TRADE PRACTICES AMENDMENT (AUSTRALIAN CONSUMER LAW) BILL (NO. 2) 2010 Explanatory Memorandum
TRADE PRACTICES AMENDMENT (AUSTRALIAN CONSUMER LAW) BILL (NO. 2) 2010
2008-2009-2010
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
Trade Practices Amendment (Australian Consumer Law)
bill (No. 2) 2010
SUPPLEMENTARY EXPLANATORY MEMORANDUM
AND
CORRECTIONS TO THE EXPLANATORY MEMORANDUM
Amendments moved on behalf of the Government
(Circulated by the authority of the
Minister for Competition Policy and Consumer Affairs,
the Hon Dr Craig Emerson MP)
Table of contents
Glossary 1
General outline and financial impact 3
Chapter 1 Explanation of amendments 5
Glossary
The following abbreviations and acronyms are used throughout this
supplementary explanatory memorandum.
|Abbreviation |Definition |
|ACCC |Australian Competition and |
| |Consumer Commission |
|ACL |Australian Consumer Law |
|ASIC |Australian Securities and |
| |Investments Commission |
|ASIC Act |Australian Securities and |
| |Investments Commission Act |
| |2001 |
|Bill |Trade Practices Amendment |
| |(Australian Consumer Law) |
| |Bill (No. 2) 2010 |
|Committee |Senate Standing Committee on |
| |Economics |
|Corporations Act |Corporations Act 2001 |
|TP Act |Trade Practices Act 1974 |
General outline and financial impact
Outline of amendments
On 17 March 2010, the Australian Government introduced the Trade
Practices Amendment (Australian Consumer Law) Bill (No. 2) 2010
(the Bill) into the Australian Parliament. On 18 March 2010, the
Bill was referred to the Senate Standing Committee on Economics
(the Committee) for inquiry and report. The Committee reported on
21 May 2010 and recommended that the Bill be passed, preferably
with some amendments.
The amendments to the Bill primarily relate to the Australian
Consumer Law (ACL) provisions of the Bill, set out in Schedule 1.
These amendments:
. return the definition of a 'consumer' (which applies to
provisions of the ACL dealing with consumer guarantees,
unsolicited consumer agreements, lay-by sales, the
provision of itemised bills, continuing credit contracts
and linked credit contracts) to apply to any person that
purchases goods and services below $40,000 in value;
. as a consequence of the aforementioned amendment, allow
suppliers and manufacturers to limit their liability in
respect of goods not ordinarily acquired for personal,
domestic or household use or consumption that fail to meet
the standards required by consumer guarantees (in line
with existing sections 68A and 74L of the TP Act);
. exempt, for the time being, services provided by qualified
architects or engineers from the statutory guarantee that
services are fit for purpose in line with existing section
74(2) of the TP Act;
. make a number of amendments to the mandatory reporting
requirement where a supplier of consumer goods or product-
related services becomes aware that a product they have
supplied has been involved in the death, serious injury,
or illness of any person;
. clarify that a consumer may choose to terminate a contract
for the supply of services that are connected to goods
that have been rejected;
. clarify that the obligation upon a supplier to refund
monies in respect of services when connected goods have
been rejected extends only to services that have not yet
been consumed; and
. clarify that the scope of the definition of an
'unsolicited consumer agreement' includes situations where
a consumer provides contact information to a supplier for
purposes other than soliciting goods or services (such as
entering a competition) or where a consumer contacts a
supplier in response to a failed attempt by a supplier to
contact them (missed call marketing).
Minor and technical amendments are also made to the Bill.
Specifically, these amendments:
. provide for matters that the Minister must take into
consideration when prescribing additional examples of
terms that may be unfair;
. insert a definition of 'conduct' into the ACL;
. clarify that a supplier is entitled to recover certain
amounts from a consumer if an unsolicited consumer
agreement is terminated;
. insert a definition of 'Family Court Judge' into the ACL;
. substitute section 236 for section 82 in section 87CB of
the TP Act; and
. substitute section 139DA of the TP Act for section 231 of
the ACL.
