Unfair contract terms regime to commence 1 July 2010

Thursday 27 May 2010

The Governor-General, Quentin Bryce, has fixed by proclamation 1 July 2010 as the commencement date for the unfair contract terms regime under both the Trade Practices Amendment (Australian Consumer Law) Act (No.1) 2010 and the Australian Securities and Investments Commission Act 2001.

The national unfair contract terms provisions will apply to consumer contracts entered, renewed or varied on or after 1 July 2010.

The Court's enforcement powers concerning unfair contract terms will also commence on 1 July 2010.

Unfair contract terms

A term in standard form consumer contracts will be unfair where it:

• causes a significant imbalance in the parties' rights and obligations, is not reasonably necessary to protect the legitimate interests of the party advantaged by that term, and would cause detriment (whether financial or otherwise) if it was relied upon or applied
• is part of a standard form, non-negotiated consumer contract
• is part of a contract entered into after the commencement date, or renewed or varied on or after commencement.

The unfair contract terms regime will not apply to business-to-business contracts.

Recommended action

Businesses should immediately review their standard form consumer contracts to ensure their terms comply with the new legislation.

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