT Act.

The court may take account of any consideration it thinks is relevant when determining whether a term in a consumer contract is unfair.  However, the court must take into account whether the term is transparent, and the contract as a whole. 

Part 2 of the ACL as to be applied in the first ACL Bill.

Similar provisions exist in Part 2B of the Vic.  FT Act.

Terms in a consumer contract that define the main subject matter of the contract, set out the upfront price payable under the contract, or are required or expressly permitted by a law of the Commonwealth, State or Territory are also excluded from the application of the unfair contract terms provisions in this Bill.

Part 2 of the ACL as to be applied in the first ACL Bill.

 



Detailed explanation of new law

Unfair terms

5.15                The scope of the unfair contract terms provisions in the ACL is restricted to business-to-consumer transactions as the provisions apply only to a consumer contract in which at least one of the parties is an individual. 

5.16                Contracts between businesses are excluded from the scope of the unfair contract terms provisions, except in respect of ‘sole traders’.

5.17                A term in a consumer contract is void if the term is unfair and the contract is a standard form contract.  A finding by a court that a term is unfair, and therefore void, means that the term is treated as if it never existed.  [Schedule 1, item 1: Chapter 2, Part 2-3, subsections 23(1) and (2)]

5.18                In the context of the ACL, a consumer contract is defined as a contract entered into for:

•        a supply of goods or services; or

•        a sale or grant of an interest in land;

to an individual whose acquisition of the goods, services or interest is wholly or predominantly for personal, domestic or household use or consumption.  [Schedule 1, item 1: Chapter 2, Part 2-3, section 2 and subsection 23(3)]

5.19                This definition does not limit the operation of the unfair contract terms provisions to things of a personal, domestic or household nature, and would include the supply of any good, service or interest in land to a consumer provided the acquisition of what is supplied under the contract is wholly or predominantly for personal, domestic or household use or consumption.

5.20                An interest in relation to land, is taken to mean one of the following:

•        a legal or equitable estate or interest in the land; or

•        a right of occupancy of the land or of a building or part of building erected on the land, arising by virtue of the holding of shares, or by virtue of a contract to purchase shares, in an incorporated company that owns the land or building; or

•        a right, power or privilege over, or in connection with, the land.  [Schedule 1, item 1: Chapter 2, Part 2-3, section 2]

5.21                A relevant contract does not include:

•        a contract that is a shipping contract; and

•        a contract that is a constitution of a company, managed investment scheme or other kind of body.  [Schedule 1, item 1: Chapter 2, Part 2-3, section 28]  

Meaning of ‘unfair’

5.22                A term in a consumer contract is unfair if: 

•        it would cause a significant imbalance in the parties’ rights and obligations arising under the contract; and

•        the term is not reasonably necessary to protect the legitimate interests of the party who would be advantaged by the supplier; and

•        it would cause financial or non-financial detriment to a party if the term were to be applied or relied on.  [Schedule 1, item 1: Chapter 2, Part 2-3, section 2 and subsection 24(1)]

First element of the test

5.23                The first element of the test requires the court to consider whether the term would cause a significant imbalance in the parties’ rights and obligations arising under the contract.  This will involve a factual determination of whether any such significant imbalance would exist.  [Schedule 1, item 1: Chapter 2, Part 2-3, paragraph 24(1)(a)]

5.24                A claimant in proceedings is required to prove this element of the test on the balance of probabilities. 

Second element of the test

5.25                The second element of the test requires the court to consider whether the term is reasonably necessary to protect the legitimate interests of the party who would be advantaged by the term.  [Schedule 1, item 1: Chapter 2, Part 2-3, section 2, paragraph 24(1)(b)]

5.26                In respect of the second element of the test, a term of a consumer contract is presumed not to be reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term, unless that party can prove otherwise in a court.  [Schedule 1, item 1: Chapter 2, Part 2-3, subsection 24(4)]

5.27                Where a claimant in proceedings has alleged that a term is unfair, it is for the respondent to establish that a term is reasonably necessary to protect its legitimate interests on the balance of probabilities.  The respondent may introduce any evidence relevant to this element of the test. 

5.28                While it is ultimately a matter for the court to determine whether a term is reasonably necessary to protect the legitimate interests of the respondent, the provision will require the respondent to establish, at the very least, that its legitimate interest is sufficiently compelling on the balance of probabilities to overcome any detriment caused to the consumer, or a class of consumers, and that therefore the term was ‘reasonably necessary’.

Third element of the test

5.29                The third element of the test requires the court to consider whether the term would cause financial or non-financial detriment to a party if the term were to be applied or relied on.  This will involve a factual determination of whether any such detriment does exist or would exist if the term was relied on.  [Schedule 1, item 1: Chapter 2, Part 2-3, paragraph 24(1)(c)]

5.30                A claimant in proceedings is required to prove this element of the test on the balance of probabilities. 

5.31                By requiring evidence of whether detriment has existed or would exist in the future, the provision requires more than a hypothetical case to be made out by the claimant.  In this context, a claimant does not need to have proof of having suffered actual detriment, but that detriment would exist in the future as a result of the application of or reliance on the term. 

5.32                In this regard, a term does not need to be enforced in order to be unfair, although the possibility of such enforcement may impact on the decisions made by the party that would be disadvantaged by the term’s practical effect, to that party’s detriment. 

5.33                Detriment is not limited to financial detriment.  This is designed to allow the court to consider situations where there may be other forms of detriment that have affected or would affect the party disadvantaged by the practical effect of the term.

5.34                Where it is found that a term is unfair and that only future detriment would arise from the application of or reliance on that term, then the remedies available would likely be limited to a declaration that the term is an unfair term and an injunction preventing the party advantaged by it applying or relying on it, or purporting to do so.  Any form of compensatory remedy would likely be limited to those situations where there is actual detriment proven. 

Considerations the court may take into account

5.35                In determining whether a term in a consumer contract is unfair, the court may take into account any matter which it thinks is relevant, but the court must take into account the following matters:

•        the extent to which the term is transparent; and

•        the contract as a whole.  [Schedule 1, item 1: Chapter 2, Part 2-3, subsection 24(2)]

Transparency

5.36                The court must have regard to w hether a term is transparent in determining whether that term is ‘unfair’.  [Schedule 1, item 1: Chapter 2, Part 2-3, paragraph 24(2)(a)]

5.37                A term is transparent if the term is:

•        expressed in reasonably plain language;

•        legible;

•        presented clearly; and

•         readily available to any party affected by the term.  [Schedule 1, item 1: Chapter 2, Part 2-3, section 1 and subsection 24(3)]

5.38                A lack of transparency in the terms of a consumer contract may be a strong indication of the existence of a significant imbalance in the rights and obligations of the parties under the contract. 

5.39                Transparency, on its own account, cannot overcome underlying unfairness in a contract term.  Furthermore, the extent to which a term is not transparent is not, of itself, determinative of the unfairness of a term in a consumer contract and the nature and effect of the term will continue to be relevant.

5.40                The elements set out in paragraphs 24(3)(a)-(c) of the ACL relate to the way in which a term is presented in a consumer contract.  The remaining element covers situations where the term is set out by the party who seeks to rely upon it in a document which is not physically available to the other party at or before the time the parties entered into the contract. 

Contract as a whole

5.41                The court must have regard to the contract as a whole in determining whether that term is ‘unfair’.  [Schedule 1, item 1: Chapter 2, Part 2-3, paragraph 24(2)(b)]

Examples of unfair terms

5.42                There is a non-exhaustive, indicative list of examples of the types of terms that may be considered ‘unfair’.  [Schedule 1, item 1: Chapter 2, Part 2-3, subsection 25(1)]

5.43                Without limiting the meaning of ‘unfair’, the following examples are provided: 

•        a term that permits, or has effect of permitting, one party (but not another party) to avoid or limit performance of the contract;

•        a term that permits, or has the effect of permitting, one party (but not another party) to terminate the contract;

•        a term that penalises, or has the effect of penalising, one party (but not another party) for a breach or termination of the contract;

•        a term that permits, or has the effect of permitting, one party (but not another party) to vary the terms of the contract;

•        a term that permits, or has the effect of permitting, one party (but not another party) to renew or not renew the contract;

•        a term that permits, or has the effect of permitting, one party to vary the upfront price payable under the contract without the right of another party to terminate the contract;

•        a term that permits, or has the effect of permitting, one party unilaterally to vary the characteristics of the goods or services to be supplied, or the interest in land to be sold or granted, under the contract;

•        a term that permits, or has the effect of permitting, one party unilaterally to determine whether the contract has been breached or to interpret its meaning;

•        a term that limits, or has the effect of limiting, one party’s vicarious liability for its agents;

•        a term that permits, or has the effect of permitting, one party to assign the contract to the detriment of another party without that other party’s consent;

•        a term that limits, or has the effect of limiting, one party’s right to sue another party;

•        a term that limits, or has the effect of limiting, the evidence one party can adduce in proceedings relating to the contract; and

•        a term that imposes, or has the effect of imposing, the evidential burden on one party in proceedings relating to the contract.  [Schedule 1, item 1: Chapter 2, Part 2-3, paragraphs 25(1)(a)-(m)]

5.44                The examples in subsection 25(1) of the ACL provide statutory guidance on the types of terms which may be regarded as being of concern.  They do not prohibit the use of those terms, nor do they create a presumption that those terms are unfair. 

5.45                Any consideration of a term of a type listed as an example is subject to the test set out in subsection 24(1) of the ACL.  In this context, there may be circumstances in which the use of such a term is reasonably necessary in order to protect a party’s reasonable business interests.

5.46                The Minister may prescribe additional examples of terms of a kind, or a term that has an effect of a kind, prescribed by the regulations.  [Schedule 1, item 1: Chapter 2, Part 2-3, paragraph 25(1)(n)]

5.47                Prior to prescribing additional examples of terms of a kind, or a term that has an effect of a kind, the relevant Minister must consider the following factors:

•        the detriment that a term of that kind would cause to consumers;

•        the impact on business generally of prescribing that kind of  term or effect; and

•        the public interest.  [Schedule 2, item 1: Part XI, subsection 139G(2)]

5.48                The requirement of the relevant Minister to consider the three factors in subsection 25(2) of the ACL prior to prescribing additional examples of terms does not change the effect of the regulation-making power.  Any terms added to the list would continue to be examples only, and would not be binding on a court.

Terms permitting unilateral changes by one party to the contract

5.49                Paragraphs 25(1)(a), (b), (d), (e), (f), (g) and (h) are examples of types of terms that allow a party to make changes to key elements of a contract, including terminating it, on a unilateral basis. 

5.50                The inclusion of these examples does not prohibit unilateral variation terms, not does it create a presumption that such terms are unfair.  Indeed, the need for the unilateral variation of contract terms is expressly contemplated by legislation in s pecific contexts, including for example sections 63 to 107 of the National Credit Co de (formerly Parts 4 and 5 of the Uniform Consumer Credit Code ).

Terms limiting the rights of parties to a consumer contract

5.51                Paragraphs 25(1)(i), (k), (l) and (m) are examples of types of terms that have the effect of limiting the rights of the party to whom the consumer contract is presented. 

5.52                Paragraph 25(1)(i) specifically deals with limitation of liability clauses.  There are many instances in which limitations of liability are expressly permitted by national, State or Territory legislation for legitimate public policy reasons. 

5.53                In this regard, paragraph 26(1)(c) of the ACL expressly excludes references to terms that are required, or expressly permitted, by a law of the Commonwealth or a State or Territory from the application of the unfair contract terms provisions.  However, this exclusion applies only to the extent that such terms are required or expressly permitted.

Terms which penalise a party for a breach or termination of the contract

5.54                Paragraph 25(1)(c) refers to terms that penalise, or have the effect of penalising, one party for a breach or termination of the contract. 

5.55                This provision reflects the common law concept of ‘penalties’.  To be valid, a penalty imposed by a contract must be a genuine pre-estimate of the loss likely to be suffered by the party as a result of the breach or early termination, and should not be an arbitrary sum.  However, under the unfair contract terms provision the relevant consideration is whether the term is unfair, within the meaning given to that term by the provisions. 

Terms which permit the assignment of a contract to the detriment of the other party without their consent

5.56                Paragraph 25(1)(j) refers to terms that allow for a party to assign the contract to the detriment of the other party, without the other party’s consent. 

5.57                This example does not prohibit the use of such clauses.  Indeed, assignment of contracts is expressly contemplated by other legislation, for example section 188 of the National Credit Code (formerly section 166 of the Uniform Consumer Credit Code ). 

Terms that define the subject matter etc of consumer contracts are unaffected

5.58                Certain terms of a consumer contract are unaffected by subsection 23(1) of the ACL, but only to the extent that the term:

•        defines the main subject matter of a consumer contract;

•        sets the ‘upfront price’ payable under the contract; or

•         is a term required, or expressly permitted, by a law of the Commonwealth or a State or Territory.  [Schedule 1, item 1: Chapter 2, Part 2-3, section 26(1)]

Main subject matter of the contract

5.59                The exclusion of terms that define the main subject matter of a consumer contract ensures that a party cannot challenge a term concerning the basis for the existence of the contract.  [Schedule 1, item 1: Chapter 2, Part 2-3, paragraph 26(1)(a)]

5.60                Where a party has decided to purchase the goods, services, land, financial services or financial products that are the subject of the contract, that party cannot then challenge the fairness of a term relating to the main subject matter of the contract at a later stage, given that the party had a choice of whether or not to make the purchase on the basis of what was offered. 

5.61                The main subject matter of the contract may include the decision to purchase a particular type of good, service, financial service or financial product, or a particular piece of land.  It may also encompass a term that is necessary to give effect to the supply or grant, or without which, the supply or grant could not occur. 

Upfront price

5.62                The upfront price payable under a consumer contract is consideration that is:

•        provided, or is to be provided, for the supply, sale or grant under the contract; and

•        is disclosed at or before the time the contract is entered into,

but does not include any other consideration that is contingent on the occurrence or non-occurrence of a particular event.  [Schedule 1, item 1: Chapter 2, Part 2-3, section 2, paragraph 26(1)(b) and subsection 26(2)]

5.63                Consideration includes any amount or thing provided as consideration for the supply of a good, service, financial service, financial product or a grant of land.  It would also include any interest payable under a consumer contract. 

5.64                The exclusion of upfront price means that a term concerning the upfront price cannot be challenged on the basis that it is unfair.  Having agreed to provide a particular amount of consideration when the contract was made, which was disclosed at or before the time the contract was entered into, a person cannot then argue that that consideration is unfair at a later time.  The upfront price is a matter about which the person has a choice and, in many cases, may negotiate. 

5.65                The upfront price covers the cash price payable for a good, service, financial service, financial product or land at the time the contract is made.  It also covers a future payment or a series of future payments.

5.66                The definition also requires that the upfront price must be disclosed at or before the time the contract was entered into by the parties.  In the case of most transactions this is reasonably straightforward, as a key pre-condition of the transaction occurring is an understanding of the price to be paid. 

5.67                A key consideration for a court in considering whether a future payment, or a series of future payments, forms the upfront price may be the transparency of the disclosure of such a payment, or the basis on which such payments may be determined, at or before the time the contract is made. 

5.68                In the context of non-financial services contracts, another relevant consideration is compliance with section 53C of the TP Act (which commenced on 25 May 2009), which imposes specific obligations in relation to the disclosure of a single price in many cases.

5.69                Other consideration (that is, further forms of consideration which are not part of the upfront price) under the consumer contract that is contingent on the occurrence or non-occurrence of a particular event, is excluded from the determination of the upfront price. 

5.70                Terms that require further payments levied as a consequence of something happening or not happening at some point in the duration of the contract are covered by the unfair contract terms provisions.  Such payments are additional to the upfront price, and are not necessary for the provision of the basic supply, sale or grant under the contract.

Terms required as a matter of law

5.71                The exclusion of terms ‘required, or expressly permitted, by a law of the Commonwealth or a State or Territory’ ensures that a court is not required to determine the fairness of terms that are required to be included, or expressly permitted to be included, in consumer contracts as a matter of public policy.  There are many examples of mandated consumer contracts or terms that are required to be used or are expressly permitted to be used in order to ensure the validity of specific transactions, which apply in the laws of the Commonwealth, the States or the Territories.  [Schedule 1, item 1: Chapter 2, Part 2-3, paragraph 26(1)(c)]

Meaning of standard form contract

5.72                To account for circumstances where a question about whether a contract is in a standard form is the subject of dispute between the parties in proceedings, there is a rebuttable presumption that a contract the subject of proceedings is a standard form contract.  The respondent in those proceedings must then show that, on the balance of probabilities, the contract is not in a standard form.  [Schedule 1, item 1: Chapter 2, Part 2-3, subsections 27(1) and 27(2)]

5.73                If a party wishes to argue that the contract has been negotiated and is not in a standard form, then the rebuttable presumption requires the party that presents the contract to show that the contract is not a standard form contract.  This reflects that:

•        the claimant will usually only have evidence of the existence of one contract — their own; and

•        the respondent is best placed to bring evidence regarding the nature of the contracts it uses and the way in which it deals with other parties to such contracts, including whether negotiations have been entered into.

5.74                In determining whether a contract is a standard form contract, the court may consider any matter it thinks relevant.  However, it must have regard to certain factors.  These include:

•        whether one of the parties has all or most of the bargaining power relating to the transaction;

•        whether the contract was prepared by one party before any discussion relating to the transaction commenced;

•        whether another party was, in effect, required to accept or reject the terms  in the contract (other than terms excluded by subsection 26(1) of the ACL) in the form in which they were presented (that is, on a ‘take-it-or-leave-it’ basis);

•        whether another party was given an effective opportunity to negotiate the terms of the contract that were not terms excluded by subsection 26(1) of the ACL;

•        whether the terms of the contract (other than terms excluded by subsection 26(1) of the ACL) take into account the specific characteristics of another party or the particular transaction; and

•        any other matter prescribed by the regulations.  [Schedule 1, item 1: Chapter 2, Part 2-3, subsection 27(2)]

5.75                Additional factors may be added to the list of factors by way of regulations made by the relevant Minister.  This will permit the expansion of the list in response to changes in markets and the way in which standard form contracts are constructed and used.  The making of such regulations will be subject to:

•        the Australian Government’s best-practice regulation requirements; and

•        the voting process for amending the ACL set out in the IGA,

as any regulations will form part of the ACL.

Contracts exempted from the unfair contract terms provisions

5.76                Certain contracts are excluded from the application of the unfair contract terms provisions of the ACL to the extent that:

•        the contract relates to certain shipping contracts; and

•        the contract is a constitution of a company, managed investment scheme or other kind of body.  [Schedule 1, item 1: Chapter 2, Part 2-3, section 28]

Shipping contracts

5.77                The unfair contract terms provisions will not apply to consumer contracts which are shipping contracts .  Shipping contracts include:

•        contracts of marine salvage or towage;

•        a charter party of a ship; or

•        a contract for the carriage of goods by ship.  [Schedule 1, item 1: Chapter 2, Part 2-3, subsection 28(1)]

5.78                A ship is given the meaning it has under section 3 of the Admiralty Act 196 8 for the purposes of the unfair contract terms provisions in the ACL.  [Schedule 1, item 1: Chapter 2, Part 2-3, section 2]

5.79                These shipping contracts are already subject to a comprehensive legal framework (nationally and internationally) that deals with contractual terms in a maritime law context. 

5.80                The reference to a contract for the carriage of goods by ship includes a reference to any contract covered by a sea carriage document within the meaning of the amended Hague Rules referred to in subsection 7(1) of the Carriage of Goods by Sea Act 1991 [Schedule 1, item 1: Chapter 2, Part 2-3, section 28(2)]

5.81                The amended Hague Rules consists of the text set out in Schedule 1 of the Carriage of Goods by Sea Act which, in its unmodified form, is the English translation of Articles 1 to 10 of the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading, done at Brussels on 25 August 1924 (otherwise referred to as the Brussels Convention).  The Brussels Convention was amended by Articles 1 to 5 of the Visby Protocol on 23 October 1968, and Article II of the SDR Protocol on 21 December 1979.