Date of effect: The amendments commence at the same time as the
provisions of the Trade Practices Amendment (Australian Consumer
Law) Bill (No. 2) 2010 - that is, on 1 January 2011.
Financial impact: Nil.
Compliance cost impact: Nil.
Chapter 1
Explanation of amendments
Outline of chapter
1. The Bill would amend the TP Act to complete the initial text of the
ACL and make related amendments to the TP Act, the ASIC Act, the
Corporations Act and to other Commonwealth Acts. The amendments
would alter the operation of the law in the ways outlined below.
In addition, the amendments include several minor corrections to
the provisions of the Bill.
Meaning of consumer
2. Many provisions of the ACL apply to all persons and are not limited
to a defined class of consumers. However, some provisions of the
ACL apply only to a defined class of consumer as it is not
appropriate, in those cases, to extend protections afforded by the
relevant provisions more broadly.
3. The meaning of consumer is relevant to the following provisions of
the ACL:
. consumer guarantees; [Division 1 of Part 3-2 of the ACL]
. unsolicited consumer agreements; [Division 2 of Part 3-2
of the ACL]
. lay-by sales agreements; [Division 3 of Part 3-2 of the
ACL]
. the provision of itemised bills; [section 101 of the ACL]
. the definition of continuing credit contracts; [section
14 of the ACL]; and
. linked credit contracts. [Division 1 of Part 5-5 of the
ACL]
4. Currently, under section 4B of the TP Act, a person is taken to
have acquired goods as a consumer if any one of three element are
satisfied:
. the goods are priced at less than the prescribed amount
(currently $40,000); or
. the goods are priced at more than $40,000, but are of a
kind ordinarily acquired for personal, domestic or
household use or consumption; or
. the goods consisted of a road vehicle or trailer acquired
for use principally in the transport of goods on public
roads.
5. Similarly, under section 4B of the TP Act, a person is taken to
have acquired services as a consumer if:
. the services are priced at less than the prescribed amount
(currently $40,000); or
. the services are priced at more than $40,000, but are of a
kind ordinarily acquired for personal, domestic or
household use or consumption.
6. Section 3 of the ACL, as drafted, would have removed the $40,000
element from the TP Act definition of consumer, but otherwise would
not have altered that definition. A number of stakeholders raised
concerns about the impact of this change. Some stakeholders have
indicated that it may have limited consumer protection when
consumers purchase items that are not ordinarily acquired for
personal, domestic or household use or consumption but are priced
at less than $40,000. Examples cited by stakeholders include
purchases of cement mixers or elevators by consumers for use in or
about their homes.
7. The Government amendments revise section 3 of the ACL to re-instate
the $40,000 threshold in the definition of consumer. This change
will extend the coverage of all provisions of the ACL that rely on
the definition of consumer to apply to all acquisitions of goods or
services where the relevant price is less than $40,000, with the
exception of acquisitions where the person acquired the goods for
the purpose of re-supply or for the purpose of using them up or
transforming them in trade or commerce.
Amounts paid or payable for purchases
8. Currently, paragraph 4B(2)(b) and (c) of the TP Act makes provision
for calculation of the price of goods or services for the purposes
of subsection 4B(1) of the TP Act. The Government amendments would
replicate the effect of subsection 4B(2)(b) and (c) of the TP Act
in subsections 3(4) and 3(5) of the ACL.
9. Determining the price of goods or services for the purposes of
subsection 3(1) or 3(3) of the ACL may not be straightforward when
goods or services are not purchased individually but, instead, form
part of a bundle of goods and services. Common examples of this
type of supply include internet services supplied in conjunction
with network equipment and a Single Lens Reflex camera supplied
with optional lenses. Subsection 3(11) of the ACL defines these
types of purchases as constituting a mixed supply.
