Unfair Contract Prohibition changes in Trade Practices Act
Will the new legislation apply to existing contracts?
The new legislation will not apply to contracts which exist at the time that the new prohibition starts. However, it will apply to contracts which are entered into after the start date of the legislation (currently expected to be 1 July, 2010), contracts which are renewed after the start date and to any clause of a contract which is varied after the start date.
If a contract existed at the date that the new prohibition starts but a clause is varied after the start date then the new prohibitions will apply only to the clause, which is varied, and not to the whole contract.
What should I do now?
Every company who has standard term consumer contracts should review and amend those contracts to remove any unfair terms. This should be done even if the contracts have already been reviewed to comply with the Victorian Fair Trading Act. In particular, the supply of goods or services to consumers over the internet should be carefully reviewed as these contracts are highly likely to be found to be “standard form” contracts.
Alternatively, companies could review the way in which their contracts are agreed to allow for a process of negotiation with consumers so that contracts will no longer be “standard form” contracts.
–Joanne Daniels is a partner with Middletons, an Australian full service commercial law firm.