Constitutions of companies etc

5.82                The unfair contract terms provisions will not apply to contracts which are constitutions of companies, managed investment schemes or other kinds of bodies.  [Schedule 1, item 1: Chapter 2, Part 2-3, subsection 28(3)]

5.83                A constitution is given the meaning it has under section 9 of the Corporations Act 2001 [Schedule 1, item 1: Chapter 2, Part 2-3, section 2]

Effect of the Insurance Contracts Act 1984 on certain consumer contracts

5.84                Section 15 of the Insurance Contracts Act 1984 provides that a contract of insurance (as defined by that Act) is not capable of being made the subject of relief under any other Commonwealth Act, a State Act or an Act or Ordinance of a Territory.  In this context ‘relief’ means relief in the form of:

•        the judicial review of a contract on the ground that it is harsh, oppressive, unconscionable, unjust, unfair or inequitable; or

•        relief for insureds from the consequences in law of making a misrepresentation,

but does not include relief in the form of compensatory damages.  The effect of section 15 is to mean that the unfair contract terms provisions of either the ACL or the ASIC Act do not apply to contracts of insurance covered by the Insurance Contracts Act 1984, to the extent that that Act applies.

Enforcement and remedies

5.85                Without limiting any other power of the court to make declarations, the Australian Competition and Consumer Commission (ACCC) may seek a declaration from a court that a term of a standard form consumer contract is an unfair term.  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 5, section 249]

5.86                Where a court has declared a term in a consumer contract to be an unfair term, it is a contravention of the ACL for a person to apply or rely on, or purport to apply or rely on, that term.

5.87                In such circumstances, the following enforcement powers and remedies apply:

•         injunctions;   [Schedule 1, item 1: Chapter 5, Part 5-2, Division 2]

•         damages; [Schedule 1, item 1: Chapter 5, Part 5-2, Division 3]

•         compensatory orders and redress for non-parties;   [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4]

5.88                For further information on these powers and remedies generally see Chapters 14 and 15.

5.89                A reference to a contravention of a provision of the ACL includes a reference to applying or relying on, or purporting to apply or rely on, a declared term of a consumer contract for the purposes of the court’s power to:

•        grant an injunction in such terms as the court determines appropriate;

•        make an order to redress non-party consumers (other than an award of damages) as the court thinks appropriate; and

•        make any order as the court thinks appropriate, such as specific performance, payment of compensation or exemplary damages.  [Schedule 1, item 1: Chapter 2, Part 2-3, section 2, subsection 232(3), subparagraph 237(1)(a)(ii) and paragraph 238(1)(b)]

Application and transitional provisions

5.90                The unfair contract terms provisions set out in the first ACL Bill (which are now contained in Part 2-3 of the ACL) will commence on 1 July 2010 or on a date to be proclaimed by the Governor-General that can not be before 1 July 2010.  If the Governor-General has not proclaimed the commencement of the provisions within six months of the date of the Royal Assent, then the provisions will commence on the first day after a day six months after the date of Royal Assent.  [Schedule 7, item 8]

5.91                The provisions apply to new consumer contracts entered into on or after the date on which the provisions of the first ACL Bill commenced.  [Schedule 7, item 8]

5.92                The provisions do not apply to consumer contracts entered into before the date on which the provisions of the first ACL Bill commenced, unless such a contract is:

•        renewed on or after that commencement, in which case the unfair contract terms provisions apply to the contract as renewed on and from the day on which the renewal takes effect (the renewal day ) in relation to conduct that occurs on or after the renewal day; or

•        varied on or after that commencement, in which case the unfair contract terms provisions apply to the contract a s varied on and from that day on which the variation takes effect (the variation day ), in relation to conduct that occurs on or after the variation day. 

5.93                While provisions apply to consumer contracts to the extent that they are renewed or varied after the date on which the provisions of the first ACL Bill commenced, the unfair contract terms provisions do not apply to a consumer contract to the extent that the operation of the provisions would result in an acquisition of property from a person otherwise than on just terms, within the meaning of section 51(xxxi) of the Australian Constitution [Schedule 7, item 8]

 



C hapter 6     

Unfair practices

Outline of chapter

6.1                    The Australian Consumer Law (ACL) includes prohibitions on specific conduct that is generally regarded as being unfair.  These prohibitions apply generally to all forms of business activity in all sectors of the economy, rather than to specific industry sectors. 

6.2                    Unlike the general prohibitions provided for in Chapter 2 of the ACL, the provisions in Chapter 3 are targeted at particular kinds or activities, rather than the effect that more general conduct might have on a consumer. 

6.3                    Part 3-1 of the ACL includes provisions that are:

•        equivalent to all of the existing provisions of Part V, Divisions 1 and 1AAA of the TP Act and their associated criminal offences in Division 2 of Part VC, with some provisions amended to draw on best practice in State and Territory consumer laws; and

•        amendments to those provisions which draw on best practice in State and Territory consumer laws, as agreed by the Ministerial Council on Consumer Affairs (MCCA).

6.4                    Part 4-1 of the ACL creates associated criminal offences with respect to most of the provisions of Part 3-1.

6.5                    The ACL also includes requirements for a proof of transaction and itemised bills at Part 3-2, Division 4.

Context of amendments

6.6                    The Council of Australian Governments (COAG) has agreed that the ACL should be based on the TP Act, drawing on the recommendations of the Productivity Commission in its Review of Australia’s Consumer Policy Framework and best practice in State and Territory consumer laws.

6.7                    At its meeting on 4 December 2009, the Ministerial Council on Consumer Affairs (MCCA) agreed to the ways in which the consumer provisions of the TP Act will be amended for the purposes of their incorporation in the ACL.  In respect of unfair practices, MCCA agreed that the ACL should:

•        prohibit false or misleading testimonials about goods or services;

•        clarify the operation of the provisions relating to representations as to future matters;

•        clarify that, when a business offers a gift or a prize to a consumer, that gift or prize should be provided as described to the consumer within a reasonable time;

•        clarify that, when a business agrees to supply goods or services to a consumer, the goods or services should be supplied to the consumer as described and within the specified time, or if no time is specified, within a reasonable time;

•        prohibit the assertion of a right to payment for unauthorised advertisements, and that any document seeking payment for unsolicited goods or services, or unauthorised entries or advertisements, must include a statement to the effect that it is not a bill payable by the consumer;

•        provide that a consumer is not liable to pay for unsolicited services;

•        clarify the operation of the pyramid selling provisions;

•        clarify that goods with multiple prices displayed should be sold at the lowest displayed price unless the seller chooses to withdraw them from sale;

•        provide consumers with a right to receive a receipt for purchases of $75 or more where businesses are not already required to provide consumers with a tax invoice under the Commonwealth goods and services tax (GST) legislation; and

•        provide consumers with a right to request an itemised bill for the supply of services.

6.8                    In addition, all of the provisions of that have been included in Part 3-1 and Part 4-1 of the ACL have been drafted to reflect that:

•        the ACL is to be applied by the States and Territories as an application law.  Specifically:

-       the provisions refer to ‘a person’ as opposed to ‘a corporation’ in the TP Act (the TP Act drafting reflected a constitutional limitation on the Commonwealth);

-       the penalty amounts for criminal offences and civil pecuniary penalties are expressed as dollar amounts, rather than penalty units, as each jurisdiction has its own definition of how much one penalty unit is worth; and

-       mental elements for offences have been specified.

•        much of the TP Act has been in place for over 30 years, so a number of ACL provisions have been redrafted to comply with the requirements of plain English drafting.

False or misleading representations etc.

False or misleading representations about goods or services

6.9                    Section 53 of the TP Act prohibited the making of certain false or misleading representations, in connection with the supply or possible supply of goods or services.  These specific prohibitions supplemented the prohibition on  conduct that is misleading or deceptive, or likely to mislead to deceive, in trade or commerce in section 52 of the TP Act. 

6.10                MCCA agreed that the prohibition on false and/or misleading representations in the TP Act will be expanded for the purposes of the ACL to:

•        ensure that specific representations are prohibited on the basis that they are false or misleading; and

•        include additional prohibitions relating to:

-       representations that are testimonials and representations about testimonials; and

-       representations concerning consumer guarantees.

6.11                Section 53 of the TP Act proscribed specific representations, some of which are prohibited from being false, some from being false or misleading, and others from being about qualities the goods or services do not have.  There appears to be no rationale as to why, through various amendments, the different forms of wording were used for different elements of section 53 of the TP Act. 

6.12                For example, there is little reason to prohibit false or misleading representations concerning the availability of spare parts (section 53(ea) of the TP Act) but only prohibiting false, but not misleading, representations that goods are new (section 53(b) of the TP Act). 

6.13                Section 29 of the ACL replaces section 53 of the TP Act and has been drafted to remove this distinction and apply to false or misleading representations and includes the new forms of prohibited representation. 

False or misleading representations about the sale of land etc. 

6.14                Section 53A of the TP Act prohibited the making of certain false or misleading representations in connection with the supply or possible supply of goods or services. 

6.15                Dealings in relation to land are neither a good nor a service and, accordingly, this specific prohibition on false or misleading representations about the sale of land and other forms of land transaction was added to the TP Act in 1987.  Similar prohibitions exist in the FT Acts of most States and Territories.

6.16                Section 30 of the ACL replaces section 53A of the TP Act. 

Misleading conduct relating to employment

6.17                Section 53B of the TP Act prohibited the making of certain false or misleading representations in connection with the supply or possible supply of goods or services. 

6.18                Section 53B of the TP Act was inserted into the Act in 1988 for two reasons:

•        representations in relation to employment are not necessarily made ‘in trade or commerce’, but rather ‘in respect of trade or commerce’, so the other provisions in the TP Act, which are mostly concerned with conduct ‘in trade or commerce’, would not apply; and

•        employment is neither a good nor a service. 

6.19                A similar provision currently exists in the fair trading Acts of all States and Territories.

6.20                Section 31 of the ACL replaces section 53B of the TP Act.

Offering rebates, gifts, prizes etc. 

6.21                Section 54 of the TP Act prohibited offering gifts, prizes or other free items without intending to provide them, or not providing them as offered.  Section 54 is, among other things, intended to prevent people from being enticed into buying goods or services entirely or partly on the basis of accompanying free items that they are never going to receive. 

6.22                MCCA agreed that an equivalent provision will be included in the ACL, as well as a new requirement that the person provide the rebate, gift, prize or other free items in the specified time or, if no time has been specified, within a reasonable time, drawing on the existing similar requirement in section 16(b) of the Victorian FT Act.  This is designed to prevent traders from subjecting consumers to unnecessarily long delays in receiving promised gifts, prizes, rebates or other free items. 

6.23                Section 32 of the ACL replaces section 54 of the TP Act.

Certain misleading conduct in relation to goods or services

6.24                Following Australia’s ratification of the Paris Convention for the Protection of Industrial Property , section 55 of the TP Act was included as a specific prohibition against conduct that is liable to mislead the public in relation to certain aspects of goods.  Section 55A was added to the TP Act in 1987 to cover services in the same way.  A similar provision currently exists in the TP Acts of all States and Territories.

6.25                Sections 33 and 34 of the ACL replace section 55 and 55A of the TP Act. 

Bait advertising

6.26                Bait advertising is the practice of offering goods or services at a particular price to attract consumers, when the advertiser is aware that it will not be able to supply the goods or services at that price in reasonable quantities. 

6.27                Section 56 of the TP Act prohibited advertising in this manner if the supplier ought reasonably be aware that there are reasonable grounds for believing that the supplier will not be able to supply the goods or services at reasonable quantities or for a reasonable period.  While this practice might have been covered by other provisions in the TP Act, section 56 provided further, specific requirements that the goods or services must be available in reasonable quantities. 

6.28                Section 56(2) of the TP Act specified that a corporation that advertised goods or services for supply at a specified price must ensure that such goods or services are available at that price in reasonable quantities for a reasonable time, having regard to the nature of the market in which the corporation carries on business and the nature of the advertisement.

6.29                A similar provision exists in the fair trading Acts of all States and Territories.

6.30                Section 35 of the ACL replaces section 56 of the TP Act.

Wrongly accepting payment

6.31                Section 58 of the TP Act prohibited a supplier from accepting payment for goods or services without intending to supply or where there are reasonable grounds for believing the goods or services will not be able to be provided. 

6.32                Section 36 of the ACL replaces section 58 of the TP Act and augments it with a requirement to provide goods or services for which payment has been accepted within the specified time, or if no time is specified, within a reasonable time.  MCCA agreed on 4 December 2009 that the ACL should include such a requirement, drawing on section 19 of the Victorian FT Act. 

6.33                The expanded scope of section 36 of the ACL is to prevent traders from subjecting people to unnecessarily long delays in receiving goods or services for which they have paid. 

6.34                While a person may have remedies available under the law of contract section 36 of the ACL is not intended to impose a contravention for a trader that genuinely endeavours to fulfil its supply agreements.  Subsection 36(5) provides an exception to the prohibition if the failure to supply was due to something beyond the trader’s control and it had exercised due diligence and took reasonable precautions to avoid the failure. 

Misleading representations about certain business activities

6.35                Section 53 of the TP Act prohibited the making of certain false or misleading representations in connection with the supply or possible supply of goods or services.  However, this prohibition does not necessarily cover representations regarding the profitability, risk or other aspects of particular types of business activity, such as home-based businesses or those that require a person to invest either personal effort or money into a business (such as a franchising arrangement).

6.36                Section 59 of the TP Act prohibited making false or misleading representations about the profitability, risk or other material aspect of any business activity that can be carried on from home.  In 1967, section 59 was amended to prohibit the making of false or misleading representations about the profitability, risk or other material aspect of any business activity that requires work or investment by a person.  A similar provision currently exists in the FT Acts of all States and Territories.

6.37                Section 37 of the ACL replaces section 59 of the TP Act.

Application of provisions of this Division to information providers

6.38                Section 65A of the TP Act made provision for the application of the provisions in Part V, Division 1 of the TP Act to information providers. 

6.39                In Australian Ocean Line Pty Ltd v West Australian Newspapers Ltd (1983) 47 ALR 497 and Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 55 ALR 25, the Federal Court found that the publication of news in a newspaper had the potential to constitute a contravention of the misleading or deceptive conduct provisions in section 52 of the TP Act.  As a result section 65A was included in the TP Act in 1984 to exclude the application of all of the provisions described above (except for misleading conduct in relation to employment) for prescribed information providers when these providers are carrying on a business of providing information.  Such providers include radio stations, television stations, and publishers of newspapers and magazines.  A similar provision currently exists in the FT Acts of all States and Territories.

6.40                Section 38 of the ACL replaces section 65A of the TP Act.

Unsolicited supplies

6.41                The practice of providing consumers with unsolicited goods, and then demanding payment for those goods, is regarded as sufficiently detrimental to consumers that specific provisions dealing with these practices have been part of the TP Act since its first enactment.  Specifically:

•        section 64 of the TP Act prohibited a person from asserting a right to payment for unsolicited goods unless the person has a reason to believe he or she is entitled to payment.  Section 64 also applied to unauthorised directory entries and also sets out rules for determining when a payment has been solicited and what are reasonable grounds for believing a supplier has a right to payment; and

•        section 65 of the TP Act also provided that a consumer is not liable to pay for unsolicited goods, or for loss or damage to those goods, unless the loss or damage is the result of a wilful and unlawful act by the consumer.  A similar provision, at subsection 64(4), gave protection to consumers against liability for unauthorised directory entries.

6.42                After the enactment of the TP Act, it emerged that corporations that engage in the practice of sending unsolicited credit cards or debit cards to consumers may not be covered by the TP Act provisions against unsolicited goods or services.  As a result, section 63A, prohibiting the sending of unsolicited credit cards or debit cards to a consumer (except at the written request of the consumer), was inserted into the TP Act in 1985.

6.43                Furthermore, a new provision was added to section 64 of the TP Act prohibiting the assertion of a right to payment for unsolicited services was added in 1987, which recognises that it is just as easy for a supplier to demand payment for unsolicited services as it is for unsolicited goods.

6.44                The ACL will retain provisions concerning these prohibitions in sections Chapter 3, Part 3-1, Division 2, and will extend them to cover entries that are like directory entries but are not published in directories.

6.45                While no provision for liability resulting from the supply of unsolicited services existed in the TP Act, Victoria has had such a provision in its FT Act since 1999.  This provision is incorporated into section 43 of the ACL.

Pyramid schemes

6.46                Provisions regulating pyramid schemes have existed in the TP Act since its enactment in 1974.  Part V, Division 1AAA of the TP Act was incorporated in 2002 to present the provisions in plain English.  Similar provisions exist in the FT Acts of most States and Territories.

6.47                The prohibition of pyramid schemes is driven by the prevalence of scams that require a person to join a scheme by paying a fee, and the only way to make that money back is by enticing or recruiting others to join the scheme.  These schemes inevitably collapse when they fail to attract new members to join, leaving those still in the scheme out of pocket.

6.48                On 4 December 2009, MCCA agreed that the existing pyramid schemes provisions will be retained in the ACL, with some minor changes to clarify the operation of the provisions.

6.49                Chapter 3, Part 3-1, Division 3 of the ACL will replace Part V, Division 1AAA of the TP Act.

Pricing

Multiple pricing

6.50                Sections 52 (misleading and deceptive conduct) and 53 (false or misleading representations) of the TP Act are applicable to multiple prices being displayed for the same goods or services.  However, these prohibitions often require the interpretation of the court or the intervention of a regulator to be pursued should a dispute arise. 

6.51                MCCA agreed on 4 December 2009 that the ACL should include a specific requirement relating to multiple pricing, drawing on the existing similar requirement in section 40 of the NSW FT Act.  This requirement will provide a clear rule that people (including traders) can understand if multiple prices are displayed for a product.  If multiple prices are displayed at the same time for goods, those goods must not be sold for more than the lowest of the prices.  Section 47 of the ACL will not force businesses to sell the goods, businesses have a right to withdraw the goods from sale and correct pricing errors if they occur. 

6.52                Section 47 of the ACL will deal with multiple pricing.

Single price to be specified in certain circumstances

6.53                Section 53C of the TP Act regulated the practice of component pricing but did not seek to prohibit component pricing.  When amended in 2008, it clarified that under the TP Act a corporation must not make a representation as to the partial price of a good or service without also specifying, in a prominent way and as a single figure, the single price.

6.54                Section 48 of the ACL replaces section 53C of the TP Act.

Other unfair practices

Referral selling

6.55                Section 57 of the TP Act regulated referral selling.  Selling by commission is a popular method of attracting custom.  However, some suppliers attach conditions to the commissions based on future, unknown events, which may mean that consumers do not actually receive a commission for their efforts if the future event does not occur.  Section 57 of the TP Act addressed this issue by prohibiting a corporation from inducing a consumer to buy goods or services by representing that the consumer will receive some benefit for assisting the corporation to supply goods or services to other customers, when the receipt of this benefit is contingent on an event occurring after the contract for the initial sale is made.

6.56                Section 49 of the ACL replaces section 57 of the TP Act.

Harrassment and coercion

6.57                Traders have resorted to illegal or inappropriate behaviour in pursuing consumers to either supply goods or services to them or demand payment for such supply.  Section 60 of the TP Act prohibited the use of physical force, undue harassment or coercion by a servant or agent of a corporation at certain locations in connection with the supply of goods or services or payment for those goods or services.  Similar provisions exist in the FT Acts of all States and Territories. 

6.58                Section 50 of the ACL will replace section 60 of the TP Act, with changes to extend the application of the prohibition to land transactions.

Proof of transaction and itemised bills

6.59                No provisions relating to a proof of transaction existed in the TP Act.  Since 1999, the Victorian FT Act has had a requirement for a proof of transaction to be given to consumers under certain circumstances.

6.60                Similarly, no provisions relating to an itemised bill existed in the TP Act.  Since 1999, the Victorian FT Act has had a requirement for an itemised bill to be provided to a consumer upon request when the consumer has been supplied with services.

6.61                On 4 December 2009, MCCA agreed that requirements for a proof of transaction and an itemised bill will be incorporated into the ACL and these are dealt with in sections 100 and 101 of the ACL.