10. Subsection 3(4) of the ACL provides that the amount paid or payable
for goods or services is taken to be the price paid or payable by
the person, unless subsection 3(5) applies. Subsection 3(5) of the
ACL provides rules for determining the price of individual
components of a mixed supply for the purposes of subsections 3(1)
and 3(3). The price of goods or services purchased as part of a
mixed supply is to be taken to be:
. if the goods or services could have been purchased from
the supplier separately from the mixed supply - the price
at which they could have been purchased; or
. if the goods or services were not available separately
from the supplier - the lowest price at which goods or
services of that kind could have been purchased from
another supplier; or
. if the goods or services are not available other than by
way of a mixed supply- the value of the goods or services.
Amounts paid or payable for other acquisitions
11. In certain circumstances goods or services are acquired otherwise
than by way of purchase, such as when trade occurs by way of
barter. In such cases, subsection 3(6) of the ACL will provide
that the amount paid or payable is taken to be the price at which
the person could have purchased the goods or services from the
supplier at the time of the acquisition.
12. Subsections 3(7) provides that the price of goods acquired other
than by way of purchase is the lowest price at which the relevant
person could have purchased the goods or services from another
supplier if the goods or services could not be purchased from their
actual supplier, either because they were not available for
purchase, or because they were only available as part of a mixed
supply.
13. Subsection 3(8) provides that the price of goods or services
acquired other than by way of purchase is taken to be their value
if the goods or services are not available, other than by mixed
supply, from any supplier.
Amounts paid or payable for obtaining credit
14. The effective price of acquiring goods or services may be increased
by the cost of obtaining credit. Subsection 3(9) provides that
amount paid or payable for goods or services is increased, for the
purposes of subsections 3(1) and 3(3), by the amount paid or
payable for the service of being provided with credit. This
ensures that it is not possible to avoid the total amount paid or
payable for goods or services exceeding the prescribed amount by
attributing a portion of the effective purchase price to the cost
of obtaining credit.
Presumption that persons are consumers
15. Subsection 3(10) provides a rebuttable presumption that a person is
a consumer if it is alleged that a person was a consumer in
relation to particular goods or services. Where a claimant has
alleged that they are 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.
Supplies to consumers
16. Subsection 3(12) clarifies that a reference to a supply of goods or
services to a consumer in the ACL is a reference to a supply of
goods or services to a person who is taken to have acquired them as
a consumer.
Limitation of liability for failures to comply with guarantees
17. Sections 64A and 276A of the ACL provide for suppliers and
manufacturers, respectively, limiting their liability for failure
to comply with consumer guarantees. This amendment to the Bill
follows from the decision to re-instate the $40,000 threshold in
the meaning of consumer. In each case the ability to limit
liability applies only to goods or services that are not ordinarily
acquired for personal, domestic or household use or consumption.
18. The ability to limit liability under section 64A and 276A does not
allow a manufacturer or supplier to exclude all liability that
would otherwise arise under the relevant consumer guarantees.
Under subsection 64A(1), liability may be limited to the
replacement of goods or the supply of equivalent goods, the repair
of goods, the payment of the cost of replacing the goods or of
acquiring equivalent goods or the payment of the cost of having
goods repaired. Under subsection 64A(2), liability may be limited
to the cost of supplying services again or the payment of the cost
of having services supplied again. Under section 276A, liability
may be limited to the cost of replacing goods, the cost of
obtaining equivalent goods or the cost of having goods repaired,
whichever is the lowest.
19. Subsections 64A(3) and 276A(2) provide that the provisions which
allow liability to be limited do not apply if it is not fair or
reasonable for the supplier or manufacturer, respectively, to limit
liability. Subsections 64A(4) and 276A(3) provide for certain
matters to which a court is to have regard when determining whether
limitation of liability is fair and reasonable in a particular
case.
20. Subsection 276A(4) provides for a contract between a manufacturer
and supplier providing that the manufacturer may provide for the
manufacturer has a greater liability than that provided for in
subsection 276A(1). This allows a supplier and manufacturer to
agree that the manufacturer will accept greater liability than
merely that which relates to replacing or repairing defective
goods.
