Do you deal directly with consumers? If so, now is the time to get any related contracts reviewed, to ensure that you aren’t in breach of recently enacted consumer protection laws…
Changes to the Trade Practices Act are now in force that could have a serious impact on the enforceability of your standard form contracts with consumers entered into (or amended) on or after 1 July 2010.
What is a standard form contract?
Essentially, a standard form contract is the type of contract where you haven’t provided an opportunity for negotiation or amendment of the terms. An example might be terms that you have on the back of pre-printed order forms, or a standard printed document that you provide to your consumer customers, without giving them an opportunity to negotiate changes.
The kinds of things that a court might look at in considering whether you have a standard form contract include whether one party in the contract is in control, or if one party crafted the contract without any prior discussion about the terms with the other party.
But one thing to bear in mind is where the burden of proof sits – If a customer says that a standard contract exists, it may be up to you to prove that it doesn’t!
What does this mean for me?
If your business supplies goods or services to consumers, or deals in the sale or grant of land to consumers, your operations could be affected by this new legislation, particularly if your customers use your goods or services for personal or household use.
When businesses and consumers enter into contracts that have terms that are deemed unfair under these new provisions, the consumer will no longer be bound by those terms.
What kinds of terms might be seen as “unfair”?
The sorts of terms that may be viewed as unfair are those that cause one parties’ rights or obligations to be significantly imbalanced, those that allow a party to make wholesale changes to the contract, or limit the right for litigation by one party or permit one party to assign the contract to another party without the other party’s consent. We see many contracts on a weekly basis that have terms that could fall into this category, so the likelihood is that if you have standard form contracts, they may very well contain these types of terms.
What should I do?
Look over your standard form consumer contracts, ensuring that there are no terms that might now be viewed as unnecessarily one-sided, or otherwise “unfair”. If you are unsure of whether certain clauses may be deemed unfair, don’t take a chance on it. Send your document in to us and we will provide a fixed price review and amendment to ensure you aren’t falling foul of the new legislation.
Another tip is to put in place procedures to ensure that your customers thoroughly understand the terms of your contracts before signing.
When will the legislation start?
These new provisions are in force now! So don’t delay in making sure you are fully compliant with the new regime.