Summary of new law

6.62                The ACL has provisions that prohibit a number of unfair practices and ensures that a norm of conduct is established for suppliers in dealing with consumers. 

6.63                Part 3-1 deals with:

•        False or misleading representations or conduct .  The ACL prohibits the making of representations that are false or misleading in relation to specific matters, including goods or services, testimonials, sale or grant of interests in land, employment, and certain business activities.  Information providers are exempt from these requirements under specified circumstances.

•        Unsolicited supplies .  The ACL prohibits sending unsolicited credit cards or debit cards, and asserting a right to payment for unsolicited goods or services, or unauthorised entries or advertisements.

•        Pyramid schemes .  The ACL prohibits a person from participating in, or inducing another person to participate in, a pyramid scheme, but excludes legitimate multi-level marketing schemes from the definition of a pyramid scheme.

•        Pricing .  The ACL contains rules addressing the display of multiple prices for goods, as well as a requirement to state a total single price for goods or services where quantifiable. 

•        Other unfair practices .  The ACL prohibits practices relating to bait advertising, and harassment and coercion. 

•        Miscellaneous.  The ACL also requires that a consumer should be given a proof of transaction or an itemised bill under certain circumstances.

False or misleading representations etc.

False or misleading representations about goods or services

6.64                Section 29 of the ACL prohibits a person from making false or misleading representations of certain types in connection with the supply, possible supply or promotion by any means of the supply or use of goods or services. 

6.65                Section 29 of the ACL covers false or misleading representations of the following types:

•        that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use; or

•        that services are of a particular standard, quality, value or grade; or

•        that goods are new; or

•        that a particular person has agreed to acquire goods or services; or

•        that purports to be a testimonial by any person relating to goods or services; or

•        concerning:

-       testimonial by any person; or

-       a representation that purports to be such a testimonial;

relating to goods or services; or

•        that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits; or

•        that the person making the representation has a sponsorship, approval or affiliation; or

•        with respect to the price of goods or services; or

•        concerning the availability of facilities for the repair of goods or of spare parts for goods; or

•        concerning the place of origin of goods; or

•        concerning the need for any goods or services; or

•        concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy (including a guarantee under Part 3-2, Division 1); or

•        concerning a requirement to pay for a contractual right that:

-       is wholly or partly equivalent to any condition, warranty, guarantee, right or remedy (including a guarantee under Part 3-2, Division 1); and

-       a person has under a law of the Commonwealth, a State or a Territory (other than an unwritten law). 

6.66                This provision substantially reflects the section 53 of the TP Act, with the following changes:

•        it has been redrafted for ease of use and accessibility; 

•        all the prescribed types of representations listed in section 29 are prohibited from being either false or misleading;

•        it includes a specific prohibition on false or misleading representations concerning testimonials (or representations that purport to be testimonials);

•        it includes an evidentiary burden on a respondent to adduce evidence in court that representations concerning testimonials are not false or misleading, as the case may be;

•        it includes a reference to consumer guarantees (as set out Part 3-2, Division 1) in the prohibition of false or misleading representations concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy; and

•        it includes a new prohibition of a false or misleading representation as to a requirement to pay for a contractual right that is wholly or partly equivalent to any condition, warranty, guarantee, right or remedy (including a guarantee under Part 3-2, Division 1) or that a person has under a law of the Commonwealth, a State or a Territory. 

False or misleading representations about land

6.67                Section 30 of the ACL provides that a person must not, in trade or commerce, make certain false or misleading representations in connection with the sale or grant of an interest in land, or the promotion of this sale or grant.

Misleading conduct relating to employment

6.68                Section 31 of the ACL provides that a person must not engage in conduct that is liable to mislead persons seeking employment as to matters relating to the employment.

Offering gifts and prizes etc.

6.69                Section 32 of the ACL provides that in connection with certain conduct relating to goods, services or land:

•        a person must not offer a rebate, gift, prize or other free item with the intention of not providing it, or not providing it as offered; and

•        the rebate, gift, prize or other free item must be provided, in accordance with the offer, within the time specified in the offer, or if no time is specified, within a reasonable time of the offer. 

6.70                An exception is provided to the new requirement to supply within the specified or a reasonable time —  if the failure to provide was due to something beyond the supplier’s control and he, she or it had exercised due diligence and took reasonable precautions to ensure that businesses are not dissuaded from offering prizes or other free items. 

6.71                The term ‘rebates’ has been added to the prohibition to make certain that the provision applies to ‘cash-back’ offers that are by redemption or application. 

6.72                Section 32 of the ACL also covers the contents of paragraph 53A(1)(c) of the TP Act in relation to land, but with the additions of specifically mentioning ‘rebates’ and the new requirement to provide the rebate, gift, prize or other free item within the time specified in the offer, or if no time is specified, within a reasonable time.  This provides clarity through locating all the prohibitions relating specifically to gifts and prizes in the same section. 

Certain misleading conduct in relation to goods or services

6.73                Sections 33 and 34 of the ACL provide that a person must not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the characteristics, the suitability for their purpose or the quantity of any goods or services, or the manufacturing process of any goods.

Bait advertising

6.74                Section 35 of the ACL provides that a person must not, in trade or commerce, advertise goods or services at a specified price if there are reasonable grounds, of which the person should be aware, to believe that the person would not be able to supply reasonable quantities of the goods or service at the advertised price for a reasonable period.

6.75                Section 35 also provides that, to advertise goods or services at a specified price, a person must offer such goods or services, in trade or commerce, for a reasonable period at reasonable quantities.

6.76                Section 35 applies having regard to the nature of the advertisement for the goods or services and the market in which the person is carrying on business.

Wrongly accepting payment

6.77                Section 36 of the ACL prohibits a person from accepting payment or other consideration for goods or services where, at the time of the acceptance, the corporation:

•        intends not to supply the goods or services;

•        intends to supply materially different goods or services; or

•        there are reasonable grounds, of which the corporation is aware or ought reasonably to be aware, for believing the corporation will not be able to supply the goods in the time specified or, if no time is specified, within a reasonable time. 

There is also a new requirement in the section 36 of the ACL — to provide goods or services for which payment has been accepted within the specified time, or if no time is specified, within a reasonable time.

6.78                An exception is provided for the new requirement if the failure to supply was due to something beyond the supplier’s control and he, she or it had exercised due diligence and took reasonable precautions to ensure that businesses are not dissuaded from, in appropriate circumstances, accepting payment until goods are able to be delivered. 

6.79                Section 36 also allows a consumer to accept different goods or services if he or she agrees to do so.  This will ensure that a supplier is not put in an impossible position of being required to supply something he, she or it has genuinely tried to provide but cannot and an equivalent replacement is available. 

Misleading representations about certain business activities

6.80                Section 37 of the ACL provides that a person must not make, in trade or commerce, false or misleading representations in relation to the profitability, risk or any other material aspect of any business activity that the person:

•        has represented as one that can be carried on at or from a person’s place of residence; or

•        invites other persons to participate by investing in or performing work for the business.

Information providers

6.81                Section 38 of the ACL provides that various provisions relating to false or misleading representations do not apply to an information provider if the information provider made a publication in the course of carrying on a business of providing information, unless the publication is:

•        an advertisement;

•        in connection with the supply of certain goods or services; or

•        in connection with the sale or grant of certain interests in land, or the promotion of such a sale or grant.

Unsolicited supplies

Unsolicited cards

6.82                Section 39 of the ACL provides that a person must not send a credit card or a debit card to another person except:

•        if it is at the written request of the other person; or

•        the card is for the renewal, replacement or substitution of a card of the same kind.

6.83                Section 39 also provides that a person cannot enable a credit card to be used as a debit card, or a debit card to be used as a credit card, except at the written request of the cardholder.

Assertion of right to payment

6.84                Section 40 of the ACL provides that a person must not, in trade or commerce, assert a right to payment for unsolicited goods or services unless the person has reasonable cause to believe that there is a right to payment.

6.85                Section 43 of the ACL provides that a person must not assert a right to payment for unauthorised entries or advertisements, relating to another person or their profession, trade or occupation, unless the person knows, or has reasonable cause to believe, that the other person has authorised the placing of the entry or advertisement in the publication.

6.86                Section 43 also provides that any invoice or similar document that is provided to the consumer with unsolicited goods or services, or unauthorised entries or advertisements, must contain a warning statement to the effect that such a document is not an assertion of a right to payment.

Liability of recipient for unsolicited goods or services

6.87                Sections 41 and 42 of the ACL provides that a person is not liable to pay for unsolicited goods or services that are supplied to them in trade or commerce.

6.88                Section 41 also provides that a person is not liable to pay for loss or damage to unsolicited goods unless the loss or damage is due to a wilful and unlawful action by the person, as well as the right for the sender of the unsolicited goods to retrieve them from the recipient within a certain period.

6.89                Section 42 also provides that a person is not liable to pay for loss or damage as a result of the supply, in trade or commerce, of unsolicited services to them.

Pyramid schemes

6.90                Section 44 of the ACL provides that a person must not participate, or induce or attempt to induce another person to participate, in a pyramid scheme.

6.91                Section 46 of the ACL provides that a scheme that involves the marketing of goods or services may or may not be a pyramid scheme, depending on:

•        whether the participation payments bear a reasonable relationship to the goods or services offered;

•        the emphasis given in the promotion of the scheme to the entitlement of the participants to the goods or services, compared to the emphasis given to recruitment payments; and

•        any other matter the court deems to be relevant.

Pricing

Multiple pricing

6.92                Section 47 provides that if more than one selling price is displayed for goods, a supplier must not sell the goods for more than the lowest of those prices. 

6.93                Suppliers are not obliged to sell the goods and have the right to withdraw the goods from sale until the prices are corrected.  An exception that allows a business to publish retractions for advertising errors is also available. 

Single price to be specified in certain circumstances

6.94                Section 48 prohibits using a component price when making a representation as to the price of a good or service without also prominently specifying the single figure price a consumer must pay to obtain the product or service, to the extent that a single figure price is quantifiable at the time of making a representation.    

Other unfair practices

Referral selling

6.95                Section 49 provides that a person must not, in trade or commerce, induce a consumer to buy goods or services by representing that he or she will receive some benefit for assisting the corporation to supply goods or services to other customers, when the receipt of this benefit is contingent on an event occurring after the contract for the initial sale is made

Harassment and coercion

6.96                Section 50 provides that a person must not use physical force, undue harassment or coercion in connection with the supply of goods or services, payment for goods or services, or the sale or grant, or the possible sale or grant, of an interest in land.

Proof of transaction and itemised bills

6.97                Section 100 provides that a proof of transaction must be given to a consumer if he or she is supplied with goods or services with a total price of $75 or more.

6.98                Section 100 also provides that, if the goods or services supplied to the consumer have a total price of less than $75, the supplier must provide a proof of transaction to the consumer if the consumer requests.

6.99                Section 101 provides that, if a supplier supplies services to a consumer, the consumer may request an itemised bill from the supplier.



Comparison of key features of new law and current law

False or misleading representations or conduct

New law

Current law

All the prescribed types of representations listed in section 29 are prohibited from being either false or misleading.

For the types of listed representations in section 53 of the TP Act, some are prohibited from being false, some from being false or misleading and some from being about qualities the goods or services do not have.

Similar prohibitions exist in section 12DB of the ASIC Act and in all State and Territory FT Acts:

Section 44 NSW FT Act

Sections 10, 11 and 12 Vic.  FT Act

Section 40 Qld FT Act

Sections 12 and 13 WA FT Act

Section 58 SA FT Act

Section 16 Tas.  FT Act

Section 14 ACT FT Act

Section 44 NT FT Act 

False or misleading representations concerning testimonials will be listed as prohibited in section 29 of the ACL. 

False or misleading representations concerning testimonials are not specifically listed in section 53 of the TP Act.  However, the section 14 of the Vic.  FT Act provides such a prohibition. 

In court proceedings, a person accused of making a false or misleading representation concerning a testimonial will be required to adduce evidence to the contrary or the representation will be deemed to be misleading. 

Currently, the only burden that is on a person accused of breaching certain parts of section 53 of the TP Act is if a representation as to a future matter is alleged to be misleading (by virtue of section 51A of the TP Act).  However, the section 14 of the Vic.  FT Act does provide a burden on the representor in relation to testimonials. 

 

New law

Current law

Section 26(1)(m), which prohibits false or misleading representations concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy now includes a specific reference to guarantees under Division 1 of Part 3 2 to ensure the section covers representations about that regime. 

Section 53(g) of the TP Act prohibits false or misleading representations concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy.  There is no specific mention of Part V, Division 2 of the TP Act (implied warranties and conditions). 

A new prohibition has been added regarding a false or misleading representation as to a requirement to pay for a contractual right that is wholly or partly equivalent to any condition, warranty, guarantee, right or remedy (including a guarantee under Division 1 of Part 3-2) or that a person has under a law of the Commonwealth, a State or a Territory (other than the unwritten law).

No explicit equivalent in section 53 of the TP Act. 

A person must not make false or misleading representations in connection with the sale, grant, possible sale or grant, or promotion in relation to the sale or grant, of an interest in land.

Similar provisions are currently contained in section 53A of the TP Act, section 12DC of the ASIC Act, and the following State and Territory FT Acts: 

Section 45 NSW FT Act

Section 40A Qld FT Act

Section 59 SA FT Act

Sections 12 and 13 WA FT Act

Section 17 Tas.  FT Act

Section 15 ACT FT Act

Section 45 NT FT Act

New law

Current law

A representation as to a future matter made without reasonable grounds is misleading.  Failure to adduce evidence of reasonable grounds will result in the representation being deemed as misleading. 

Section 51A of the TP Act provides that a representation as to a future matter made without reasonable grounds is misleading.  Failure to adduce evidence of reasonable grounds will result in the representation being deemed as misleading. 

A similar provision exists in section 12BB of the ASIC Act and in all State and Territory FT Acts:

Section 41 NSW FT Act

Section 4 Vic.  FT Act

Section 37 Qld FT Act

Section 54 SA FT Act

Section 9 WA FT Act

Subsections 3(7)-(9) Tas.  FT Act

Section 11 ACT FT Act

Section 41 NT FT Act

The evidentiary burden is clarified to require only that evidence of reasonable grounds be adduced.

court interpretation has differed and, in some cases, section 51A of the TP Act had been interpreted to impose a persuasive or legal burden requiring the respondent to prove reasonable grounds. 

Satisfying the evidentiary burden discharges the onus only and does not provide a defence to an allegation of misleading conduct.

Some court decisions have interpreted section 51A of the TP Act to give respondents a substantive defence to an allegation that a representation was misleading if the onus was discharged. 

The evidentiary onus can apply to alleged accessories to contraventions.

The wording of section 51A of the TP Act was held to not permit application to alleged accessories.

New law

Current law

A person must not engage in conduct that is liable to mislead persons seeking employment about matters relating to the employment.

Similar provisions are currently contained in section 53B of the TP Act and the following State and Territory FT Acts: 

Section 46 NSW FT Act

Section 13 Vic.  FT Act

Section 41 Qld FT Act

Section 60 SA FT Act

Section 14 WA FT Act

Section 18 Tas.  FT Act

Section 16 ACT FT Act

Section 46 NT FT Act

Offering a rebate, gift, prize or other free item with the intention of not providing it is prohibited. 

The same as the new law (section 54 of the TP Act), but without the reference to ‘rebate’. 

Similar prohibitions exist in section 12DE of the ASIC Act and in all State and Territory FT Acts:

Section 48 NSW FT Act

Section 16 Vic.  FT Act

Section 43 Qld FT Act

Section 62 SA FT Act

Section 16 WA FT Act

Section 19 Tas.  FT Act

Section 18 ACT FT Act

Section 51 NT FT Act

Rebates, gifts, prizes or other free items must be provided within the time specified in the offer, or if no time is specified, within a reasonable time. 

Defences where the failure was beyond the person’s control are also provided for this part of the section.

No such prohibition in the TP Act. 

A similar prohibition exists in section 16 of the Vic.  FT Act. 

In addition to goods and services, the section applies to a rebate, gift, prize or other free item offered in connection with the sale, possible sale or promotion by any means of the sale or grant of an interest in land. 

Land is dealt with separately from goods and services (section 53A(c) as opposed to section 54) in the TP Act. 

New law

Current law

A person must not engage in conduct that is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose or the quantity of any goods.

Similar provisions are currently contained in section 55 of the TP Act and the following State and Territory FT Acts: 

Section 49 NSW FT Act

Section 10 Vic.  FT Act

Section 44 Qld FT Act

Section 63 SA FT Act

Section 17 WA FT Act

Section 20 Tas.  FT Act

Section 19 ACT FT Act

Section 47 NT FT Act

A person must not engage in conduct that is liable to mislead the public as to the nature, the characteristics, the suitability for their purpose or the quantity of any services.

Similar provisions are currently contained in section 55A of the TP Act, section 12DF of the ASIC Act, and the following State and Territory FT Acts: 

Section 50 NSW FT Act

Section 11 Vic.  FT Act

Section 45 Qld FT Act

Section 64 SA FT Act

Section 18 WA FT Act

Section 21 Tas.  FT Act

Section 20 ACT FT Act

Section 48 NT FT Act

A person must not advertise goods or services at a specified price if there are reasonable grounds, of which the person should be aware, to believe that the person would not be able to supply reasonable quantities of the goods or service at the advertised price for a reasonable period.

To advertise goods or services at a specified price, a person must offer such goods or services for a reasonable period at reasonable quantities, having regard to the nature of the advertisement and the market in which the person is carrying on business. 

Similar provisions are currently contained in section 56 of the TP Act, section 12DG of the ASIC Act, and the following State and Territory FT Acts: 

Section 51 NSW FT Act

Section 17 Vic.  FT Act

Section 46 Qld FT Act

Section 65 SA FT Act

Section 19 WA FT Act

Section 22 Tas.  FT Act

Section 21 ACT FT Act

Section 52 NT FT Act

New law

Current law

Accepting payment for goods or services with the intention of not providing them as agreed or where there are reasonable grounds for believing the supply will not be possible is prohibited.

Same as the new law (section 58 of the TP Act).

Similar prohibitions exist in section 12DI of the ASIC Act and in all State and Territory FT Acts:

Section 53 NSW FT Act

Section 19 Vic.  FT Act

Section 48 Qld FT Act

Section 67 SA FT Act

Section 21 WA FT Act

Section 24 Tas.  FT Act

Section 24 ACT FT Act

Section 54 NT FT Act

‘Accepting payment’ includes partial payments such as deposits.

Not specifically stated in the law. 

Suppliers are required to provide goods or services within the specified time, or if no time is specified, within a reasonable time of accepting payment. 

This requirement does not apply if the failure to supply is beyond the person’s control and he, she or it has taken reasonable precautions and exercised due diligence. 

A consumer may agree to accept different goods if the agreed goods cannot be provided.           

No such requirement in the TP Act. 

A person must not make false or misleading representations in relation to the profitability, risk or any other material aspect of any business activity that the person:

•        has represented as one that can be carried on at or from a person’s place of residence; or

•        invites other persons to participate by investing in or performing work for the business.

Similar provisions are currently contained in section 59 of the TP Act and the following State and Territory FT Acts: 

Section 54 NSW FT Act

Section 20 Vic.  FT Act

Section 49 Qld FT Act

Section 68 SA FT Act

Section 22 WA FT Act

Section 25 Tas.  FT Act

Section 25 ACT FT Act

Section 49 NT FT Act

New law

Current law

Various provisions relating to false or misleading representations do not apply to an information provider if the information provider made the publication in the course of carrying on a business of providing information, unless the publication is:

•        an advertisement;

•        in connection with the supply of certain goods or services; or

•        in connection with the sale or grant of certain interests in land, or the promotion of such a sale or grant.

Similar provisions are currently contained in section 65A of the TP Act, section 12DN of the ASIC Act, and the following State and Territory FT Acts: 

Section 60 NSW FT Act

Section 32 Vic.  FT Act

Section 51 Qld FT Act

Section 74 SA FT Act

Section 63 WA FT Act

Section 28 Tas.  FT Act

Section 31 ACT FT Act

Section 60 NT FT Act

Unsolicited supplies

New law

Current law

A person must not send a credit card, a debit card, or an article that may be used as both a credit card and a debit card, to another person unless it is at the written request of the other person, or as a replacement for a similar card previously requested by the other person.