Application of fitness for purpose guarantee to architects and engineers
21. Currently, under subsection 74(2) of the TP Act, services of a
professional nature provided by a qualified architect or engineer
are exempt from the requirement that they are fit for a purpose, or
achieve a result, made known to them by a consumer. Section 61 of
the Bill would not have retained this exemption to services of a
professional nature provided by architects or engineers.
22. The exemption means that consumers are not able to seek redress in
respect of services failing to be fit for a purpose, or achieve a
desired result, that they make known to an architect or engineer.
The exemption does not apply to excuse architects or engineers from
this, or any other, liability that may arise from services provided
that do not fall within their respective areas of professional
expertise. For example, the exemption would not apply if an
engineer contracted to provide building services to a consumer in
addition to providing engineering services.
23. The exemption does not affect other avenues of redress that may be
available to consumers if services provided by architects or
engineers do not meet the standards that consumers are entitled to
expect. These include actions under the guarantee of due care and
skill and actions in negligence if an architect owes a duty of care
to the consumer and has failed to meet the standard required by
that duty.
24. The Government amendments reinstate the exemption for services of a
professional nature provided by qualified architects and engineers
from the requirement that their services are fit for purpose or
achieve a result made known to them by a consumer as recommended by
Coalition Senators who are members of the Senate Economics
Committee. The Coalition Senators' Recommendation was motivated by
a number of arguments put forward by representatives of architects
and engineers. Those arguments include that:
. architects or engineers might be held responsible for
actions of third parties, such as builders, if the
relevant guarantees apply to those occupations;
. insurance costs will rise if the relevant guarantees apply
to those occupations;
. architects and engineers often experience difficulties
ascertaining the wishes of consumers when contracted to
provide the relevant services; and
. consumers are adequately protected by other sources of
redress, such as actions for negligence and the guarantee
of due care and skill, when services do not meet the
standard that consumer are entitled to expect.
25. The relative merit of arguments put forward by representatives of
architects and engineers are difficult to assess given that the
effect of removing the exemption would have effects in the future
that are not capable of being accurately measured at the present
time. The fact that subsection 74(2) has applied to every other
occupational grouping since 1977 would tend to militate against
these arguments. However, representatives of the industry have
argued that services provided by architects and engineers have
unique features that justify the exemption, although this was not
accepted by all stakeholders.
26. Given the current state of the debate about whether professional
services provided by architects and engineers should be required to
be fit for a purpose or achieve a result that consumers tell the
relevant professionals that want to achieve, the exemption will be
retained for the time being. However, the exemption in favour of
architects and engineers will be subject to a comprehensive review
three years after the commencement of the ACL.
Mandatory reporting for product safety incidents
27. The ACL contains provisions for a national law on consumer product
safety for consumer goods and product related services. The
national consumer product safety law is included in the ACL through
Schedule 1 Parts 3-3 and 4-3.
28. The ACL allows the responsible Commonwealth Minister to take
certain actions to reduce the risks posed by unsafe consumer goods
or product related services, including banning products or imposing
standards on their design, construction or labelling, ordering
suppliers to recall products or issuing warning notices to the
public.
29. The consumer product safety provisions of the ACL require suppliers
to notify the Commonwealth Minister if they become aware that
consumer goods or product related services that they have supplied
have been associated with a death, serious injury or illness
(Schedule 1 Part 3-3 Division 5).
30. The amendments to the ACL clarify and improve the operation of the
mandatory reporting requirement in the ACL. These amendments:
. improve the operation of the reporting requirement by
amending the reporting triggers;
. clarify that reports are only required to be made by
suppliers who have supplied the specific particular
product or service in question;
. provide suppliers with an exemption from the reporting
requirement if they or any other person are already
required to report the incident under another law or
industry code of practice; and
. require that information reported be kept confidential
except in specified circumstances.
