Mark Treherne & Associates
The Trade Practices Act
Becomes the
Competition and Consumer Act
Maria van der Walt
Introduction
2011 marks the genesis of a new era in Australia’s competition and consumer protection legislation. A
range of amendments took effect on 1 January 2011.
The key changes may be summarised as follows:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Name Change
New Definitions
New Sections for Old Provisions
The New Australian Consumer Law
Wider Class of Offenders
Implied Conditions and Warranties becomes Consumer Guarantees
Introduction of a new Safety Standards system
New provisions for False or Misleading Representations
The introduction of Unfair Terms of a Contract
New regulations for unsolicited consumer agreements
New Citations
Name Change
The most obvious change on the face of the Trade Practices Act (‘TPA’) is a change of name. It has now
been dubbed the Competition and Consumer Act 2010 (‘The CCA’). The new name, the acronym shared
by Coca-Cola Amatil, the Commonwealth Copyright Administration, Community Colleges Australia and a
raft of others, along with the renumbering of familiar sections, is set to create chaos for the legal
researcher.
Definitions
The CCA has introduced a number of definitions that differ from TPA definitions. Some of the changed
definitions include:
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a) ‘evidential burden’
b) ‘consumer ‘
c) ‘consumer goods’
Definition of ‘Consumer ‘
The definition of a ‘consumer’ is found in section 3 of the ACL and has remained essentially similar to the
one that was in operation under the TPA, although it has been simplified, and is now more user friendly.
Under the ACL, a person is said to have acquired goods as a consumer if:
1. The goods were purchased at a price less than $40 000.00
a. This does not apply where the goods were purchased for the purpose of resupply, for
transformation to trade or commerce, in the process of production/manufacture or to
repair or treat goods or fixtures on land.
2. If the goods were purchased at a price of more than $40 000.00, where the goods were of a kind
ordinarily acquired for personal, domestic or household use or consumption; or it was a vehicle
or trailer acquired for use principally in the transport of goods on public roads.
Definition of ‘Evidential Burden‘
The term ‘Evidential Burden’ was not defined in the TPA and can now be found in section 4 of the ACL.
It ‘means the burden of adducing or pointing to evidence that suggests a reasonable possibility that the
matter exists or does not exist.
Definition of’ Consumer Goods’
The definition of ‘consumer goods’ has been amended to include goods which have become fixtures if
there is a recall in place for those goods.
New Sections for Old Provisions
A range of provisions have now been renumbered and relocated. Below is a sample of the old and new
locations of some key provisions.
Provision
Misleading and Deceptive Conduct
Restrictive Trade Practices
Unconscionable Conduct
Old Location
Section 52
Part IV
Part IV A
New Location
Chapter 2, Section 18 of the ACL
Part IV CCA
Chapter 2, Part 2-2, Section 20 of the
ACL
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Conditions and Warranties in Consumer
Transactions
Part V, Division 2
Unsolicited Supplies
Pyramid Schemes
Referral Selling
Section 63A, section 64
Section 65AAA to 65 AAE
Section 57
Harassment and Coercion
Section 69
False or Misleading Representations
Single Pricing
Section 53
Section 53C
Product Safety
Remedies
Part V, Division 1A
Part VI
Part 3-2, Division 1 of the ACL
Note: Now operate as Consumer
Guarantees
Chapter 3, Part 3-1, Division 2
Chapter 3, Part 3-1, Division 3
Chapter 3, Part 3-1, Division 5,
section 49
Chapter 3, Part 3-1, Division 5,
section 50
Chapter 3, Part 3-1, Division1
Chapter 3, Part 3-1, Division 4,
section 47
Chapter 3, Part 3-3
Chapter 5 of the ACL
The new sections will take some getting used to, and there is no doubt that it will take a while before
‘Misleading and Deceptive Conduct’ and ‘Section 18’ will flow freely in the same sentence.
The New Australian Consumer Law
The Australian Consumer Legislation (‘the ACL’) took force on 1 January 2011.) According to an
Australian Government Publication, the ACL is simpler and clearer than the equivalent provisions of the
Trade Practices Act and the State and Territory Fair Trading Acts, sets out clearer obligations and will be
better enforced than its predecessor.