Similar provisions are currently contained in section 63A of the TP Act, section 12DL of the ASIC Act, and the following State and Territory FT Acts: 

Section 57 NSW FT Act

Section 23 Vic.  FT Act

Section 71 SA FT Act

Section 28 WA FT Act

Section 27 Tas.  FT Act

Section 28 ACT FT Act

Section 57 NT FT Act

New law

Current law

A person must not assert a right to payment for unsolicited goods or services unless the person has reasonable cause to believe that there is a right to payment.

Similar provisions are currently contained in section 64 of the TP Act, section 12DM of the ASIC Act, and the following State and Territory FT Acts: 

Section 58 NSW FT Act

Sections 24 and 28 Vic.  FT Act

Section 52 Qld FT Act

Section 72 SA FT Act

Sections 29 and 30 WA FT Act

Section 28 ACT FT Act

Section 57 NT FT Act

A person must not assert a right to payment for unauthorised entries or advertisements unless the person knows, or has reasonable cause to believe, that the other person has authorised the placing, in a publication, of the entry or advertisement.

Provisions relating to unauthorised directory entries are currently contained in section 64 of the TP Act and the following State and Territory FT Acts: 

Section 58 NSW FT Act

Sections 27 and 28 Vic.  FT Act

Section 52 Qld FT Act

Section 72 SA FT Act

Sections 29 and 30 WA FT Act

Section 29 ACT FT Act

Section 58 NT FT Act

There is no equivalent of the provisions relating to unauthorised advertisements in the TP Act.  A similar provision currently exists in the following State and Territory FT Acts:

Section 58A NSW FT Act

Sections 27 and 28 Vic.  FT Act

Section 52 Qld FT Act

Any document that is an invoice or other document that seeks payment for unsolicited goods or services, or the making of unauthorised directory entries or advertisements, must contain a statement to the effect that the document is not a bill.

There is no equivalent provision in the TP Act.  There is a similar provision in section 58A of the NSW FT Act.

New law

Current law

A person is not liable to pay for unsolicited goods, nor for any loss or damage to those goods, unless such loss or damage is due to a willful and unlawful act in relation to the goods by the person.

Similar provisions are currently contained in section 65 of the TP Act and the following State and Territory FT Acts: 

Section 59 NSW FT Act

Section 25 Vic.  FT Act

Section 53 Qld FT Act

Section 73 SA FT Act

Section 31 WA FT Act

Section 30 ACT FT Act

Section 59 NT FT Act

A person is not liable to pay for unsolicited services, nor for any loss or damage arising as a result of the supply of those services.

There is no equivalent provision in the TP Act.  There is a similar provision in section 26 of the Victorian FT Act.

Pyramid schemes

New law

Current law

A person must not participate in, or induce or attempt to induce another person to participate in, a pyramid scheme.

Similar provisions are currently contained in section 65AAC of the TP Act, section 12DK of the ASIC Act, and the following State and Territory FT Acts: 

Section 60U NSW FT Act

Section 22 Vic.  FT Act

Section 55D Qld FT Act

Section 70 SA FT Act

Section 24 WA FT Act

Section Tas. FT Act

Section 25B ACT FT Act

Section 60D NT FT Act

New law

Current law

In determining whether a scheme is a marketing scheme rather than a pyramid scheme, a court must have regard to:

•        whether the participation payment bear a reasonable relationship to the value of the goods or services that participants are entitled to be supplied under the scheme; and

•        the emphasis on the entitlement of participants to the goods or services as opposed to their entitlement to recruitment payments.

Section 65AAE of the TP Act currently provides that a court may have regard to:

•        the extent to which the participation payment bear a reasonable relationship to the value of the goods or services that participants are entitled to be supplied under the scheme; and

•        the emphasis on the entitlement of participants to the goods or services as opposed to their entitlement to recruitment payments.

Similar provisions to section 65AAE are contained in the following State and Territory FT Acts: 

Subsection 60T(4) NSW FT Act

Section 25D ACT FT Act

Section 60C NT FT Act

Pricing

New law

Current law

If more than one selling price is displayed for goods, a supplier must not sell the goods for more than the lowest of those prices.

No Commonwealth equivalent.

A similar requirement exists in section 40 of the NSW FT Act and section 22 of the ACT FT Act.

Suppliers retain the right to withdraw items from sale.

Suppliers retain the right to withdraw items from sale.

The section applies to advertisements such as catalogues. 

Retractions can be published for mistakes in advertising.

 

The provision does not apply to wholly obscured prices, prices not in Australian currency, is a partial price such as a unit price, or is not expressed in such a way that it is unlikely to be interpreted to an amount

 

New law

Current law

A person must not use a component price when making a representation as to the price of a good or service without also prominently specifying the single figure price a consumer must pay to obtain the product or service, to the extent that a single figure price is quantifiable at the time of making a representation.

Similar provisions are currently contained in section 53C of the TP Act.

Similar prohibitions exist in section 12DD of the ASIC Act and in all State and Territory FT Acts:

Section 47 NSW FT Act

Section 15 Vic.  FT Act

Section 42 Qld FT Act

Section 61 SA FT Act

Section 15 WA FT Act

Section 21A Tas.  FT Act

Section 17 ACT FT Act

Section 50 NT FT Act

However, it should be noted that these other provisions have not been updated to reflect the amendments made in the Commonwealth Trade Practices Amendment (Clarity in Pricing) Act 2008

Other unfair practices

New law

Current law

A person must not induce a consumer to buy goods or services by representing that he or she will receive some benefit for assisting the corporation to supply goods or services to other customers, when the receipt of this benefit is contingent on an event occurring after the contract for the initial sale is made

Similar provisions are currently contained in section 57 of the TP Act, section 12DH of the ASIC Act, and the following State and Territory FT Acts: 

Section 52 NSW FT Act

Section 18 Vic.  FT Act

Section 47 Qld FT Act

Section 66 SA FT Act

Section 20 WA FT Act

Section 26A Tas.  FT Act

Section 23 ACT FT Act

Section 53 NT FT Act

New law

Current law

A person must not use physical force, undue harassment or coercion in connection with either the supply of goods or services to a consumer or payment by a consumer for goods or services.

Similar provisions are currently contained in section 60 of the TP Act, section 12DJ of the ASIC Act, and the following State and Territory FT Acts: 

Section 55 NSW FT Act

Section 21 Vic.  FT Act

Section 50 Qld FT Act

Section 69 SA FT Act

Section 23 WA FT Act

Section 26 Tas.  FT Act

Section 26 ACT FT Act

Section 55 NT FT Act

A proof of transaction must be given to a consumer if he or she is supplied with goods or services with a total price of $75 or more.

If the goods or services supplied to the consumer have a total price of less than $75, the supplier must provide a proof of transaction to the consumer if the consumer requests.

There is no equivalent provision in the TP Act.  Similar provisions currently exist in section 160A of the Victorian FT Act.

If a supplier supplies services to a consumer, the consumer may request an itemised bill from the supplier.

There is no equivalent provision in the TP Act.  Similar provisions currently exist in section 160A of the Victorian FT Act.

Detailed explanation of new law

False or misleading representations etc.

False or misleading representations about goods or services

6.100            Section 29 of the ACL prohibits a person from making a range of specified false or misleading representations, in trade or commerce and in connection with:

•        the supply of goods or services; or

•        the possible supply of goods or services; or

•        the promotion by any means of the supply or use of goods or services.

6.101            The representations specifically identified in section 29 of the ACL include: 

•        representations that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 29(1)(a)]

•        representations that services are of a particular standard, quality, value or grade.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 29(1)(b)]  

•        representations that goods are new.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 29(1)(c)]

•        representations that a particular person has agreed to acquire goods or services.  For example, inducing a sportsperson to buy a new type of sporting goods by asserting that competitors had purchased the items when he or she had not.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 29(1)(d)]

•        representations that purports to be a testimonial by any person relating to goods or services.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 29(1)(e)]

•        representations concerning a testimonial by any person or a representation that purports to be such a testimonial relating to goods or services.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, subsection 29(1)(f)]

•        representations that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 29(1)(g)]

•        representations that the person making the representation has a sponsorship, approval or affiliation.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 29(1)(h)]

•        representations with respect to the price of goods or services.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 29(1)(i)]

•        representations concerning the availability of facilities for the repair of goods or of spare parts for goods.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, subsection 29(1)(j)]

•        representations concerning the place of origin of goods.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 29(1)(k)]

•        representations concerning the need for any goods or services.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 29(1)(l)]

•        representations concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy (including a guarantee under Chapter 3, Part 3-2, Division 1).  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 29(1)(m)]

•        representations concerning a requirement to pay for a contractual right that:

-       is wholly or partly equivalent to any condition, warranty, guarantee, right or remedy (including a guarantee under Chapter 3, Part 3-2, Division 1); and

-       a person has under a law of the Commonwealth, State or Territory (other than the unwritten law).

[Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 29(1)(n)]

6.102            Section 29 applies to any transaction that takes place in trade or commerce.  ‘Trade or commerce’ is defined in section 2 of the ACL as meaning ‘trade or commerce within Australia, or between Australia and places outside Australia, and includes any business or professional activity (whether or not carried on for profit)’.  The ACL applies to conduct engaged in outside of Australia, provided that at least some aspect of the trading relationship between two or more parties has taken place in Australia.  [Schedule 1, item 1: Chapter 1, section 2]

6.103            The application of section 29 of the ACL is not limited to transactions involving ‘consumers’ as defined in section 3 of the ACL. 

6.104            The concept of ‘supply’ is defined in section 2 of the ACL.  [Schedule 1, item 1: Chapter 1, section 2]

Representations

6.105            The representations identified in paragraphs 29(1)(a), (c), (d), (e), (f), (g), (i), (j), (k) and (l) relate to goods. 

6.106            The representations identified in paragraphs 29(1)(b), (d), (e), (f), (g), (i) and (l) relate to services.

6.107            The representations identified in paragraphs 29(1)(m) and (n) relate to consumer guarantees and warranties, conditions, rights or remedies.

Meaning of concepts used in section 29

6.108            The ACL does not specifically define many of the concepts used in the drafting of section 29 of the ACL.  As section 29 is couched in substantially the same form as section 53 of the TP Act, the jurisprudence relating to the concepts applicable to section 53 of the TP Act is relevant to those concepts as they exist in section 29 of the ACL.

Representations as to goods only

6.109            A representation that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use could cover, for example and without limitation:

•        representations about the nature of the goods, which could include:

-       the way in which the goods were manufactured, including specific methods or processes; or

-       the materials from which the goods were manufactured; or

-       the correspondence of the actual goods, their contents or the way in which those goods were made with a description of those goods, their contents or the way in which they were made;

•        representations about the standard, quality or grade of the goods, which could include:

-       the suitability of the goods for the uses to which they might reasonably be put; or

-       the purity, strength, cleanliness, fineness (or otherwise) of the goods, or any other standard, quality or grade by which the goods may be assessed or compared;

•        representations about the value of the goods, which could include:

-       the price of the goods; or

-       the cost of the contents of the goods; or

-       the cost of the process by which the goods were manufactured or distributed; or

-       the market value of the goods;

•        representations about the style of the goods, which could include:

-       the design or the designer of the goods; or

-       the accuracy of a reproduction of other goods;

•        representations about the model of the goods, which could include whether the goods match the characteristics of a particular make or model of the goods;

•        representations about the previous history or use of the goods, including:

-       the origin and age of the goods; or

-       the previous ownership of the goods; or

-       the historical uses or associations of the goods either in a specific context or by specified persons. 

[Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 29(1)(a)]

6.110            A representation that goods are new could cover, for example and without limitation, representations that goods, which are in fact not new, are new.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 29(1)(c)]

6.111            A representation concerning the availability of facilities for the repair of goods or of spare parts for goods could cover, for example and without limitation, a representation that spare parts, or specific spare parts, will be available when no such parts are available or a representation that there are facilities for the repair of the goods which are not, in fact, available.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, subsection 29(1)(j)]

6.112            A representation concerning the place of origin of goods could cover, for example and without limitation:

•        a representation that goods were manufactured in a particular place; or

•        a representation that the contents of the goods came from a particular place; or

•        a representation that the goods were ‘made in’, the ‘product of’ or ‘grown in’ a particular place. 

[Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 29(1)(k)]

6.113            The country of origin provisions set out in Chapter 5, Part 5-3 provide a series of defences with respect to this provision concerning the use of particular claims on the labels of goods.  [Schedule 1, item 1: Chapter 5, Part 5-3]

Representations as to services only

6.114            A representation that services are of a particular standard, quality, value or grade could cover, for example and without limitation [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 29(1)(b)] :

•        representations about the nature of the services, which could include:

-       the way in which the services are, have been or might be undertaken, including specific methods or processes; or

-       the persons who will or might undertake the services and whether those persons have undertaken the services previously; or

-       the correspondence of the actual services or the way in which those services are undertaken with a description of those services;

•        representations about the standard, quality or grade of the goods, which could include:

-       the suitability of the services for the purposes to which they are to be put or the matter to which they relate; or

-       the qualifications and previous experience of the persons who will undertake the services; or

-       the amount of work to be undertaken as part of the supply of the services and the relationship of that work with the cost of the services.

Representations as to goods and services

6.115            A representation that a particular person has agreed to acquire the goods or services could cover, for example and without limitation [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 29(1)(d)] :

•        that another person has, may or will acquire the goods or services; or

•        that that other person has, may or will acquire the goods or services for a particular price or at a particular time; or

•        that that other person has, may or will acquire a specific form of the goods or services. 

6.116            A representation that the goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits could cover, for example and without limitation:

•        representations that the goods or services are, in some way, sponsored by another person or entity.  This could include persons or entities not engaged in trade or commerce, such as charities, religious institutions, educational institutions, professional and trades bodies and governments. 

•        representations that a person or other entity has approved of the goods or services, including representations that such an approval is a formal or informal endorsement, certification or other indication of approval made by a person or entity.  This could include persons or entities not engaged in trade or commerce. 

•        representations that the goods or services will or could:

-       reach specified or non-specified performance standards or levels in their use or provision; or

-       deliver specified or non-specified benefits or enhancements in the use of other goods or the undertaking of other services; or

-       with respect to goods, last for specified or non-specified periods of time or a specified or non-specified number of uses, and with respect to services, be provided or undertaken for a specified or unspecified period of time or a specified or unspecified number of times; or

-       tolerate specified or non-specified physical circumstances (including, for example, pressures or stresses) in their use or undertaking;

•        representations that the goods or services come with other accessories, including the provision of additional goods or services either generally or in the event that certain things occur;

•        representations that the goods or services have particular uses either generally or in addition to those for which they are to be or have been supplied;

•        representations that the goods or services will provide the person acquiring them or other persons with benefits. 

[Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 29(1)(g)]

6.117            A representation that the person making the representation has sponsorship, approval or affiliation could cover, for example and without limitation:

•        representations that the person is, in some way, sponsored by, approved of or affiliated with another person or entity.  This could include persons or entities not engaged in trade or commerce, such as charities, religious institutions, educational institutions, professional and trades bodies and governments. 

•        representations that a person or other entity has sponsored, approved of or extend an affiliation to the person, including representations that such an approval is a formal or informal endorsement, certification, qualification or other indication of approval made by a person or entity.  This could include persons or entities not engaged in trade or commerce. 

[Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 29(1)(h)]

6.118            A representation with respect to the price of goods or services could cover, for example and without limitation:

•        a representation that the goods or services:

-       will be supplied for a particular price or at a particular discount; or

-       may be paid for in a particular way or at a particular time or times.

[Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 29(1)(i)]

6.119            A representation concerning the need for any goods or services could cover, for example and without limitation:

•        a representation that the goods or services are necessary in particular circumstances or at all; or

•        a representation that the goods and services are required in the light of a specific event or as a consequence of specific circumstances; or

•        a representation that a failure to provide the goods or services will result in specific things occurring or not occurring.

[Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 29(1)(l)]

Testimonials

6.120            Paragraphs 29(1)(e) and (f) of the ACL prohibit false or misleading representations in trade or commerce:

•         that purport to be a testimonial by any person relating to goods or services; or  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 29(1)(e)]

•        concerning:

-       a testimonial by any person; or

-       a representation that purports to be such a testimonial;

relating to goods or services;  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 29(1)(f)]

6.121            Paragraphs 29(1)(e) and (f) apply to representations whether or not the testimonial was genuine or not, for example where a genuine testimonial is misrepresented or misquoted or where a fictitious testimonial was published.  False or misleading testimonials are not specifically listed as types of false or misleading representations in the section 53 of the TP Act.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraphs 29(e) and (f)]

6.122            There is a rebuttable presumption that a representation concerning a testimonial as described in paragraphs 29(1)(e) and (f) are misleading and deceptive.  Failure to adduce evidence to the contrary when it is alleged that a person has made a false or misleading representation concerning a testimonial will result in the representation being found to be misleading.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraphs 29(2)-(3)]

6.123            This onus is evidentiary in nature, the person accused does not have to disprove the alleged breach: he or she must put evidence to the contrary of the allegation before the court.  Similarly, adducing such evidence does not provide the accused with a defence to any allegation that the representation is false or misleading: it merely discharges the onus on them.  A person can discharge the evidentiary onus and still be found to have made a misleading representation.  The evidentiary onus does not apply to any other paragraphs in section 29 other than paragraphs 29(1)(e) and (f). 

6.124            To avoid doubt, just because some evidence may be adduced to the contrary, a representation is not, purely on that basis, false or misleading.  The evidence must be sufficient to displace the presumption that that the representation was false or misleading.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 29(3)(a)]

6.125            Similarly, paragraph 29(2) of the ACL does not place an onus on a person to prove that a representation is not misleading.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 29(3)(b)]

Representations as to guarantees etc.

6.126            Paragraph 29(1)(m) of the ACL prohibits false or misleading representations in trade or commerce concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy.  The paragraph includes a specific reference to guarantees under Chapter 3, Part 3-2, Division 1 of the ACL to ensure the prohibition covers representations about statutory guarantees provided by the ACL.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 29(1)(m)]

6.127            This could cover representations made by a person (generally a trader) to a person (generally a consumer as defined in section 3 of the ACL) that a condition, warranty, guarantee, right or remedy, including the statutory guarantees provided by the ACL:

•        does or does not exist with respect to the goods or services, either at all or in specified circumstances; or

•        may or may not be excluded with respect to the goods or services, either at all or in specified circumstances; or

•        may or may not have a particular effect with respect to the goods or services, either at all or in specified circumstances.

6.128            Paragraph 29(1)(n) of the ACL prohibits false or misleading representations as to a requirement to pay for a contractual right that is wholly or partly equivalent to any condition, warranty, guarantee, right or remedy or that a person has under a law of the Commonwealth, a State or a Territory (other than the unwritten law).  The paragraph includes a specific reference to guarantees under Chapter 3, Part 3-2, Division 1 of the ACL to ensure the prohibition covers representations about statutory guarantees provided by the ACL.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 29(1)(n)]

6.129            This could cover representations made by a person (generally a trader) to a person (generally a consumer as defined in section 3 of the ACL) that a condition, warranty, guarantee, right or remedy, including the statutory guarantees provided by the ACL must be paid for, either at all or in specified circumstances.

Criminal offence

6.130            Section 29 of the ACL has an associated criminal offence in section 151 of the ACL.  The maximum fine payable for a contravention of section 151 of the ACL is $1.1 million for a body corporate and $220,000 for any other person.  [Schedule 1, item 1: Chapter 4, Part 4-1, section 151]

6.131            The offence in section 151 is one of strict liability so that it is not necessary to consider the intent of the person committing the offence.  The strict liability nature of this offence reflects the potential for widespread detriment, both financially for individual consumers and for its effect on the market and consumer confidence more generally, that can be caused by a person that breaches this provision, whether or not he or she intended to engage in the contravention.