Reporting triggers
31. Section 131 and 132 of the ACL requires suppliers of consumer goods
and product-related services to notify the responsible Minister if
they become aware that a product has been associated with the
death, serious injury or illness of any person. The terms
'consumer goods' and 'product related services' are defined in
section 2 of the ACL.
32. The amendments alter the reporting triggers in subsections 131(1)
and 131(2) of the ACL so that new subsections 131(1) and 132(1)
provide that:
. where a supplier of a consumer good or product related
service becomes aware of a death or serious injury or
illness of any person; and
. the supplier:
- considers that the accident was caused or may have been
caused by the use or foreseeable misuse of their good,
or of a consumer good which relates to their service; or
- becomes aware that another person considers that the
accident was caused or may have been caused by the use
or foreseeable misuse of their good, or of a consumer
good which relates to their service;
then the supplier must report the incident within two days to the
responsible Commonwealth Minister.
33. Under new subparagraphs 131(1)(b)(i) and 132(1)(b)(i) of the ACL,
the reporting requirement is triggered if a supplier considers a
consumer good supplied by them, or a good relating to a product
related service supplied by them, was the cause or may have been
the cause of a death, serious injury or illness. The amended
provision does not require a supplier to undertake further
investigations to make themselves aware of information that they
would not otherwise be aware of.
34. Under new subparagraphs 131(1)(b)(ii) and 132(1)(b)(ii) the
reporting requirement will be triggered where a supplier becomes
aware that another person considers that their good, or a good
related to their service, was the cause or may have been the cause
of an accident (new subparagraphs 131(1)(b)(ii) and 132(1)(b)(ii)
of the ACL). For this purpose, 'another person' includes any
member of the public (such as a consumer).
Becomes aware
35. A supplier 'becomes aware' of a death, serious injury or illness,
under new paragraphs 131(1)(b) and 132(1)(b) of the ACL, when they
are informed or notified about the accident. Similarly, under new
subparagraphs 131(1)(b)(ii) and 132(1)(b)(ii), a supplier 'becomes
aware' that another person considers that a good was or may have
been the cause of an accident when they receive that information or
are notified about it.
36. A supplier can become aware of information through any avenue or
means. For example, a supplier may become aware of an incident if
a consumer complains to the supplier and alleges that they product
was or may have been a cause of an incident.
Causation
37. The amendments clarify the operation of the reporting triggers by
replacing the concept of a product being 'associated with' an
incident, with the concept of an incident being 'caused by' a
product. This covers situations that include:
. where the accident was the result of, or possibly the
result of, using the good; and
. where the accident was the result of, or possibly the
result of, misusing the good, and the misuse is reasonably
foreseeable.
38. The amended provision does not require a supplier to have
established that their product was the cause of an incident before
making a report.
Use and foreseeable misuse
39. Where use or foreseeable misuse of a consumer good is considered by
a supplier of that good (or by the supplier of a product related
service which the good relates to) to be the cause or possible
cause of a death, serious injury or illness - then the supplier
must report the incident to the ACCC.
40. 'Use' of a consumer good includes applying the good for its
primary, normal or ordinary purpose(s). Labels, instructions,
directions and any other information that may accompany a good may
be relevant in determining what the uses are for the good.
41. A 'foreseeable misuse' of a consumer good includes applying the
good for a purpose other than its primary, normal or ordinary
purpose(s), as long as the misuse is reasonably foreseeable.
Irrelevant is the intention or motivation of the user or whether
the good was deliberately or intentionally misused. Rather what is
relevant is whether the misuse is reasonably foreseeable. For
example, placing a toy in one's mouth, although not a normal or
intended use for that type of good is nevertheless reasonably
foreseeable where the intended user is a small child.
Suppliers who are required to report
42. Amendments to the ACL clarify who is required to report the
necessary information under the mandatory reporting requirement by
removing the words 'of a particular kind' from paragraphs 131(1)(a)
and 132(1)(a) of the ACL.
43. Under new paragraphs 131(1)(a) and 132(1)(a), only suppliers of the
consumer good considered to have caused or possibly caused an
accident, or of the product related service which the good relates
to, are required to provide a report to the ACCC. Suppliers of
similar products or of substitute or competing products are not
required to provide a report.
