Goodbye Trade Practices Act

The Competition and Consumer Act 2010 (CCA) came into effect on 1 January 2011 although some parts took effect on 1 July 2010.  While the CCA retains much of the law that was contained in the TPA, it also introduces some far reaching changes.  

New national consumer protection regime 

The CCA includes what is known as the Australian Consumer Law (ACL).  The ACL will be applied both by the federal government and also by all State and Territory governments.  This means that for the first time, Australia will have a uniform national consumer protection regime.

Unfair Terms

The ACL contains provisions prohibiting “unfair terms” in standard form consumer contracts made with consumers who are individuals (not companies).  Businesses that use standard form contracts will need to review their terms and conditions to ensure that they do not contain unfair terms.  If a term is found to be unfair, then the term (and possibly the entire contract, depending on the circumstances) will be void. In addition, a party to the contract or a regulator (e.g. the ACCC or the Office of Fair Trading) can seek damages or compensation orders.

Consumer Guarantees

Under the TPA, certain warranties (such as fitness of goods for purpose and that goods be of merchantable quality) were implied into all consumer contracts.  Businesses could limit their liability under these warranties to a limited extent.  These warranties have been replaced in the ACL by “consumer guarantees”.  

The content of these guarantees is similar to the old implied warranties, but the remedies and enforcement mechanisms are broader.  Instead of relying on contractual rights, aggrieved consumers will now have a statutory cause of action.  The consequences which follow from a breach of the consumer guarantees are prescribed in the ACL and therefore limitation of liability will be less useful than previously.  

Regulators given greater teeth

Under the CCA regulators have the power to:

  • issue substantiation notices
  • issue public warning notices
  • apply to a court for a pecuniary penalty
  • apply to the court for a banning order
  • seek redress on behalf of consumers not a party to the court proceeding. 

Substantiation notices

A substantiation notice compels a supplier to provide information and documents to the regulator which substantiate any claims they make promoting their goods or services, the sale of land or employment to be offered.  Unlike under the TPA, the regulator does not have to have a reasonable belief that there has been a breach of the Act before requiring this information.  Under the ACL, the regulator can simply decide to require substantiation any time a supplier makes a promotional claim or representation.  Failure to comply with a substantiation notice within the time limit, or providing false information in answer to it, is an offence and also renders the supplier liable to pay a fine.  It is also a basis on which a regulator may issue a public warning notice or infringement notice.

Public warning notices

This is a notice to the public which can be issued by a regulator where it has reasonable grounds to suspect that a business has contravened any of the consumer protection provisions of the ACL (including misleading and deceptive conduct, unconscionable conduct, having unfair terms in standard form consumer contracts, breaching the consumer guarantees, failure to comply with a substantiation notice etc). 

Pecuniary penalties

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