6.132            Part 4-6 of the ACL provides defences applicable to criminal proceedings of:

•        an honest and reasonable mistake of fact; [Schedule 1, item 1: Chapter 4, Part 4-6, section 207]

•        where the contravention was caused by the act or default of another person or an accident or cause beyond the person’s control, and where the person took reasonable precautions and exercised due diligence to avoid the contravention; and  [Schedule 1, item 1: Chapter 4, Part 4-6, section 208]

•        where an advertiser publishes an advertisement in the ordinary course of business and does not know and had no reason to suspect the advertisement amounted to a contravention.  [Schedule 1, item 1: Chapter 4, Part 4-6, section 209]

Enforcement powers, penalties and remedies

6.133            A person contravening section 29 of the ACL is liable to pay a civil pecuniary penalty of up to:

•        $1.1 million for a body corporate;

•        $220,000 for other persons. 

[Schedule 1, item 1: Chapter 5, Part 5-2, Division 1, section 224]

6.134            The following enforcement powers and remedies apply to section 29 of the ACL:

•        undertakings;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 1]

•        substantiation notices; [Schedule 1, item 1: Chapter 5, Part 5-1, Division 2]

•         public warning notices;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 3]

•         injunctions;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 2]

•        damages;  [Schedule 1, item 1: Chapter 5, Part 5-2 ,Division 3]

•        compensatory orders;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision A]

•        redress for non-parties; and  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision B]

•        non-punitive orders.  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 5, section 246]  

6.135            For further information on these powers, remedies and penalties generally see Chapters 14 and 15. 

6.136            The ACCC may issue an infringement notice for a contravention of section 29 of the ACL.  The amount of the penalty specified in the infringement notice is:

•        600 penalty units for a listed corporation;

•        60 penalty units for a body corporate other than a listed corporation; and

•        12 penalty units for any other person.  [Schedule 2, item 1: Part XI, Division 5]

ASIC Act

6.137            Section 12DB of the ASIC Act is repealed and replaced with a new section 12DB to reflect section 29 of the ACL, with respect to financial products and services.  [Schedule 3, item 14]

False or misleading representations etc about sale etc of land

6.138            Section 30 of the ACL provides that a person must not, in trade or commerce, make specified types of false or misleading representations in relation to:

•        the sale or grant, or the possible sale or grant, of an interest in land; or

•        the promotion of the sale or grant of an interest in land.

[Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, subsection 30(1)]

6.139            The types of false or misleading representations specified in section 30 of the ACL include:

•        representations that the person making the representation has a sponsorship, approval or affiliation; [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 30(1)(a)]

•        representations concerning the nature of the interest in land; [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 30(1)(b)]

•        representations concerning the price payable for the land; [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 30(1)(c)]

•        representations concerning the location of the land; [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 30(1)(d)]

•        representations concerning the characteristics of the land; [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 30(1)(e)]

•        representations concerning the use to which the land is capable of being put or may lawfully be put; or   [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 30(1)(f)]

•        representations concerning the existence or availability of facilities associated with the land.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 30(1)(g)]

Sponsorship, approval or affiliation

6.140            A representation that the person making the representation has sponsorship, approval or affiliation could cover, for example and without limitation:

•        representations that the person is, in some way, sponsored by, approved of or affiliated with another person or entity.  This could include persons or entities not engaged in trade or commerce, such as charities, religious institutions, educational institutions, professional and trades bodies and governments. 

•        representations that a person or other entity has sponsored, approved of or extend an affiliation to the person, including representations that such an approval is a formal or informal endorsement, certification, qualification or other indication of approval made by a person or entity.  This could include persons or entities not engaged in trade or commerce. 

[Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 30(1)(a)]

Interests in land

6.141            A representation concerning the nature of the interest of the land could cover, for example and without limitation:

•        representations that the relevant interest in the land exists when it does not; or

•        representations that the relevant interest in the land is different to what it actually is; or

•        representations as to the nature of any encumbrances or any other interests in the land which may affect the title or other interest of the acquirer to that land.

[Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 30(1)(b)]

Price payable

6.142            A representation concerning the price payable for the land could cover, for example and without limitation:

•        representations that the price is a particular amount or includes certain things, such as taxes, fees and charges; or

•        representations that the price for the land is different to what it actually is; or

•        representations as to the price for the land is or is not affected by another matter which may affect the price paid, or the ability of the acquirer to that land to pay.

[Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 30(1)(c)]

Location

6.143            A representation concerning the location of the land could cover, for example and without limitation:

•        representations about the location of the land; or

•        representations about matters relating to the location of the land, including access to it.

[Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 30(1)(d)]

Characteristics

6.144            A representation concerning the characteristics of the land could cover, for example and without limitation:

•        representations about the features of the land; or

•        representations about matters relating to the topography, geology, hydrology or other physical characteristics of the land; or

•        representations about the fertility of the land or the suitability of the land for particular uses.

[Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 30(1)(e)]

Uses of the land

6.145            A representation concerning the uses of the land could cover, for example and without limitation:

•        representations about the uses to which the land might be appropriately put, having regard to its location and physical features; or

•        representations about relevant administrative approvals, or licences concerning the use of the land.

[Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 30(1)(g)]

Facilities

6.146            A representation concerning the facilities associated with the land could cover, for example and without limitation:

•        representations that the land has, or may or may not have, certain facilities or access to such facilities; or

•        representations about the nature of those facilities and the uses to which they may be put; or

•        representations as any interests or other rights that other persons may have with respect to those facilities.

[Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 30(1)(g)]

Interpretation

6.147            The ACL does not specifically define many of the concepts used in the drafting of section 30 of the ACL.  As section 30 is couched in substantially the same form as section 53A of the TP Act the jurisprudence relating to the concepts applicable to section 53A of the TP Act is relevant to those concepts as they exist in section 30 of the ACL.

6.148            Section 30 applies to any land transaction.  A land transaction may not be a supply of ‘goods’ or ‘services’ and therefore this provision is included to avoid any doubt about the application or scope of section 29 of the ACL. 

6.149            The application of section 30 of the ACL is not limited to transactions involving ‘consumers’ as defined in section 3 of the ACL. 

6.150            The types of representations prohibited mainly relate to various aspects of the land in question, including its nature, price, location or characteristics, uses for the land, and the existence or availability of facilities associated with the land.  In addition, the person making the representation must not make a false or misleading representation that the person has a sponsorship, approval or affiliation.

6.151            This provision recognises that dealings associated with land are neither a good nor a service, so a separate clause prohibiting false or misleading representations in relation to land is necessary.  This provision only applies if the representations are made in connection with transactions involving the sale or grant of interests in land, and not if only in connection with a person’s general business activities, even if those business activities involve the selling of land. [8]

6.152            To avoid doubt, it is specified that the references to interests in land in this section does not affect the operation of other provisions such as the misleading or deceptive conduct provisions in Part 2-1 and other provisions in Part 3-1.  [Chapter 3, Part 3-1, Division 1, subsection 30(2)]

Criminal offence

6.153            Section 30 of the ACL has an associated criminal offence in section 152 of the ACL.  The maximum fine payable for a contravention of section 152 of the ACL is $1.1 million for a body corporate and $220,000 for any other person.  [Schedule 1, item 1: Chapter 4, Part 4-1, section 152]

6.154            The offence in section 152 is one of strict liability so that it is not necessary to consider the intent of the person committing the offence.  The strict liability nature of this offence reflects the potential for widespread detriment, both financially for individual consumers and for its effect on the market and consumer confidence more generally, that can be caused by a person that breaches this provision, whether or not he or she intended to engage in the contravention.

6.155            Part 4-6 of the ACL provides defences applicable to criminal proceedings of:

•        an honest and reasonable mistake of fact; [Schedule 1, item 1: Chapter 4, Part 4-6, section 207]

•        where the contravention was caused by the act or default of another person or an accident or cause beyond the person’s control, and where the person took reasonable precautions and exercised due diligence to avoid the contravention; and  [Schedule 1, item 1: Chapter 4, Part 4-6, section 208]

•        where an advertiser publishes an advertisement in the ordinary course of business and does not know and had no reason to suspect the advertisement amounted to a contravention.  [Schedule 1, item 1: Chapter 4, Part 4-6, section 209]

Enforcement powers, penalties and remedies

6.156            A person contravening section 30 of the ACL is liable to pay a civil pecuniary penalty of up to:

•        $1.1 million for a body corporate;

•        $220,000 for other persons. 

[Schedule 1, item 1: Chapter 5, Part 5-2, Division 1, section 224]

6.157            The following enforcement powers and remedies apply to section 30 of the ACL:

•        undertakings;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 1]

•        substantiation notices; [Schedule 1, item 1: Chapter 5, Part 5-1, Division 2]

•         public warning notices;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 3]

•         injunctions;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 2]

•        damages;  [Schedule 1, item 1: Chapter 5, Part 5-2 ,Division 3]

•        compensatory orders;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision A]

•        redress for non-parties; and  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision B]

•        non-punitive orders.  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 5, section 246]  

6.158            For further information on these powers, remedies and penalties generally see Chapters 14 and 15. 

6.159            The ACCC may issue an infringement notice for a contravention of section 30 of the ACL.  The amount of the penalty specified in the infringement notice is:

•        600 penalty units for a listed corporation;

•        60 penalty units for a body corporate other than a listed corporation; and

•        12 penalty units for any other person.

[Schedule 2, item 1: Part XI, Division 5]

Misleading conduct relating to employment

6.160            Section 31 of the ACL provides that a person must not engage in conduct that is liable to mislead persons seeking employment about:

•        matters relating to the employment, including, but not limited to, the availability, nature, terms or conditions of the employment; or

•        any other matter relating to employment. 

[Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, subsection 31]

Interpretation

6.161            Section 31 recognises that representations in relation to employment are not necessarily made ‘in trade or commerce’, but rather ‘in respect of trade or commerce’.  Accordingly, sections 19 and 29 of the ACL, which are concerned with conduct in trade or commerce, do not apply. 

6.162            Employment, or the ‘performance of work under a contract of service’, is also explicitly excluded from the definition of ‘service’ in section 2 of the ACL.

6.163            The ACL does not specifically define many of the concepts used in the drafting of section 31 of the ACL.  As section 31 is couched in substantially the same form as section 53B of the TP Act the jurisprudence relating to the concepts applicable to section 53B of the TP Act is relevant to those concepts as they exist in section 31 of the ACL.

6.164            The application of section 31 of the ACL is not limited to transactions involving ‘consumers’ as defined in section 3 of the ACL. 

Criminal offence

6.165            Section 31 of the ACL has an associated criminal offence in section 153 of the ACL.  The maximum fine payable for a contravention of section 153 of the ACL is $1.1 million for a body corporate and $220,000 for any other person.  [Schedule 1, item 1: Chapter 4, Part 4-1, section 153]

6.166            The offence in section 153 is one of strict liability so that it is not necessary to consider the intent of the person committing the offence.  The strict liability nature of this offence reflects the potential for widespread detriment, both financially for individual consumers and for its effect on the market and consumer confidence more generally, that can be caused by a person that breaches this provision, whether or not he or she intended to engage in the contravention.

6.167            Part 4-6 of the ACL provides defences applicable to criminal proceedings of:

•        an honest and reasonable mistake of fact; [Schedule 1, item 1: Chapter 4, Part 4-6, section 207]

•        where the contravention was caused by the act or default of another person or an accident or cause beyond the person’s control, and where the person took reasonable precautions and exercised due diligence to avoid the contravention; and  [Schedule 1, item 1: Chapter 4, Part 4-6, section 208]

•        where an advertiser publishes an advertisement in the ordinary course of business and does not know and had no reason to suspect the advertisement amounted to a contravention.  [Schedule 1, item 1: Chapter 4, Part 4-6, section 209]

Enforcement powers, penalties and remedies

6.168            A person contravening section 31 of the ACL is liable to pay a civil pecuniary penalty of up to:

•        $1.1 million for a body corporate;

•        $220,000 for other persons. 

[Schedule 1, item 1: Chapter 5, Part 5-2, Division 1, section 224]

6.169            The following enforcement powers and remedies apply to section 31 of the ACL:

•        undertakings;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 1]

•        substantiation notices; [Schedule 1, item 1: Chapter 5, Part 5-1, Division 2]

•         public warning notices;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 3]

•         injunctions;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 2]

•        damages;  [Schedule 1, item 1: Chapter 5, Part 5-2 ,Division 3]

•        compensatory orders;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision A]

•        redress for non-parties; and  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision B]

•        non-punitive orders.  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 5, section 246]  

6.170            For further information on these powers, remedies and penalties generally see Chapters 14 and 15. 

6.171            The ACCC may issue an infringement notice for a contravention of section 31 of the ACL.  The amount of the penalty specified in the infringement notice is:

•        600 penalty units for a listed corporation;

•        60 penalty units for a body corporate other than a listed corporation; and

•        12 penalty units for any other person.  [Schedule 2, item 1: Part XI, Division 5]

Offering rebates, gifts, prizes etc

6.172            Section 32 of the ACL prohibits a supplier offering gifts, prizes and other free items (including services), in trade or commerce, in connection with:

•        the supply, or possible supply of goods or services; or

•        the promotion by any means of goods or services:

without intending to provide them.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, subsection 32(1)]

6.173            Section 32 also provides that the same requirements apply in relation to the:

•        sale or grant or possible sale or grant of an interest in land; or

•        promotion of a grant or sale of an interest in land.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, subsections 32(1)(c)-(d)]

6.174            Section 32 of the ACL refers to ‘rebates’, which were not explicitly included in section 54 of the TP Act.  This has been included to specifically include ‘cash-back’ offers within the scope of this provision.  While rebates will still be able to be conditional on certain conditions being fulfilled by a consumer, once those obligations have been fulfilled this section will have effect.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, section 32]

Reasonable time

6.175            Section 32 of the ACL also includes a provision which prohibits a person from not providing gifts, prizes, rebates or other free items offered in connection with:

•        the supply, or possible supply, of goods or services;

•        the promotion by any means of goods or services;

•        the sale or grant or possible sale or grant of an interest in land; or

•        the promotion of a grant or sale of an interest in land.

within the time specified in the offer, or, if no time is specified, within a reasonable time of making the offer.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, subsection 32(2)]

6.176            The specified time requirement requires that if an offer is made, subject to clearly stated terms of delivery, the person making the offer will not be forced to meet a shorter timeframe than that which had been stated.  Similarly, the reasonable time requirement also requires that consumers are not subject to unreasonably long delays—for example, where a cash-back offer is made but it takes two years to receive the money. 

6.177            Where no time is specified, the determination of a ‘reasonable time’ is a subjective assessment, which will include consideration of such issues as the nature of the gifts and prizes offered and any representations or inferences made about their availability.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, subsection 32(2)]

6.178            Section 32 of the ACL also provides that the requirement to supply within the specified or reasonable time does not apply where the reason the supplier could not supply was beyond their control, providing he, she or it had taken reasonable precautions and exercised due diligence.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, subsection 32(3)]

6.179            Section 32 of the ACL also permits a person to accept a different prize, rebate or other free item if he or she agrees to do so.  This avoids the situation where a trader is put in an impossible position of being required to supply something it has genuinely tried to provide but cannot, even where an appropriate substitute is available.  It allows the trader to offer something in place of the prize that cannot be supplied.  The person is not obliged to accept the different item if he or she wishes to retain other rights to compensation he or she may have.  If a person accepts the substitute item then the trader should still provide it within a reasonable time.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, subsection 32(4)]

Interpretation

6.180            The ACL does not specifically define many of the concepts used in the drafting of section 32 of the ACL.  As section 32 is couched in substantially the same form as section 54 of the TP Act the jurisprudence relating to the concepts applicable to section 54 of the TP Act is relevant to those concepts as they exist in section 32 of the ACL.

6.181            The application of section 32 of the ACL is not limited to transactions involving ‘consumers’ as defined in section 3 of the ACL. 

6.182            The concept of ‘supply’ is defined in section 2 of the ACL.  [Schedule 1, item 1: Chapter 1, section 2]

Criminal offence

6.183            Section 32 of the ACL has an associated criminal offence in section 154 of the ACL.  The maximum fine payable for a contravention of section 154 of the ACL is $1.1 million for a body corporate and $220,000 for any other person.  [Schedule 1, item 1: Chapter 4, Part 4-1, section 154]

6.184            The offence in section 154 is one of strict liability so that it is not necessary to consider the intent of the person committing the offence.  The strict liability nature of this offence reflects the potential for widespread detriment, both financially for individual consumers and for its effect on the market and consumer confidence more generally, that can be caused by a person that breaches this provision, whether or not he or she intended to engage in the contravention.

6.185            Part 4-6 of the ACL provides defences applicable to criminal proceedings of:

•        an honest and reasonable mistake of fact; [Schedule 1, item 1: Chapter 4, Part 4-6, section 207]

•        where the contravention was caused by the act or default of another person or an accident or cause beyond the person’s control, and where the person took reasonable precautions and exercised due diligence to avoid the contravention; and  [Schedule 1, item 1: Chapter 4, Part 4-6, section 208]

•        where an advertiser publishes an advertisement in the ordinary course of business and does not know and had no reason to suspect the advertisement amounted to a contravention.  [Schedule 1, item 1: Chapter 4, Part 4-6, section 209]

Enforcement powers, penalties and remedies

6.186            A person contravening section 32 of the ACL is liable to pay a civil pecuniary penalty of up to:

•        $1.1 million for a body corporate;

•        $220,000 for other persons. 

[Schedule 1, item 1: Chapter 5, Part 5-2, Division 1, section 224]

6.187            The following enforcement powers and remedies apply to section 32 of the ACL:

•        undertakings;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 1]

•        substantiation notices; [Schedule 1, item 1: Chapter 5, Part 5-1, Division 2]

•         public warning notices;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 3]

•         injunctions;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 2]

•        damages;  [Schedule 1, item 1: Chapter 5, Part 5-2 ,Division 3]

•        compensatory orders;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision A]

•        redress for non-parties; and  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision B]

•        non-punitive orders.  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 5, section 246]  

6.188            For further information on these powers, remedies and penalties generally see Chapters 14 and 15. 

6.189            The ACCC may issue an infringement notice for a contravention of section 32(2) of the ACL.  The amount of the penalty specified in the infringement notice is:

•        600 penalty units for a listed corporation;

•        60 penalty units for a body corporate other than a listed corporation; and

•         12 penalty units for any other person.  [Schedule 2, item 1: Part XI, Division 5]

ASIC Act

6.190            Section 12DE of the ASIC Act is amended to reflect section 32 of the ACL, with respect to financial products and services.  [Schedule 3, items 18-23]

Certain misleading conduct in relation to goods

6.191            Section 33 of the ACL provides that a person must not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose or the quantity of any goods.  This operates in the same way as the current section 55 of the TP Act.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, section 33]

6.192            This provision gives effect to Australia’s ratification of the Paris Convention for the Protection of Industrial Property ; specifically, paragraph (3)(iii) of Article 10 bis of that Convention.  The Convention establishes global rules in relation to ‘patents, utility models, industrial designs, trademarks, service marks, trade names, indications of source or appellations of origin, and the repression of unfair competition’. [9]   The operation of section 33 is based on Australia’s ratification of the Convention.

Interpretation

6.193            An important distinction between section 33 of the ACL and most other provisions in Chapter 3 is that it applies to conduct that is liable to mislead the public.  This means that the conduct must have a public element — not necessarily applying to the world at large, but involving a general segment of the community that is sufficiently large. [10]

6.194            The ACL does not specifically define many of the concepts used in the drafting of section 33 of the ACL.  As section 33 is couched in substantially the same form as section 55 of the TP Act the jurisprudence relating to the concepts applicable to section 55 of the TP Act is relevant to those concepts as they exist in section 33 of the ACL.

6.195            The application of section 33 of the ACL is not limited to transactions involving ‘consumers’ as defined in section 3 of the ACL. 

6.196            The concept of ‘supply’ is defined in section 2 of the ACL.  [Schedule 1, item 1: Chapter 1, section 2]

Criminal offence

6.197            Section 33 of the ACL has an associated criminal offence in section 155 of the ACL.  The maximum fine payable for a contravention of section 155 of the ACL is $1.1 million for a body corporate and $220,000 for any other person.  [Schedule 1, item 1: Chapter 4, Part 4-1, section 155]

6.198            The offence in section 155 is one of strict liability so that it is not necessary to consider the intent of the person committing the offence.  The strict liability nature of this offence reflects the potential for widespread detriment, both financially for individual consumers and for its effect on the market and consumer confidence more generally, that can be caused by a person that breaches this provision, whether or not he or she intended to engage in the contravention.