44. For the purposes of the reporting requirement, suppliers of a
consumer good include all participants in the supply chain for that
good. That is, it includes those who were involved in supplying
the good in question, such as the manufacturer, retailer,
distributor, dealer or importer of the good. Reporting
obligations do not apply to other persons, including competitors.
45. For example, the manufacturer of a bicycle who considers that a
bike that he or she manufactured may have caused a serious injury,
will be required to report the incident under the mandatory
reporting requirement in the ACL. Other bicycle manufacturers are
not required to make a report. Similarly, the retailer who sold
the bicycle will be required to make a report if they believe (for
instance, through a consumer complaint) that the bicycle may have
caused an accident.
Exemptions
46. In limited circumstances, suppliers may be exempted from making a
report under section 131 or 132. Four exemptions are available and
are set out under subsection 131(2) of the ACL for suppliers of
consumer goods, and under subsection 132(2) for suppliers of
product related services.
47. The amendments to the ACL alter the operation of the reporting
exemptions:
. to complement amendments to the reporting triggers; and
. to exempt suppliers from having to report an incident
where another person has already done so.
Suppliers are exempt from reporting an incident to the ACCC if one
of the following four specific circumstances exist:
. where it is clear that the use or foreseeable misuse of a
consumer good supplied by them, or of a good relating to a
product related service supplied by them, was not the
cause of the accident in question (new paragraphs
131(2)(a) and 132(2)(a) of the ACL);
. where it is very unlikely that the use or foreseeable
misuse of a consumer good supplied by them, or of a good
relating to a product related service supplied by them,
was not the cause of the accident in question (new
paragraphs 131(2)(b) and 132(2)(b) of the ACL);
. where the supplier or another person is already required
to report the incident under another law specified in the
regulations (new paragraphs 131(2)(c) and 132(2)(c) of the
ACL); or
. where the supplier or another person is already required
to report the incident under an industry code of practice
specified in the regulations (new paragraphs 131(2)(d) and
132(2)(d) of the ACL).
Clearly or very unlikely to be the cause
48. Amendments to the ACL ensure that the first two exemptions
complement the reporting triggers. Paragraphs 131(2)(a),
131(2)(b), 132(2)(a) and 132(2)(b) of the ACL provide an exemption
where the incident was clearly or very unlikely to have been
'associated with' the good in question. Following amendments to
the reporting triggers to replace the words 'associated with', with
the words 'caused by', the exemptions are similarly amended with
complementary changes (new paragraphs 131(2)(a), 131(2)(b),
132(2)(a) and 132(2)(b)).
49. For the purposes of relying on the first two exemptions (new
paragraphs 131(2)(a), 131(2)(b), 132(2)(a) and 132(2)(b) of the
ACL), it is not enough for a supplier to show that their good, or a
good relating to a their service, may not have been the cause of
the accident in question. Rather the supplier must have some
reason to believe that that use or foreseeable misuse of the good
either clearly did not cause, or was very unlikely to have caused,
the accident.
50. For example, where a sporting injury was suffered as a result of
rough play on the playing field, the manufacturer of the footwear
worn by the injured player at the time of accident could rely on
the first or second reporting exemption.
Reporting under another law or industry code
51. Amendments to the ACL provide exemptions to suppliers where either
they or any other person is already required to report the incident
to a regulator (third and fourth exemption).
52. New paragraphs 131(2)(c), 131(2)(d), 132(2)(c) and 132(2)(d) of the
ACL exempt suppliers from having to report if they or another
person are already required under a specified law or specified code
of practice to report about the same incident to a regulator. For
the purposes of these exemptions, 'another person' includes any
member of the public who is required, under a specified law or
industry code of practice, to report the incident in question.
Confidentiality
53. New subsection 132A(1) of the ACL requires reported information to
be treated confidentially and to not be disclosed by any person.