In general, the ACL is well organised and easy to understand. It is divided into five chapters. These are:
1. Introduction
2. General Protections
3. Specific Protections
4. Offences
5. Remedies
The government also asserts ‘in its Review of Australia’s Consumer Policy Framework that the
Productivity Commission estimated that a national approach to consumer law would deliver benefits of
up to $4.5 billion per year.’1
1
The Australian Consumer Law http://www.consumerlaw.gov.au/content/Content.aspx?doc=fact_sheets/FAQ.htm
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This new national consumer law for fair trading and consumer protection and is located in Schedule 2 of
the Competition and Consumer Act. The ACL replaces 20 national state and territory consumer
provisions and applies to all Australian businesses. This includes sole traders and partnerships.
Wider Class of Offenders
The ACL widens the scope of application of a range of sections, such as section 51AB, 52, 53 and 53B to
include natural persons. This is possible because the ACL operates simultaneously as state and
Commonwealth law.
In relation to Misleading and Deceptive Conduct, the TPA provided that ‘a corporation shall not, in trade
or commerce, engage in conduct that is misleading or deceptive. The new provision in the ACL states
that ‘a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is
likely to mislead or deceive.’ The word person is defined to include a partnership. This change is
mirrored in the amendments in relation to the following sections:
1. The old section 51AB, Unconscionable Conduct, now found in Part 2-2 of the ACL, sections 20 to
22.
2. The old section 52, Misleading and Deceptive Conduct, now found in Part 2-1, section 18 of the
ACL.
3. The old section 53, False or misleading representations, now found in section Chapter 4, Part 41, of the ACL.
4. The old section 53B, Misleading conduct relating to employment, now found in Part 3-1, Section
31 of the ACL.
This broadened class of offenders does not apply to Restrictive Trade Practices, found in Part IV of both
the TPA and the CCA.
Consumer Guarantees
Consumer guarantees have replaced the implied conditions and warranties under the old system. A
range of consumer guarantees now apply to both the Supply of Goods and to the Supply of Services.
Supply of Goods Guarantees
The following guarantees apply to the sale of goods:
1.
2.
3.
4.
5.
Section 51 - Guarantee as to title
Section 52 - Guarantee as to undisturbed possession
Section 53 - Guarantee as to undisclosed securities etc.
Section 54 - Guarantee as to acceptable quality
Section 55 - Guarantee as to fitness for any disclosed purpose etc.
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6.
7.
8.
9.
Section 56 - Guarantee relating to the supply of goods by description
Section 57 - Guarantees relating to the supply of goods by sample or demonstration model
Section 58 - Guarantee as to repairs and spare parts
Section 59 - Guarantee as to express warranties
Supply of Services Guarantees
1. Section 60 Guarantee as to due care and skill
2. Section 61 Guarantees as to fitness for a particular purpose etc.
3. Section 62 Guarantee as to reasonable time for supply
Pursuant to section 64, the above guarantees cannot be excluded by contract and where a term
purports to do so, that term will be voided.
Remedies for failure to Comply with Consumer Guarantees
Section 259 outlines action against suppliers of goods where guarantees are not complied with.
Distinction is drawn between failures that can be remedied and that are not major and failures that
cannot be remedied and classify as major failures.
Where there is a failure that is not major the consumer may require the supplier to remedy the failure
within a reasonable time; or if the supplier refuses to remedy, or fails to remedy in reasonable time, the
consumer may take action against the supplier to recover all reasonable costs incurred by the consumer
in having the failure remedied, or notify the supplier that the consumer rejects the goods and of the
grounds for the rejection.
If the failure is a major failure, the consumer may notify the supplier that the consumer rejects the
goods and of the grounds for the rejection or take action against the supplier to recover the reduction in
the value of the goods.
Safety of Consumer Goods and Services
Product Safety was previously dealt with under Part V, Division 1A of the Trade Practices Act. The new
Safety Standards system is located in Part 3-3 of the ACL.
Under division 1, Commonwealth Ministers may issue product safety standards on consumer goods and
product related services. Safety standards may govern a range of factors including composition, design,
construction, finish, packaging, warnings and instructions.
Under division 2, interim and permanent bans may be made on goods or products that a safety threat.
Interim bans remain within the power of the State and Territory ministers, whilst permanent bans are
issued by Commonwealth ministers.
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Division 3 allows for the recalling of consumer goods under a range of circumstances, including goods
that do not comply with a standard, where an interim ban, or a permanent ban on goods is in force and
where it appears to the responsible Minister that such goods will or may cause injury to any person.