6.199            Part 4-6 of the ACL provides defences applicable to criminal proceedings of:

•        an honest and reasonable mistake of fact; [Schedule 1, item 1: Chapter 4, Part 4-6, section 207]

•        where the contravention was caused by the act or default of another person or an accident or cause beyond the person’s control, and where the person took reasonable precautions and exercised due diligence to avoid the contravention; and  [Schedule 1, item 1: Chapter 4, Part 4-6, section 208]

•        where an advertiser publishes an advertisement in the ordinary course of business and does not know and had no reason to suspect the advertisement amounted to a contravention.  [Schedule 1, item 1: Chapter 4, Part 4-6, section 209]

Enforcement powers, penalties and remedies

6.200            A person contravening section 33 of the ACL is liable to pay a civil pecuniary penalty of up to:

•        $1.1 million for a body corporate;

•        $220,000 for other persons. 

[Schedule 1, item 1: Chapter 5, Part 5-2, Division 1, section 224]

6.201            The following enforcement powers and remedies apply to section 33 of the ACL:

•        undertakings;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 1]

•        substantiation notices; [Schedule 1, item 1: Chapter 5, Part 5-1, Division 2]

•         public warning notices;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 3]

•         injunctions;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 2]

•        damages;  [Schedule 1, item 1: Chapter 5, Part 5-2 ,Division 3]

•        compensatory orders;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision A]

•        redress for non-parties; and  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision B]

•        non-punitive orders.  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 5, section 246]  

6.202            For further information on these powers, remedies and penalties generally see Chapters 14 and 15. 

6.203            The ACCC may issue an infringement notice for a contravention of section 33 of the ACL.  The amount of the penalty specified in the infringement notice is:

•        600 penalty units for a listed corporation;

•        60 penalty units for a body corporate other than a listed corporation; and

•        12 penalty units for any other person.  [Schedule 2, item 1: Part XI, Division 5]

Certain misleading conduct in relation to services

6.204            Section 34 of the ACL provides that a person must not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the characteristics, the suitability for their purpose or the quantity of any services [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, section 34]

6.205            This provision largely follows the same form as section 33, except that this relates to services and the Industrial Property Convention relates to goods.  The reference to manufacturing process has also been removed from this provision as it is not relevant to services. 

Interpretation

6.206            An important distinction between section 34 of the ACL and most other provisions in Chapter 3 of the ACL is that it applies to conduct that is liable to mislead the public.  This means that the conduct must have a public element — not necessarily applying to the world at large, but involving a general segment of the community that is sufficiently large. [11]

6.207            The ACL does not specifically define many of the concepts used in the drafting of section 34 of the ACL.  As section 34 is couched in substantially the same form as section 55A of the TP Act the jurisprudence relating to the concepts applicable to section 55A of the TP Act is relevant to those concepts as they exist in section 34 of the ACL.

6.208            The application of section 34 of the ACL is not limited to transactions involving ‘consumers’ as defined in section 3 of the ACL. 

6.209            The concept of ‘supply’ is defined in section 2 of the ACL.  [Schedule 1, item 1: Chapter 1, section 2]

Criminal offence

6.210            Section 34 of the ACL has an associated criminal offence in section 156 of the ACL.  The maximum fine payable for a contravention of section 156 of the ACL is $1.1 million for a body corporate and $220,000 for any other person.  [Schedule 1, item 1: Chapter 4, Part 4-1, section 156]

6.211            The offence in section 156 is one of strict liability so that it is not necessary to consider the intent of the person committing the offence.  The strict liability nature of this offence reflects the potential for widespread detriment, both financially for individual consumers and for its effect on the market and consumer confidence more generally, that can be caused by a person that breaches this provision, whether or not he or she intended to engage in the contravention.

6.212            Part 4-6 of the ACL provides defences applicable to criminal proceedings of:

•        an honest and reasonable mistake of fact; [Schedule 1, item 1: Chapter 4, Part 4-6, section 207]

•        where the contravention was caused by the act or default of another person or an accident or cause beyond the person’s control, and where the person took reasonable precautions and exercised due diligence to avoid the contravention; and  [Schedule 1, item 1: Chapter 4, Part 4-6, section 208]

•        where an advertiser publishes an advertisement in the ordinary course of business and does not know and had no reason to suspect the advertisement amounted to a contravention.  [Schedule 1, item 1: Chapter 4, Part 4-6, section 209]

Enforcement powers, penalties and remedies

6.213            A person contravening section 34 of the ACL is liable to pay a civil pecuniary penalty of up to:

•        $1.1 million for a body corporate;

•        $220,000 for other persons. 

[Schedule 1, item 1: Chapter 5, Part 5-2, Division 1, section 224]

6.214            The following enforcement powers and remedies apply to section 34 of the ACL:

•        undertakings;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 1]

•        substantiation notices; [Schedule 1, item 1: Chapter 5, Part 5-1, Division 2]

•         public warning notices;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 3]

•         injunctions;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 2]

•        damages;  [Schedule 1, item 1: Chapter 5, Part 5-2 ,Division 3]

•        compensatory orders;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision A]

•        redress for non-parties; and  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision B]

•        non-punitive orders.  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 5, section 246]  

6.215            For further information on these powers, remedies and penalties generally see Chapters 14 and 15. 

6.216            The ACCC may issue an infringement notice for a contravention of section 34 of the ACL.  The amount of the penalty specified in the infringement notice is:

•        600 penalty units for a listed corporation;

•        60 penalty units for a body corporate other than a listed corporation; and

•        12 penalty units for any other person.  [Schedule 2, item 1: Part XI, Division 5]

Bait advertising

6.217            Section 35 of the ACL provides that a person must not, in trade or commerce, advertise goods or services at a specified price when there are reasonable grounds for believing that the person will not be able to supply those goods or services at that price for a reasonable period at reasonable quantities, having regard to the nature of the advertisement and the market in which the person carries on the business, and the person ought reasonably be aware of those grounds.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, subsection 35(1)]

6.218            A person who, in trade or commerce, advertises goods or services at a specified price must offer such goods or services for supply at that price for a reasonable period at reasonable quantities, having regard to the nature of the advertisement and the market in which the person carries on the business.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, subsection 35(2)]

Interpretation

6.219            The ACL does not specifically define many of the concepts used in the drafting of section 35 of the ACL.  As section 35 is couched in substantially the same form as section 56 of the TP Act the jurisprudence relating to the concepts applicable to section 56 of the TP Act is relevant to those concepts as they exist in section 35 of the ACL.

6.220            The application of section 35 of the ACL is not limited to transactions involving ‘consumers’ as defined in section 3 of the ACL. 

6.221            The concept of supply is defined in section 2 of the ACL.  [Schedule 1, item 1: Chapter 1, section 2]

Criminal offence

6.222            Section 35 of the ACL has an associated criminal offence in section 157 of the ACL.  The maximum fine payable for a contravention of section 157 of the ACL is $1.1 million for a body corporate and $220,000 for any other person.  [Schedule 1, item 1: Chapter 4, Part 4-1, section 157]

6.223            The offence in section 157 is one of strict liability so that it is not necessary to consider the intent of the person committing the offence.  The strict liability nature of this offence reflects the potential for widespread detriment, both financially for individual consumers and for its effect on the market and consumer confidence more generally, that can be caused by a person that breaches this provision, whether or not he or she intended to engage in the contravention.

6.224            Part 4-6 of the ACL provides defences applicable to criminal proceedings of:

•        an honest and reasonable mistake of fact; [Schedule 1, item 1: Chapter 4, Part 4-6, section 207]

•        where the contravention was caused by the act or default of another person or an accident or cause beyond the person’s control, and where the person took reasonable precautions and exercised due diligence to avoid the contravention; and  [Schedule 1, item 1: Chapter 4, Part 4-6, section 208]

•        where an advertiser publishes an advertisement in the ordinary course of business and does not know and had no reason to suspect the advertisement amounted to a contravention.  [Schedule 1, item 1: Chapter 4, Part 4-6, section 209]

Enforcement powers, penalties and remedies

6.225            A person contravening section 35 of the ACL is liable to pay a civil pecuniary penalty of up to:

•        $1.1 million for a body corporate;

•        $220,000 for other persons. 

[Schedule 1, item 1: Chapter 5, Part 5-2, Division 1, section 224]

6.226            The following enforcement powers and remedies apply to section 35 of the ACL:

•        undertakings;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 1]

•        substantiation notices; [Schedule 1, item 1: Chapter 5, Part 5-1, Division 2]

•         public warning notices;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 3]

•         injunctions;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 2]

•        damages;  [Schedule 1, item 1: Chapter 5, Part 5-2 ,Division 3]

•        compensatory orders;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision A]

•        redress for non-parties; and  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision B]

•        non-punitive orders.  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 5, section 246]  

6.227            For further information on these powers, remedies and penalties generally see Chapters 14 and 15. 

6.228            The ACCC may issue an infringement notice for a contravention of section 35(2) of the ACL.  The amount of the penalty specified in the infringement notice is:

•        600 penalty units for a listed corporation;

•        60 penalty units for a body corporate other than a listed corporation; and

•        12 penalty units for any other person.  [Schedule 2, item 1: Part XI, Division 5]

Wrongly accepting payment

6.229            Subsections 36(1)-(3) of the ACL provide that a person is prohibited from accepting payment, in trade or commerce, where the supplier: 

•        intends not to supply the goods or services;

•        intends to supply materially different goods or services; or

•        there are reasonable grounds, of which the corporation is aware or ought reasonably to be aware, for believing the corporation will not be able to supply the goods in the time specified or, if no time is specified, within a reasonable time. 

[Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, subsections 36(1)-(3)]

6.230            Section 36 of the ACL further provides that a person must provide goods or services within the specified time, or if no time is specified, within a reasonable time of accepting payment for them.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, subsection 36(4)]

6.231            Paragraph 36(4)(a) provides that a specified time for provision of the goods or services will be considered a reasonable time, if communicated to the person at or before the time the consumer made payment.  If an offer is made, subject to clearly stated terms of delivery, the person supplying the goods or services will not be forced to deliver the goods or services within a shorter timeframe than that which has been stated.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 36(4)(a)]

6.232            Where no time is specified, the determination of a ‘reasonable time’ is a subjective assessment, which will include consideration of such issues as the nature of the goods or services and any representations or inferences made about their availability.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, paragraph 36(4)(b)]

6.233            Section 36 also provides that the requirement to supply within the specified or reasonable time does not apply where the reason the trader could not supply was beyond its control, providing it had taken reasonable precautions and exercised due diligence.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, subsection 36(5)]

6.234            Subsection 36(6) of the ACL also permits a person to accept a different good or service if he or she agrees to do so.  This avoids the situation where a trader is put in an impossible position of being required to supply something it has genuinely tried to provide but cannot, even where an appropriate substitute is available.  It allows the trader to offer something in place of the good or service that cannot be supplied.  The person is not obliged to accept the different good or service if he or she wishes to retain other rights to compensation that he or she may have.  If a person accepts the substitute good or service then the trader should still provide it within a reasonable time.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, subsection 36(6)]

6.235            Section 36 also provides that the intent or knowledge-based requirements in subsections 36(1), (2) and (3) apply whether or not full consideration has been paid.  This ensures that a trader could not accept deposits with no intention of providing the goods or services.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, subsection 36(7)]

Interpretation

6.236            The ACL does not specifically define many of the concepts used in the drafting of section 36 of the ACL.  As section 36 is couched in substantially the same form as section 58 of the TP Act the jurisprudence relating to the concepts applicable to section 58 of the TP Act is relevant to those concepts as they exist in section 36 of the ACL.

6.237            The application of section 36 of the ACL is not limited to transactions involving consumers as defined in section 3 of the ACL. 

6.238            The concept of supply is defined in section 2 of the ACL.  [Schedule 1, item 1: Chapter 1, section 2]

Criminal offence

6.239            Section 36 of the ACL has an associated criminal offence in section 158 of the ACL.  The maximum fine payable for a contravention of section 158 of the ACL is $1.1 million for a body corporate and $220,000 for any other person.  [Schedule 1, item 1: Chapter 4, Part 4-1, section 158]

6.240            The offence in section 158 is one of strict liability so that it is not necessary to consider the intent of the person committing the offence.  The strict liability nature of this offence reflects the potential for widespread detriment, both financially for individual consumers and for its effect on the market and consumer confidence more generally, that can be caused by a person that breaches this provision, whether or not he or she intended to engage in the contravention.

6.241            Part 4-6 of the ACL provides defences applicable to criminal proceedings of:

•        an honest and reasonable mistake of fact; [Schedule 1, item 1: Chapter 4, Part 4-6, section 207]

•        where the contravention was caused by the act or default of another person or an accident or cause beyond the person’s control, and where the person took reasonable precautions and exercised due diligence to avoid the contravention; and  [Schedule 1, item 1: Chapter 4, Part 4-6, section 208]

•        where an advertiser publishes an advertisement in the ordinary course of business and does not know and had no reason to suspect the advertisement amounted to a contravention.  [Schedule 1, item 1: Chapter 4, Part 4-6, section 209]

Enforcement powers, penalties and remedies

6.242            A person contravening section 36 of the ACL is liable to pay a civil pecuniary penalty of up to:

•        $1.1 million for a body corporate;

•        $220,000 for other persons. 

[Schedule 1, item 1: Chapter 5, Part 5-2, Division 1, section 224]

6.243            The following enforcement powers and remedies apply to section 36 of the ACL:

•        undertakings;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 1]

•        substantiation notices; [Schedule 1, item 1: Chapter 5, Part 5-1, Division 2]

•         public warning notices;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 3]

•         injunctions;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 2]

•        damages;  [Schedule 1, item 1: Chapter 5, Part 5-2 ,Division 3]

•        compensatory orders;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision A]

•        redress for non-parties; and  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision B]

•        non-punitive orders.  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 5, section 246]  

6.244            For further information on these powers, remedies and penalties generally see Chapters 14 and 15. 

6.245            The ACCC may issue an infringement notice for a contravention of section 36(4) of the ACL.  The amount of the penalty specified in the infringement notice is:

•        600 penalty units for a listed corporation;

•        60 penalty units for a body corporate other than a listed corporation; and

•        12 penalty units for any other person.  [Schedule 2, item 1: Part XI, Division 5]

Misleading representations about certain business activities

6.246            Section 37 of the ACL provides that a person must not, in trade or commerce, make false or misleading representations in relation to the profitability, risk or any other material aspect of any business activity that the person has represented as one that can be carried on at or from a person’s place of residence.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, subsection 37(1)]

6.247            A person must not, in trade or commerce, make false or misleading representations in relation to the profitability, risk or any other material aspect of any business activity that a person invites other persons to participate by performing work for or investing in the business.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, subsection 37(2)]

Interpretation

6.248            Section 37 recognises that a general prohibition on the making of certain false or misleading representations in connection with the supply or possible supply of goods or services does not necessarily cover representations regarding the profitability, risk or other aspects of particular types of business activity, such as home-based businesses or those that require a person to invest either personal effort or money into a business (such as a franchising arrangement).

6.249            The ACL does not specifically define many of the concepts used in the drafting of section 37 of the ACL.  As section 37 is couched in substantially the same form as section 59 of the TP Act the jurisprudence relating to the concepts applicable to section 59 of the TP Act is relevant to those concepts as they exist in section 37 of the ACL.

6.250            The application of section 37 of the ACL is not limited to transactions involving ‘consumers’ as defined in section 3 of the ACL. 

Criminal offence

6.251            Section 37 of the ACL has an associated criminal offence in section 159 of the ACL.  The maximum fine payable for a contravention of section 159 of the ACL is $1.1 million for a body corporate and $220,000 for any other person.  [Schedule 1, item 1: Chapter 4, Part 4-1, section 159]

6.252            The offence in section 159 is one of strict liability so that it is not necessary to consider the intent of the person committing the offence.  The strict liability nature of this offence reflects the potential for widespread detriment, both financially for individual consumers and for its effect on the market and consumer confidence more generally, that can be caused by a person that breaches this provision, whether or not he or she intended to engage in the contravention.

6.253            Part 4-6 of the ACL provides defences applicable to criminal proceedings of:

•        an honest and reasonable mistake of fact; [Schedule 1, item 1: Chapter 4, Part 4-6, section 207]

•        where the contravention was caused by the act or default of another person or an accident or cause beyond the person’s control, and where the person took reasonable precautions and exercised due diligence to avoid the contravention; and  [Schedule 1, item 1: Chapter 4, Part 4-6, section 208]

•        where an advertiser publishes an advertisement in the ordinary course of business and does not know and had no reason to suspect the advertisement amounted to a contravention.  [Schedule 1, item 1: Chapter 4, Part 4-6, section 209]

Enforcement powers, penalties and remedies

6.254            A person contravening section 37 of the ACL is liable to pay a civil pecuniary penalty of up to:

•        $1.1 million for a body corporate;

•        $220,000 for other persons. 

[Schedule 1, item 1: Chapter 5, Part 5-2, Division 1, section 224]

6.255            The following enforcement powers and remedies apply to section 37 of the ACL:

•        undertakings;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 1]

•        substantiation notices; [Schedule 1, item 1: Chapter 5, Part 5-1, Division 2]

•         public warning notices;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 3]

•         injunctions;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 2]

•        damages;  [Schedule 1, item 1: Chapter 5, Part 5-2 ,Division 3]

•        compensatory orders;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision A]

•        redress for non-parties; and  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision B]

•        non-punitive orders.  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 5, section 246]  

6.256            For further information on these powers, remedies and penalties generally see Chapters 14 and 15. 

6.257            The ACCC may issue an infringement notice for a contravention of section 37 of the ACL.  The amount of the penalty specified in the infringement notice is:

•        600 penalty units for a listed corporation;

•        60 penalty units for a body corporate other than a listed corporation; and

•        12 penalty units for any other person.  [Schedule 2, item 1: Part XI, Division 5]

Information providers

6.258            The provisions of Chapter 3, Part 3-1, Division 1 which prohibit the making of false or misleading representations in different contexts do not apply to publications by an information provider, where the information provider made the publication in the course of carrying on a business of providing information or, in the case of a radio or television broadcaster, the publication was by radio or television broadcast by the information provider.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, subsection 38(1)]

6.259            This exemption does not apply to:

•        advertisements;

•        a publication in connection with the supply (or promotion of the supply) of goods or services by the information provider; or

•        a publication in connection with the sale or grant (or promotion of the sale or grant) of an interest in land by the information provider.