This includes keeping the entire report, or any part of, or any
information contained in, the report, confidential.
54. In specified circumstances, reported information can be disclosed.
New subsections 132A(1) and 132A(2) of the ACL sets out six
exemptions to the confidentiality requirement, they are:
. if the person who made the report has consented for the
report or any part of it to not be treated as
confidential;
. if disclosure is by the Commonwealth Minister to another
responsible Minister, to the ACCC or to an associate
regulator (such as a state or territory consumer agency);
. if disclosure is by the Commonwealth Minister and the
Minister considers that the disclosure is in the public
interest (for example, for the purposes of issuing a
warning notice to the public on an unsafe good);
. if disclosure is by:
- an ACCC staff member to another ACCC staff member, to a
staff member of an associate regulator or to an
associate regulator; or
- a staff member of an associate regulator to another
staff member, to an ACCC staff member, to the ACCC or to
another associate regulator;
. if disclosure is authorised or required by or under a law
(for example, if disclosure is required by court order);
or
. if disclosure is reasonably necessary to enforce the
criminal law or a law that imposes a pecuniary penalty.
55. A new definition of 'associate regulator' is inserted into section
2 of Schedule 1 of the Bill. An associate regulator includes
another Commonwealth or State or Territory regulatory agency with
responsibility for administering the ACL in their jurisdiction.
Termination of contracts for services that are connected to rejected goods
Consumer has the option of terminating
56. Section 265 of the ACL, as drafted, would have provided that a
consumer is taken to have terminated a contract for the supply of
services that are connected to certain goods at the time that the
consumer elects to receive a refund in respect of those goods when
they have been rejected under section 259 of the ACL. A number of
stakeholders raised concerns about the automatic termination of
contracts for the supply of services that are connected with
rejected goods. In some circumstances, consumers may wish to
retain the benefit of a contract for the supply of services despite
having rejected goods that are associated with those services.
57. Amendments to the ACL would replace the automatic termination of
contracts for the supply of services with provisions that would
provide consumers with the option of cancelling contracts for the
supply of services that are connected with rejected goods.
58. The Government amendment to section 265 provides that a consumer
may terminate a contract for the supply of services if three
conditions are satisfied:
. the consumer notifies the supplier that they are rejecting
the goods under section 259 of the ACL;
. the supplier is required to give the consumer a refund
under paragraph 263(4)(a) of the ACL (in other words, the
goods have been validly rejected); and
. a person supplies services to the consumer that are
connected with the rejected goods.
59. The only relevant change in the provision compared to the Bill, as
drafted, is from a contract for the supply of services being taken
to be terminated to a the provision that allows that a consumer may
terminate such a contract.
60. An example of the application of this provision would be to a
contract for the provision of internet access. The ACL, as
drafted, would have provided for the automatic termination of the
contract for supply of internet access if a consumer rejected a
faulty modem that was supplied by their internet service provider.
The amendment will allow a consumer to retain their internet
connection whist rejecting a faulty modem, or rejecting the faulty
modem and cancelling the connection, at their option.
Supplier must refund only cost of services not yet consumed
61. Paragraph 265(e) and subsection 269(3) of the ACL, as drafted,
would have provided that a consumer is entitled to recover a refund
of money paid or other consideration paid or provided for services
when they have a right to terminate contracts for the supply of
services. The government amendment clarifies that the requirement
to refund money or consideration to consumers is limited to amounts
that relate to services yet to be consumed.
62. The amendment limits the amount refunded in respect of services if
they have been provided to consumers without any issue or problem.
For example, if a mobile telephone fails to function 22 months into
a 24 month contract, the amount refunded (or not charged) in
respect of services would relate only to the final two months of
the contract. If services have not been 'consumed' because a
faulty good connected with the services prevented the consumer from
receiving the benefit of the services, the amount refunded might be
increased to take that into account.