Interim Bans
Under Division 2, section 109, a responsible Minister may, by written notice published on the internet,
impose an interim ban on consumer goods of a particular kind if:
a)
it appears to the responsible Minister that:
i.
consumer goods of that kind will or may cause injury to any person; or
ii.
a reasonably foreseeable use (including a misuse) of consumer goods of that
kind will or may cause injury to any person
This provision is mirrored with similar provisions which apply to product related services. An interim ban
will last 60 days, but may be extended by a notice published on the internet.
Permanent Bans
The Commonwealth Minister may, by written notice published on the internet, impose a permanent ban
on consumer goods of a particular kind if:
a) one or more interim bans on consumer goods of that kind (the banned goods ), or on
consumer goods of a kind that include the banned goods, are in force; or
b) it appears to the Commonwealth Minister that:
i.
ii.
consumer goods of that kind will or may cause injury to any person; or
a reasonably foreseeable use (including a misuse) of consumer goods of that
kind will or may cause injury to any person.
Both interim and permanent bans may be revoked by the minister giving notice on the internet.
False or Misleading Representations
This provision is found in Chapter 4, Part 4-1 of the ACL.
The provisions in this area have remained largely unchanged. However a new provision has been
inserted which makes it an offence to make a false or misleading representation concerning a
testimonial or a representation that purports to be a testimonial.
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The offence imposing a requirement to pay for a contractual right has also been broadened to include
consumer guarantees as contractual rights for which payment may not be demanded.
Unfair Terms of a Contract
The ACL introduces new provisions, in Part 2-3, regulating unfair contracts by voiding a term in standard
contract where the term is ‘unfair.’
An Unfair Term is defined as one that:
a)
would cause a significant imbalance in the parties' rights and obligations arising under the
contract; and
b) is not reasonably necessary in order to protect the legitimate interests of the party who
would be advantaged by the term; and would cause detriment (whether financial or
otherwise) to a party if it were to be applied or relied upon.
The ACL provides a non-exhaustive list with 14 examples of unfair terms. These examples include “a
term that penalises, or has the effect of penalising, one party (but not another party) for a breach or
termination of the contract” and “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.”
However section 23(2) provides that the contract continues to bind the parties if it is capable of
operating without the unfair term.
Unsolicited Supplies
New provisions have been introduced to regulate unsolicited supplies.
These provisions are located in Chapter 3, Division 2 and prohibit:
a. requesting payment of unsolicited goods or services – Section 40
b. sending unsolicited credit cards or debit cards – Section 39
c. requesting payment for unauthorised entries or advertisements – Section 43
Pursuant to section 40(3)(b) and section 43(2)(b), if an invoice is issued for unsolicited goods or services,
it must bear a warning stating that the item is not a bill and that payment is not required.
The legislation provides that a person who received unsolicited goods or services is not liable for
payment for those goods or services. There is a three month recovery period, during which the supplier
may collect the goods. The recovery period is shortened to one month, if pursuant to section 41(5) the
receiver of the goods gives notice to the supplier.
After the lapse of the recovery period the receiver may retain possession of the unsolicited goods, and
the supplier cannot take action to recover the goods.
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New Citation
Thomson Reuters have suggested the following method of citation for the Australian Consumer Law:
1. To talk about a section in Schedule 2 (i.e. in the Australian Consumer Law), we suggest referring
to section 29 of the Australian Consumer Law as "ACL, s 29".
2. It would generally be helpful to mention first that the Australian Consumer Law is Schedule 2 to
the Competition and Consumer Act 2010).
Conclusion
The ACCC asserts that the Competition and Consumer Act signifies the ‘biggest change to the TPA in 35
years’ and a ‘complete modernisation of consumer protection laws.’ In the meantime, the legal
profession and members of the public have entered the period of transition. Across all spectrums of life,
where radical changes are implemented, periods of inconvenience and adjustment will inevitably follow.
The question that presents is whether this ‘radical change’ is worth the discomfort of transition and the
inevitable costs associated therewith.
It appears to be indisputable that the new Competition and Consumer Act and particularly the
Australian Consumer Law found therein is simpler and more user friendly than its predecessor. The
structure and language has been simplified and with uniform application across Australia it is hard to
argue that the amendments have lead to legislation that is more accessible to consumers, business
owners and the general public.
As to the ACCC’s promise that the CCA will be better and more consistently enforced than then TPA –
only time will tell.
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