These exceptions operate in the same way as those outlined in the repealed paragraphs 65A(1)(a) and (b) of the TP Act.  In particular, subsections 38(3) and (4) have been constructed to maintain the High Court’s interpretation in ACCC v Channel Seven Brisbane Pty Limited . [12]   In that case, the High Court held that the second exception applies for publications made on behalf of, or pursuant to a contract, arrangement or understanding with a person who supplies goods or services, rather than for publications made in connection with relevant goods or services in relation to the information provider.  This supports the view that the exceptions have a wide application rather than a narrow one.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, subsections 38(2)-(4)]

6.260            An ‘information provider’ is a defined term in the ACL, and includes media organisations such as radio and television stations (including the Australian Broadcasting Corporation and the Special Broadcasting Service Corporation), as well as publishers of newspapers and magazines.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 1, subsections 20(5) and (6)]

6.261            Similarly, information providers are also exempt from the related criminal offences provisions in sections 151, 152, 155, 156 and 159 of the ACL.  [Schedule 1, item 1: Chapter 4, Part 4-1, Division 2, section 160]

ASIC Act

6.262            The ASIC Act includes a provision in the same terms as section 38 of the ACL, which replaces the current section 12DN of the ASIC Act.  This  gives a similar exclusion to information providers in relation to publications made by these providers in the course of carrying on a business of providing information, has been replaced with an updated version reflecting current drafting practices.  [Schedule 3, item 29, section 12DN]

Unsolicited supplies

Unsolicited cards

6.263            Section 39 of the ACL provides that a person must not send a credit card, a debit card, or an article that may be used as both a credit card and a debit card, to another person unless it is at the written request of the other person, or as a replacement for a similar card previously requested by the other person.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 2, subsection 39(1)]

6.264            However, the prohibition in subsection 39(1) of the ACL does not apply unless the card or article is sent by or on behalf of the issuer of the card or article.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 2, subsection 39(2)]

6.265            A person is prohibited from taking any action to enable another person (that is, the person in receipt of the card) a credit card to be used as a debit card, or a debit card to be used as a credit card, except at the written request of the cardholder.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 2, subsections 39(3) and (4)]

Interpretation

6.266            For the purposes of section 39 of the ACL a ‘credit card’ is an article that is one or more of the following:

•        an article of a kind commonly known as a credit card;

•        a similar article intended for use in obtaining cash, goods or services on credit; or

•        an article of a kind that persons carrying on business commonly issue to their customers, or their prospective customers, for use in obtaining goods or services from those persons on credit,

and it includes an article that may be used as one of these things.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 2, subsection 39(5)]

6.267            For the purposes of section 39 of the ACL, a ‘debit card’ is an article intended for use by a person in obtaining access to an account that is held by the person for the purpose of withdrawing or depositing cash or obtaining goods or services, or an article that may be used for these purposes.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 2, subsection 39(6)]

6.268            ‘Article’ is defined in section 2 of the ACL, and includes, for example, items such as cards, microchips or other devices embedded in cards, and any other token or document that can be used as a credit card or a debit card.  [Schedule 1, item 1: Chapter 1, section 2]

6.269            The ACL does not specifically define many of the other concepts used in the drafting of section 39 of the ACL.  As section 39 is couched in substantially the same form as section 63A of the TP Act the jurisprudence relating to the concepts applicable to section 63A of the TP Act is relevant to those concepts as they exist in section 39 of the ACL.

6.270            The application of section 39 of the ACL is not limited to transactions involving ‘consumers’ as defined in section 3 of the ACL. 

Criminal offence

6.271            Section 39 of the ACL has an associated criminal offence in section 161 of the ACL.  The maximum fine payable for a contravention of section 161 of the ACL is $1.1 million for a body corporate and $220,000 for any other person.  [Schedule 1, item 1: Chapter 4, Part 4-1, section 161]

6.272            The offence in section 161 is one of strict liability so that it is not necessary to consider the intent of the person committing the offence.  The strict liability nature of this offence reflects the potential for widespread detriment, both financially for individual consumers and for its effect on the market and consumer confidence more generally, that can be caused by a person that breaches this provision, whether or not he or she intended to engage in the contravention.

6.273            Part 4-6 of the ACL provides defences applicable to criminal proceedings of:

•        an honest and reasonable mistake of fact; [Schedule 1, item 1: Chapter 4, Part 4-6, section 207]

•        where the contravention was caused by the act or default of another person or an accident or cause beyond the person’s control, and where the person took reasonable precautions and exercised due diligence to avoid the contravention; and  [Schedule 1, item 1: Chapter 4, Part 4-6, section 208]

•        where an advertiser publishes an advertisement in the ordinary course of business and does not know and had no reason to suspect the advertisement amounted to a contravention.  [Schedule 1, item 1: Chapter 4, Part 4-6, section 209]

Enforcement powers, penalties and remedies

6.274            A person contravening section 39 of the ACL is liable to pay a civil pecuniary penalty of up to:

•        $1.1 million for a body corporate;

•        $220,000 for other persons. 

[Schedule 1, item 1: Chapter 5, Part 5-2, Division 1, section 224]

6.275            The following enforcement powers and remedies apply to section 39 of the ACL:

•        undertakings;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 1]

•        substantiation notices; [Schedule 1, item 1: Chapter 5, Part 5-1, Division 2]

•         public warning notices;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 3]

•         injunctions;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 2]

•        damages;  [Schedule 1, item 1: Chapter 5, Part 5-2 ,Division 3]

•        compensatory orders;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision A]

•        redress for non-parties; and  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision B]

•        non-punitive orders.  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 5, section 246]  

6.276            For further information on these powers, remedies and penalties generally see Chapters 14 and 15. 

6.277            The ACCC may issue an infringement notice for a contravention of section 39 of the ACL.  The amount of the penalty specified in the infringement notice is:

•        600 penalty units for a listed corporation;

•        60 penalty units for a body corporate other than a listed corporation; and

•        12 penalty units for any other person.  [Schedule 2, item 1: Part XI, Division 5]

Asserting a right to payment for unsolicited goods or services

6.278            Section 40 of the ACL provides that a person must not, in trade or commerce, assert a right to payment from another person for unsolicited goods or services, unless the first person has reasonable cause to believe that there is a right to the payment.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 2, subsections 40(1) and (2)]

6.279            Section 40 further provides that a person must not, in trade or commerce, send an invoice or other document to another person that states the amount due or sets out the charge for unsolicited goods or services without a warning statement that complies with the requirements set out in regulations.  This provision establishes a specific prohibition for the use of an invoice in this way to complement the rules about the use of an invoice set out in section 10 of the ACL, which defines the meaning of ‘assert a right to payment’.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 2, subsection 40(3)]

6.280            In any proceedings under section 40 of the ACL, the onus is on the person asserting their right to payment from the other person to prove that he or she knew or had reasonable cause to believe that there was a right to payment for the unsolicited goods or services.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 2, subsection 40(4)]

Interpretation

6.281            ‘Assert a right to payment’ is a defined concept for the purposes of the ACL and is dealt with in section 10.  It deems certain conduct, such as taking steps to demand payment or to collect a debt, to be asserting a right to payment.  Section 10 is in substantially the same form as subsections 64(5) and (7) of the TP Act.  [Schedule 1, item 1: Chapter 1, section 10]

6.282            The ACL does not specifically define many of the other concepts used in the drafting of section 40 of the ACL.  As section 40 is couched in substantially the same form as section 64 of the TP Act the jurisprudence relating to the concepts applicable to section 64 of the TP Act is relevant to those concepts as they exist in section 40 of the ACL.

6.283            The application of section 40 of the ACL is not limited to transactions involving ‘consumers’ as defined in section 3 of the ACL. 

Criminal offence

6.284            Section 40 of the ACL has an associated criminal offence in section 162 of the ACL.  The maximum fine payable for a contravention of section 162 of the ACL is $1.1 million for a body corporate and $220,000 for any other person.  [Schedule 1, item 1: Chapter 4, Part 4-1, section 162]

6.285            The offence in section 162 is one of strict liability so that it is not necessary to consider the intent of the person committing the offence.  The strict liability nature of this offence reflects the potential for widespread detriment, both financially for individual consumers and for its effect on the market and consumer confidence more generally, that can be caused by a person that breaches this provision, whether or not he or she intended to engage in the contravention.

6.286            Part 4-6 of the ACL provides defences applicable to criminal proceedings of:

•        an honest and reasonable mistake of fact; [Schedule 1, item 1: Chapter 4, Part 4-6, section 207]

•        where the contravention was caused by the act or default of another person or an accident or cause beyond the person’s control, and where the person took reasonable precautions and exercised due diligence to avoid the contravention; and  [Schedule 1, item 1: Chapter 4, Part 4-6, section 208]

•        where an advertiser publishes an advertisement in the ordinary course of business and does not know and had no reason to suspect the advertisement amounted to a contravention.  [Schedule 1, item 1: Chapter 4, Part 4-6, section 209]

Enforcement powers, penalties and remedies

6.287            A person contravening section 40 of the ACL is liable to pay a civil pecuniary penalty of up to:

•        $1.1 million for a body corporate;

•        $220,000 for other persons. 

[Schedule 1, item 1: Chapter 5, Part 5-2, Division 1, section 224]

6.288            The following enforcement powers and remedies apply to section 40 of the ACL:

•        undertakings;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 1]

•        substantiation notices; [Schedule 1, item 1: Chapter 5, Part 5-1, Division 2]

•         public warning notices;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 3]

•         injunctions;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 2]

•        damages;  [Schedule 1, item 1: Chapter 5, Part 5-2 ,Division 3]

•        compensatory orders;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision A]

•        redress for non-parties; and  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision B]

•        non-punitive orders.  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 5, section 246]  

6.289            For further information on these powers, remedies and penalties generally see Chapters 14 and 15. 

6.290            The ACCC may not issue an infringement notice for a contravention of section 40 of the ACL. 

ASIC Act

6.291            Section 12DM of the ASIC Act is amended to reflect section 40 of the ACL, with respect to financial products and services.  [Schedule 3, items 24-28]

Liability etc. of recipient for unsolicited goods or services

Unsolicited goods

6.292            If a person, in trade or commerce, supplies unsolicited goods to another person, the other person:

•        is not liable to make any payment for those unsolicited goods; or

•        is not liable for any loss or damage to those goods, unless the loss or damage resulted from the person receiving the good’s wilful and unlawful act during the recovery period.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 2, subsection 41(1)]

6.293            The ‘recovery period’ is defined in subsection 41(4) of the ACL as being whichever of the following periods ends first:

•        a period of 3 months starting on the day after the day on which the person received the goods;

•         if the person who receives the unsolicited goods gives notice with respect to the goods to the supplier or sender in accordance with subsection 41(5), a period of 1 month starting on the day on which the notice is given.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 2, subsection 41(4)]

6.294                A notice under section 41 must be in writing, state the name and address of the person who received the unsolicited goods, state the address of the place at which the goods may be recovered by the owner or sender and contain a statement to the effect that the goods are unsolicited goods.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 2, subsection 41(5)]

6.295            The ‘recovery period’ is relevant to the ability of the person supplying unsolicited goods to retain title to those goods:

•        a person who supplies unsolicited goods is not entitled to take action to recover the goods after the end of the recovery period; and

•        the goods become the property of the person who has received them at the end of the recovery period, free of any lien or charge on those goods which might be asserted by the person who supplied them or any other person.

[Schedule 1, item 1: Chapter 3, Part 3-1, Division 2, subsection 41(2)]

6.296            The provisions governing the ownership of the goods set out in subsection 41(2) of the ACL are subject to caveats relating to the conduct of the person who has received the goods.  Subsection 41(2) will not apply when:

•        the person who received unsolicited goods has, at any time during the recovery period, unreasonably refused to permit the sender or the owner of the goods to take possession of them; or

•        the sender or owner of the goods has within the recovery period taken possession of the goods; or

•         the goods were received by the person in circumstances in which the person knew, or might reasonably have been expected to have known, that the goods were not intended for him or her.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 2, subsection 41(3)]

6.297            Section 12DMA is included in the ASIC Act in relation to liability for unsolicited financial products.  This specifies that a person is not liable to make any payment for unsolicited financial products and is not liable for loss or damage as a result of the supply of the financial products.  [Schedule 3, item 28, section 12DMA]

Unsolicited services

6.298            A person is not liable to make any payment for unsolicited services, or for loss or damage arising as a result of the supply of such services.  This is intended to exclude a person from liability for not just the unsolicited services themselves, but other loss or damage arising from the supply of such services.  Unlike unsolicited goods, there is no provision for traders to retrieve unwanted unsolicited services as it is not possible for unsolicited services to be ‘retrieved’.  [Chapter 3, Part 3-1, Division 2, section 42]

6.299            Section 12DMA is included in the ASIC Act in relation to liability for unsolicited financial services.  This specifies that a person is not liable to make any payment for unsolicited financial services and is not liable for loss or damage as a result of the supply of the financial services.  [Schedule 3, item 28, section 12DMA]

6.300            As with the provision in the ACL, no enforcement or remedies apply to the ASIC Act provision.

Interpretation

6.301            The ACL does not specifically define many of the other concepts used in the drafting of sections 41 and 42 of the ACL.  As sections 41 and 42 are couched in substantially the same form as section 64 of the TP Act the jurisprudence relating to the concepts applicable to section 64 of the TP Act is relevant to those concepts as they exist in sections 41 and 42 of the ACL.

6.302            The application of sections 41 and 42 of the ACL is not limited to transactions involving ‘consumers’ as defined in section 3 of the ACL. 

Enforcement and remedies

6.303            Sections 41 and 42 of the ACL establish rules about the liability of persons who receive unsolicited goods or services.  As such, no enforcement or remedies apply to either of these provisions as any ‘breach’ will be covered under the section 40, which relates to asserting a right to payment for unsolicited goods or services.

Asserting a right to payment for unauthorised entries or advertisements

6.304            Subsection 43(1) of the ACL provides that a person must not, in trade or commerce, assert a right to payment from another person for placing, in a publication, an entry or advertisement relating to that person or their profession, business, trade or occupation.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 2, subsection  43(1)]

6.305            Section 43 operates in a similar way to the repealed subsection 64(3) of the TP Act, except it has been expanded to include entries that are like ‘directory entries’ but are not included in directories.

6.306            Subsection 12DMB(1) is included in the ASIC Act, which treats assertions for payment for unauthorised entries or advertisements for financial services or financial products in the same way as section 43 of the ACL.  [Schedule 3, item 28, subsection 12DMB(1)]

6.307            Subsection 43(2) of the ACL provides that a person must not, in trade or commerce, send an invoice or other document to another person that states the amount due or sets out the charge for placing, in a publication, an entry or advertisement in relation to the other person or their profession, trade or occupation, without a warning statement that complies with the requirements set out in regulations.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 2, subsection  43(2)]

6.308            Subsection 12DMB(2) is included in the ASIC Act, which treats documents asserting a right to payment for unauthorised entries or advertisements for financial services or financial products in the same way as section 43 of the ACL.    [Schedule 1, item 1: Chapter 3, Part 3-1, Division 2, subsections  43(2)][Schedule 3, item 28, subsection 12DMB(2)]

6.309            Subsection 43(2) of the ACL and subsection 12DMB(2) establish a specific prohibition for the use of an invoice in this way to complement the rule about the use of an invoice set out in section 10 of the ACL and section 12BF of the ASIC Act.  [Schedule 1, item 1: Chapter 1, section 10]

6.310            Under section 43(4) a person is not liable to make any payment to another person for placing an entry or advertisement in a publication, and can recover any such payment made through court action.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 2, subsections  43(4)]

6.311            Subsection 12DMB(4) is included in the ASIC Act, which treats liability for payment for unauthorised entries or advertisements for financial services or financial products in the same way as section 43 of the ACL.  [Schedule 3, item 28, subsection 12DMB(4)]

6.312            Section 43(4) of the ACL operates in a similar way to the repealed subsection 64(4) of the TP Act, except that it has been expanded to include entries that are like ‘directory entries’ but are not included in directories.

6.313            Subsections 43(1) and (2) of the ACL and subsections 12DMB(1) and (2) of the ASIC Act do not apply if the person asserting their right to payment knows, or has reasonable cause to believe, that the other person authorised the placing of the entry or advertisement. [Schedule 1, item 1: Chapter 3, Part 3-1, Division 2, subsections   43(1) and (2)] [Schedule 3, item 28, subsections 12DMB(1) and (2)]

Interpretation

6.314            Section 43 of the ACL and section 12 DMB of the ASIC Act do not apply to:

•        publications with an audited circulation of 10,000 copies or more a week;

•        a body corporate related to the publisher of such a publication;

•        the Commonwealth, a State, a Territory, or an authority of the Commonwealth, State or Territory; or

•        a person specified in the regulations. 

[Schedule 1, item 1: Chapter 3, Part 3-1, Division 2, subsection 43(3)] [Schedule 3, item 28, subsection 12DMB(3)]

6.315            In relation to the audited circulation of a publication referred to in paragraph 43(3)(a) of the ACL or paragraph 12DMB(3)(a) of the ASIC Act, the audit is to be performed by a body as specified in regulations.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 2, subsection 43(3)] [Schedule 3, item 28, subsection 12DMB(3)]

6.316            An ‘advertisement’ is not a defined term for the purposes of the ACL.

6.317            For clarity, the subsection 43(5) of the ACL and section 12DMB(5) of the ASIC Act specifies that a person has not authorised the placing, in a publication, of an entry or advertisement unless certain conditions, based around ensuring that the person has taken positive, documented steps to authorise such actions, are met.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 2, subsection 43(5)][Schedule 3, item 28, subsection 12DMB(5)]

6.318            In proceedings relating to section 43 of the ACL and 12DMB of the ASIC Act the onus is on the person asserting their right to payment from another person to prove that he or she knew or had reasonable cause to believe that the other person had authorised the placing, in a publication, of the entry or advertisement.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 2, subsection 43(6)][Schedule 3, item 28, subsection 12DMB(6)]

6.319            The ACL does not specifically define many of the other concepts used in the drafting of section 43 of the ACL.  As section 43 is couched in substantially the same form as parts of section 64 of the TP Act the jurisprudence relating to the concepts applicable to section 64 of the TP Act is relevant to those concepts as they exist in section 43 of the ACL.

6.320            The application of section 43 of the ACL is not limited to transactions involving ‘consumers’ as defined in section 3 of the ACL. 

Criminal offence

6.321            Section 43 of the ACL has associated criminal offences in section 163 of the ACL.  The maximum fine payable for a contravention of a provision of section 163 of the ACL is $1.1 million for a body corporate and $220,000 for any other person.  [Schedule 1, item 1: Chapter 4, Part 4-1, section 163]

6.322            The offence in section 163 is one of strict liability so that it is not necessary to consider the intent of the person committing the offence.  The strict liability nature of this offence reflects the potential for widespread detriment, both financially for individual consumers and for its effect on the market and consumer confidence more generally, that can be caused by a person that breaches this provision, whether or not he or she intended to engage in the contravention.

6.323            Part 4-6 of the ACL provides defences applicable to criminal proceedings of:

•        an honest and reasonable mistake of fact; [Schedule 1, item 1: Chapter 4, Part 4-6, section 207]

•        where the contravention was caused by the act or default of another person or an accident or cause beyond the person’s control, and where the person took reasonable precautions and exercised due diligence to avoid the contravention; and  [Schedule 1, item 1: Chapter 4, Part 4-6, section 208]

•        where an advertiser publishes an advertisement in the ordinary course of business and does not know and had no reason to suspect the advertisement amounted to a contravention.  [Schedule 1, item 1: Chapter 4, Part 4-6, section 209]

Enforcement powers, penalties and remedies

6.324            A person contravening section 43 of the ACL is liable to pay a civil pecuniary penalty of up to:

•        $1.1 million for a body corporate;

•        $220,000 for other persons. 

[Schedule 1, item 1: Chapter 5, Part 5-2, Division 1, section 224]

6.325            The following enforcement powers and remedies apply to section 43 of the ACL:

•        undertakings;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 1]

•        substantiation notices; [Schedule 1, item 1: Chapter 5, Part 5-1, Division 2]

•         public warning notices;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 3]

•         injunctions;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 2]

•        damages;  [Schedule 1, item 1: Chapter 5, Part 5-2 ,Division 3]

•        compensatory orders;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision A]

•        redress for non-parties; and  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision B]

•        non-punitive orders.  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 5, section 246]  

6.326            For further information on these powers, remedies and penalties generally see Chapters 14 and 15. 

6.327            The ACCC may not issue an infringement notice for a contravention of section 43 of the ACL. 

6.328            For breaches of the new ASIC Act provisions, the existing enforcement and remedies in Part 2, Subdivision 2G of the ASIC Act apply.

Pyramid schemes

Participation in pyramid schemes

6.329            A person must not [Schedule 1, item 1: Chapter 3, Part 3-1, Division 3, subsections  44(1) and (2)] :

•        participate in a pyramid scheme, or

•        induce, or attempt to induce, another person to participate in a pyramid scheme.

6.330            The meaning of ‘participate’ in a pyramid scheme is [Schedule 1, item 1: Chapter 3, Part 3-1, Division 3, subsection  44(3)] :

•        to establish or promote the scheme (whether alone or together with another person).  This covers both those who create the scheme and those who propagate it, whether those persons are connected directly with the creators of the scheme or not.