Definition of 'unsolicited consumer agreement'
63. Subsection 69(1) of the ACL defines 'unsolicited consumer
agreement'. Four elements need to be satisfied. The third element
of the test in paragraph 69(1)(c) requires that 'the consumer did
not invite the dealer to come to that place, or to make a telephone
call, for the purposes of entering into negotiations relating to
the supply of goods or services'. That provision is silent on the
types of conduct that would be sufficient to amount to such an
invitation.
64. The ACL will be amended to clarify that two types of conduct in
which consumers may engage are not invitations for the purposes of
paragraph 69(1)(c).
65. New paragraph 69(1A)(a) would provide that a consumer giving his or
her name or contact details other than for the predominant purpose
of entering into negotiations relating to the supply of goods or
services referred to in subsection (1)(c) is not taken to be an
invitation for a dealer to come to a place or make a telephone
call.
Example 1.1
An example of the application of this provision includes
where a consumer provides their name and contact details for
the purposes of entering a competition. If a dealer
subsequently uses those details to contact the consumer to
supply them goods or services, the competition entry would
not be taken to be an invitation for the dealer to contact
the consumer.
66. Paragraph 69(1A)(b) would provide that a consumer contacting a
dealer in connection with an unsuccessful attempt by the dealer to
contact the consumer is not taken to be an invitation for a dealer
to come to a place or make a telephone call.
Example 1.2
Examples of the application of this provision include where:
. a consumer calls a number on their mobile telephone that
appears as a result of a 'missed call';
. a customer calls a dealer in response to a message left by
the dealer on the consumer's answering machine or mobile
telephone in relation to the supply of goods or services;
and
. a dealer leaves a 'calling card' on the doorstep of the
consumer and the consumer uses contact details on the card
to contact the dealer.
Minor technical amendments
67. The government amendments also make a number of minor technical
amendments to the Bill. These amendments address drafting issues
that have been identified since the Bill was introduced.
68. Subsection 2(2) of the Bill inserts a definition of 'conduct' into
the ACL. This provision extends the ordinary meaning of 'conduct'
to include refusing to do certain things or making it known that
certain things will not be done. This provision is modelled on,
and should be given the same meaning as, subsection 4(2) of the TP
Act.
69. Subsection 25(2) of the ACL provides for matters that the Minister
must take into consideration when prescribing additional examples
of terms that may be unfair. This provision was inserted into the
ACL by the Trade Practices Amendment (Australian Consumer Law) Act
2010, but omitted from the Bill. The Government amendment ensures
that this subsection is part of the Schedule version of the ACL.
70. Section 88 of the ACL prohibits a supplier from attempting to
recover payment from a consumer after an unsolicited consumer
agreement has been lawfully terminated. The Government amendment
clarifies that suppliers are not prevented from recovering certain
amounts specified in section 85 in the ACL.
71. The government amendments insert a definition of 'Family Court
Judge' into section 130 of the TP Act. 'Family Court Judge' is
defined as a Judge of the Family Court (including the Chief Judge,
the Deputy Chief Judge, a Judge Administrator or a Senior Judge).
72. The government amendments substitute section 236 of the ACL for
section 82 of the TP Act in section 87CB of the TP Act. This
corrects a minor drafting error in the Bill.
73. The government amendments substitute section 139DA of the TP Act
for section 231 of the ACL. This corrects a minor drafting error
in the Bill.
Corrections to the Explanatory Memorandum
74. In clause 5.85 of the Explanatory Memorandum, replace the reference
to section 249 with a reference to section 250.
75. In clause 5.89, replace, 'payment of compensation or exemplary
damages' with 'or payment of compensation'.
76. In Chapter 16, all references to 'Part 5-2' should be replaced with
references to 'Part 5-3'.
77. In clauses 18.17, 18.18, 18.19 and 18.20, references to '137K'
should be replaced by '137F'.
78. In clause 18.21, replace '137L' with '137G'.
79. In clauses 18.22 and 18.23, replace references to '137M' with
'137H'.
80. At the end of clause 19.47, insert '[Schedule 2, item 2, Part XI,
Division 4, section 133E]'.