•        to take part in the scheme in any capacity (whether or not as an employee or agent of a person who establishes or promotes the scheme, or who otherwise takes part in the scheme).  This covers any person who is part of the scheme, including persons who agree to join the scheme and who may become its victims when it collapses.

Meaning of a pyramid scheme

6.331            The meaning of ‘pyramid scheme’ is defined in section 45 of the ACL.  It describes a scheme where [Schedule 1, item 1: Chapter 3, Part 3-1, Division 3, section 45] :

•        new participants in the scheme must provide a participation payment, which is a benefit (of either a financial or non-financial nature) to the participant or participants in the scheme and or, in some cases, partly to other persons; and

•        the main incentive for new participants to participate in the scheme is the prospect of receiving a recruitment payment, which includes benefits (of either a financial or non-financial nature) from new participants who join the scheme after them. 

Marketing schemes as pyramid schemes

6.332            A scheme that involves the marketing of goods or services as its primary purpose is not a pyramid scheme.  To clarify how the courts interpret this provision, a court may have regard to any matter it considers relevant in working out whether participation payments paid by new entrants to a scheme are entirely or substantially induced by the prospect of entitlement to future recruitment payments, but the court must have regard to [Schedule 1, item 1: Chapter 3, Part 3-1, Division 3, section 46] :

•        whether the participation payments bear a reasonable relationship to the value of the goods or services that participants are entitled to be supplied under the scheme; and

•        the emphasis given in the promotion of the scheme to the entitlement of participants to the supply of goods or services by comparison with the emphasis given to their entitlement to recruitment payments. 

Interpretation

6.333            The ACL does not specifically define many of the other concepts used in the drafting of sections 44, 45 and 46 of the ACL.  As sections 44, 45 and 46 are couched in substantially the same form as parts of Part V, Division 1AAA of the TP Act the jurisprudence relating to the concepts applicable to that Division of the TP Act is relevant to those concepts as they exist in sections 44, 45 and 46 of the ACL.

6.334            The application of sections 44, 45 and 46 of the ACL is not limited to transactions involving ‘consumers’ as defined in section 3 of the ACL. 

Criminal offence

6.335            Subsections 44(1) and (2) of the ACL has associated criminal offences in section 164 of the ACL.  The maximum fine payable for a contravention of a provision of section 164 of the ACL is $1.1 million for a body corporate and $220,000 for any other person.  [Schedule 1, item 1: Chapter 4, Part 4-1, section 164]

6.336            The offence in section 164 is one of strict liability so that it is not necessary to consider the intent of the person committing the offence.  The strict liability nature of this offence reflects the potential for widespread detriment, both financially for individual consumers and for its effect on the market and consumer confidence more generally, that can be caused by a person that breaches this provision, whether or not he or she intended to engage in the contravention.

6.337            Part 4-6 of the ACL provides the following defences applicable to criminal proceedings:

•        an honest and reasonable mistake of fact; [Schedule 1, item 1: Chapter 4, Part 4-6, section 207]

•        where the contravention was caused by the act or default of another person, or an accident or cause beyond the person’s control, and where the person took reasonable precautions and exercised due diligence to avoid the contravention;   [Schedule 1, item 1: Chapter 4, Part 4-6, section 208]

•        where an advertiser publishes an advertisement in the ordinary course of business and does not know and had no reason to suspect the advertisement amounted to a contravention.  [Schedule 1, item 1: Chapter 4, Part 4-6, section 209]

Enforcement powers, penalties and remedies

6.338            A person contravening subsections 44(1) and (2) of the ACL is liable to pay a civil pecuniary penalty of up to [Schedule 1, item 1: Chapter 5, Part 5-2, Division 1, section 224] :

•        $1.1 million for a body corporate;

•        $220,000 for other persons. 

6.339            The following enforcement powers and remedies apply to subsections 44(1) and (2) of the ACL:

•        undertakings;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 1]

•        substantiation notices; [Schedule 1, item 1: Chapter 5, Part 5-1, Division 2]

•         public warning notices;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 3]

•         injunctions;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 2]

•        damages;  [Schedule 1, item 1: Chapter 5, Part 5-2 ,Division 3]

•        compensatory orders;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision A]

•        redress for non-parties; and  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision B]

•        non-punitive orders.  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 5, section 246]  

6.340            For further information on these powers, remedies and penalties generally see Chapters 14 and 15. 

6.341            The ACCC may issue an infringement notice for a contravention of subsections 44(1) and (2) of the ACL.  The amount of the penalty specified in the infringement notice is:

•        600 penalty units for a listed corporation;

•        60 penalty units for a body corporate other than a listed corporation; and

•        12 penalty units for any other person.  [Schedule 2, item 1: Part XI, Division 5]

Pricing

Multiple pricing

6.342            Subsection 47(1) of the ACL prohibits a person who, in trade or commerce, from supplying goods where [Schedule 1, item 1: Chapter 3, Part 3-1, Division 4, subsection 47(1)] :

•        the goods have more than one displayed price; and

•        the supply takes place for a price which is the not the lower, or not the lowest, of the displayed prices. 

6.343            Section 47 of the ACL does not exclude a person’s right to withdraw an item from sale, for example, where a pricing error has occurred.  The person is not obliged by section 47 to sell a mislabelled item, but if the person does choose to sell it without withdrawing it from sale and correcting the pricing, then he, she or it must not sell it for more than the lowest price. 

Interpretation

6.344            Subsection 47(2) provides that a displayed price includes a price for the goods, or any representation that may reasonably be inferred to be a representation of a price for the goods:

•        that is annexed or affixed to, or is written, printed, stamped or located on, or otherwise applied to, the goods or any covering, label, reel or thing used in connection with the goods;

•        that is used in connection with the goods or anything on which the goods are mounted for display or exposed for supply;

•        that is determined on the basis of anything encoded on or in relation to the goods;

•        that is published in relation to the goods in a catalogue available to the public if:

-       a time is specified in the catalogue as the time after which the goods will not be sold at that price and that time has not passed;

-       in any other case—the catalogue may reasonably be regarded as not out of date; or

•        that is in any other way represented in a manner from which it may reasonably be inferred that the price or representation is applicable to the goods;

and includes such a price or representation that is partly obscured by another such price or representation that is written, stamped or located partly over that price or representation.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 4, subsection 47(2)]

6.345            If prices are displayed in a catalogue, and that catalogue is only applicable to certain sales (such as in NSW), the price is taken to be a displayed price in NSW but not, for instance, in Victoria.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 4, subsection 47(3)]

6.346            If a price is completely obscured, such as where a new label is placed completely over an old one, it is not a displayed price.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 4, paragraph 47(4)(a)]

6.347            If a price is not the total selling price, such as a unit price per kilogram; then that is not a displayed price.  Unit price information required to be provided under the Trade Practices (Industry Code — Unit Pricing) Regulations 2009 is an example of price information that is not to be considered a ‘displayed price’ for the purposes of section 45.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 4, paragraph 47(4)(b)]

6.348            Prices that are not in Australian currency, or that are expressed in a way not likely to be interpreted as being in Australian currency, are not displayed prices.  If a product has a foreign price printed on it and it is not clear that it is not the amount in Australian currency, that price may need to be covered if it is incorrect.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 4, paragraphs 47(4)(c)-(d)]

6.349            To recognise that pricing is easier to correct for prices affixed to goods than in broader advertisements, where a pricing error is made in a catalogue or advertisement, a supplier can publish a retraction of at least a similar circulation or audience and the retracted price will no longer be considered a displayed price from that point on.  For example, if a national catalogue incorrectly stated $10 instead of $100, a notice could be placed in newspapers, provided the circulation is at least similar to that of the catalogue.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 4, subsection 47(5)]

Criminal offence

6.350            Subsection 47(1) of the ACL has an associated criminal offence in section 165 of the ACL.  The maximum fine payable for a contravention of a provision of section 165 of the ACL is $1.1 million for a body corporate and $220,000 for any other person.  [Schedule 1, item 1: Chapter 4, Part 4-1, section 165]

6.351            The offence in section 165 is one of strict liability so that it is not necessary to consider the intent of the person committing the offence.  The strict liability nature of this offence reflects the potential for widespread detriment, both financially for individual consumers and for its effect on the market and consumer confidence more generally, that can be caused by a person that breaches this provision, whether or not he or she intended to engage in the contravention.

6.352            Part 4-6 of the ACL provides the following defences to criminal proceedings:

•        an honest and reasonable mistake of fact; [Schedule 1, item 1: Chapter 4, Part 4-6, section 207]

•        where the contravention was caused by the act or default of another person, or an accident or cause beyond the person’s control, and where the person took reasonable precautions and exercised due diligence to avoid the contravention; and  [Schedule 1, item 1: Chapter 4, Part 4-6, section 208]

•        where an advertiser publishes an advertisement in the ordinary course of business and does not know and had no reason to suspect the advertisement amounted to a contravention.  [Schedule 1, item 1: Chapter 4, Part 4-6, section 209]

Enforcement powers, penalties and remedies

6.353            A person contravening subsection 47(1) of the ACL is liable to pay a civil pecuniary penalty of up to [Schedule 1, item 1: Chapter 5, Part 5-2, Division 1, section 224] :

•        $5,000 for a body corporate;

•        $1,000 for other persons. 

6.354            The following enforcement powers and remedies apply to subsection 47(1) of the ACL:

•        undertakings;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 1]

•        substantiation notices; [Schedule 1, item 1: Chapter 5, Part 5-1, Division 2]

•         public warning notices;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 3]

•         injunctions;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 2]

•        damages;  [Schedule 1, item 1: Chapter 5, Part 5-2 ,Division 3]

•        compensatory orders;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision A]

•        redress for non-parties; and  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision B]

•        non-punitive orders.  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 5, section 246]  

6.355            For further information on these powers, remedies and penalties generally see Chapters 14 and 15. 

6.356            The ACCC may issue an infringement notice for a contravention of subsection 47(1) of the ACL.  The amount of the penalty specified in the infringement notice is [Schedule 2, item 1: Part XI, Division 5] :

•        10 penalty units for a body corporate ; and

•        2 penalty units for any other person.

Single price to be specified in certain circumstances

6.357            If an amount that is part of the price for goods or services is stated in connection with their promotion or supply in trade or commerce, a single price for the supply of those goods or services must be stated at least as prominently as the part price.  This operates in the same way as the current section 53C of the TP Act.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 4, subsection 48(1)]

6.358            A person is not prohibited from using component pricing.  However, if a component price is used (that is, a partial price representation is made), the person should also prominently specify, as a single figure, the price a consumer will be required to pay to obtain the product or service. 

Example 6.1  

A person could continue to represent prices as:

•        $299 + $29.90 GST for a total price of $328.90; or

•        $79 + $35 taxes fees and charges for a total price of $114.

6.359            There is an exception to the general requirement for all components of price to be included in the single price; for charges relating to sending goods from the supplier to a customer.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 4, subsection 48(2)]

6.360            However, where a person does not include charges relating to sending goods from the supplier to a customer in the single price, but such charges must be paid by a customer and that amount is known, the corporation must disclose the minimum amount of those charges as a separate component of price.  A person may also choose to include the minimum amount of such charges in the single price.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 4, subsection 48(3)]

6.361            The scope of ‘charges relating to sending the goods from the supplier to the customer’ is not defined.  However, these provisions create an exemption for costs that are necessary in order to send goods from a supplier to a consumer.  This includes charges such as postage, courier fees and packaging that is appropriate for the goods being sent.  For example, it would be equally acceptable for a product to be advertised as:

•        $30.00 + $5 postage and handling; or alternatively as

•        $35.00 including postage and handling.

6.362            This provision does not apply to representations that are made only to bodies corporate.  In effect, this provision applies only to representations to persons that are not engaged in business or other activities through a corporate structure (that is, consumers).  Where a representation is made to consumers as well as businesses or governments, this provision applies.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 4, subsection 48(4)]

‘at least as prominently’

6.363            A consumer should be able to easily identify the single price in a price representation.  The single price must be specified at least as prominently as the most prominent of the other components of the price.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 4, subsection 48(5)]

6.364            The ‘at least as prominently’ disclosure requirement does not apply to contracts that provide for the supply of services for the term of the contract, which also provide for periodic payments, and if goods are also supplied under the contract — they are directly related to the services in question.  This allows for disclosure of the periodic component of the single price for the services to be displayed more prominently than the single price over the life of the contract.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 4, paragraphs 48(6)(a) and (b)]

6.365            The single price for the supply of services includes any set-up costs or costs for hardware which must be bought from the supplier to obtain those services.  For example [Schedule 1, item 1: Chapter 3, Part 3-1, Division 4, paragraph 48(6)(c)] :

•        the cost of company-specific pay television connection equipment would be required to be included in the single price; but

•        the cost of a broadband modem where the purchaser could either buy their own or purchase one from the service supplier would not need to be included. 

‘single price’

6.366            The single price is a defined term in the ACL, and only includes amounts that are quantifiable at the time of the representation concerned.  The total price is not quantifiable if, at the time of the representation concerned, it cannot be readily converted into a dollar amount.  [Schedule 1, item 1: Chapter 3, Part 3-1, Division 4, subsection 48(7)]

6.367            The single price includes each of the amounts listed in the subsection if they are quantifiable.  Consequently, where the final price will be a mixture of quantifiable and non-quantifiable charges, the charges that are quantifiable should be represented as a single price.  In such circumstances, to comply with other provisions of the ACL, the representation may need to indicate that not all components are included in the single price.

6.368            Where a total price is not quantifiable but a minimum total price is known, that minimum price must be disclosed as a single price.

6.369            The term ‘minimum quantifiable consideration’ is not intended to preclude negotiation of a lower price between the customer and the corporation making the representation. 

Example 6.2  

A motor vehicle dealer may advertise the price of a vehicle as $32,990.  However a customer may negotiate with the dealer to pay only $31,500.  The representation of $32,990 would not be in breach of the provision provided that it includes all elements of the price that are quantifiable at the time of making the representation.  The fact that a lower price has been negotiated and a subsequent representation about that lower price has been made to the consumer does not cause the dealer’s earlier representation to be in breach.

6.370            Certain elements of a price do not need to be included in the ‘single price’ disclosure where they represent costs that are payable only at the option of the consumer. 

Example 6.3  

Where a consumer can only purchase a service by using a credit card, and a compulsory surcharge is imposed for the use of a credit card, that charge should be included in the single price; but

Example 6.4  

Where a consumer can purchase a service through means other than a credit card, and those other means do not attract a compulsory surcharge, the credit card surcharge does not need to be included in the single price.

6.371            The definition of ‘single price’ provides that the single price should also include all amounts imposed on the selling corporation in relation to the supply concerned.  This amount, comprising part of the single price, need only be included if it forms part of the consideration for the supply of the goods or services in question.  That is, if it is passed on to the purchaser in the price he or she must pay. 

6.372            The definition of single price provides all amounts paid or payable by the person in relation to the supply concerned that would have otherwise been payable by the purchaser should be included. 

6.373            Where the total price will depend on the quantity purchased by a consumer, the ‘single price’ should continue to be specified as a per quantity amount.

Interpretation

6.374            The ACL does not specifically define many of the other concepts used in the drafting of section 48 of the ACL.  As section 48 is couched in substantially the same form as section 53C of the TP Act the jurisprudence relating to the concepts applicable to section 53C of the TP Act is relevant to those concepts as they exist in section 48 of the ACL.

6.375            The application of section 48 of the ACL is not limited to transactions involving ‘consumers’ as defined in section 3 of the ACL. 

Criminal offence

6.376            Subsection 48(1) of the ACL has an associated criminal offence in section 166 of the ACL.  The maximum fine payable for a contravention of a provision of section 166 of the ACL is $1.1 million for a body corporate and $220,000 for any other person.  [Schedule 1, item 1: Chapter 4, Part 4-1, section 166]

6.377            The offence in section 166 is one of strict liability so that it is not necessary to consider the intent of the person committing the offence.  The strict liability nature of this offence reflects the potential for widespread detriment, both financially for individual consumers and for its effect on the market and consumer confidence more generally, that can be caused by a person that breaches this provision, whether or not he or she intended to engage in the contravention.

6.378            Part 4-6 of the ACL provides defences applicable to criminal proceedings of:

•        an honest and reasonable mistake of fact; [Schedule 1, item 1: Chapter 4, Part 4-6, section 207]

•        where the contravention was caused by the act or default of another person or an accident or cause beyond the person’s control, and where the person took reasonable precautions and exercised due diligence to avoid the contravention; and  [Schedule 1, item 1: Chapter 4, Part 4-6, section 208]

•        where an advertiser publishes an advertisement in the ordinary course of business and does not know and had no reason to suspect the advertisement amounted to a contravention.  [Schedule 1, item 1: Chapter 4, Part 4-6, section 209]

Enforcement powers, penalties and remedies

6.379            A person contravening subsection 48(1) of the ACL is liable to pay a civil pecuniary penalty of up to [Schedule 1, item 1: Chapter 5, Part 5-2, Division 1, section 224] :

•        $1.1 million for a body corporate;

•        $220,000 for other persons. 

6.380            The following enforcement powers and remedies apply to subsection 48(1) of the ACL:

•        undertakings;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 1]

•        substantiation notices; [Schedule 1, item 1: Chapter 5, Part 5-1, Division 2]

•         public warning notices;  [Schedule 1, item 1: Chapter 5, Part 5-1, Division 3]

•         injunctions;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 2]

•        damages;  [Schedule 1, item 1: Chapter 5, Part 5-2 ,Division 3]

•        compensatory orders;  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision A]

•        redress for non-parties; and  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 4, Subdivision B]

•        non-punitive orders.  [Schedule 1, item 1: Chapter 5, Part 5-2, Division 5, section 246]  

6.381            For further information on these powers, remedies and penalties generally see Chapters 14 and 15. 

6.382            The ACCC may issue an infringement notice for a contravention of subsection 48(1) of the ACL.  The amount of the penalty specified in the infringement notice is:

•        600 penalty units for a listed corporation;

•        60 penalty units for a body corporate other than a listed corporation; and

•        12 penalty units for any other person.  [Schedule 2, item 1: Part XI, Division 5]

Other unfair practices

Referral selling

6.383            Section 49 of the ACL provides that a person must not, in trade or commerce, induce a consumer to buy goods or services by representing that he, she or it will, after the contract effecting that sale is made, receive a rebate, commission or other benefit in return for:

•        giving the person the names of prospective customers; or

•        otherwise assisting the corporation to supply goods or services to other consumers,

when the receipt of this rebate, commission or other benefit is contingent on an event occurring after the contract for the initial contract of sale is made [Schedule 1, item 1: Chapter 3, Part 3-1, Division 5, section 49]

6.384            Section 49 is directed to preventing the practice of inducing consumers to buy goods or services with the promise of a rebate, commission or other benefit in return for the consumer assisting the supplier sell goods or services to other consumers, when there is, in fact, no assurance that such a rebate, commission or other benefit will be provided by the supplier, because it depends on something else occurring or not occurring. 

Interpretation

6.385            The ACL does not specifically define many of the other concepts used in the drafting of section 49 of the ACL.  As section 49 is couched in substantially the same form as section 57 of the TP Act, the jurisprudence relating to the concepts applicable to section 57 of the TP Act is relevant to those concepts as they exist in section 49 of the ACL.

Criminal offence

6.386            Section 49 of the ACL has an associated criminal offence in section 167 of the ACL.  The maximum fine payable for a contravention of a provision of section 167 of the ACL is $1.1 million for a body corporate and $220,000 for any other person.  [Schedule 1, item 1: Chapter 4, Part 4-1, section 167]

6.387            The offence in section 167 is one of strict liability so that it is not necessary to consider the intent of the person committing the offence.  The strict liability nature of this offence reflects the potential for widespread detriment, both financially for individual consumers and for its effect on the market and consumer confidence more generally, that can be caused by a person breaching this provision, whether or not he or she intended to engage in the contravention.

6.388            Part 4-6 of the ACL provides the following defences applicable to criminal proceedings:

•        an honest and reasonable mistake of fact; [Schedule 1, item 1: Chapter 4, Part 4-6, section 207]

•        where the contravention was caused by the act or default of another person, or an accident or cause beyond the person’s control, and where the person took reasonable prec