The Competition and Consumer Legislation Amendment Bill 2010 (the Bill) will amend the Trade Practices Act 1974 (the TPA) and the Australian Securities and Investments Commission Act 2001 (ASIC Act) to clarify each statute's unconscionable conduct provisions. It will also amend the Australian Consumer Law once the Trade Practice Amendment (Australian Consumer Law) Bill (No.2) 2010 (the ACL) is passed by Parliament.
The unconscionable conduct amendments are central to the implementation of uniform consumer laws throughout Australia and will form part of the Australian Consumer Law once the ACL is passed by Parliament.
Amendments
In adopting the Senate Economics Committee recommendations, the Bill will enhance the unconscionable conduct provisions and introduce interpretative principles to clarify the scope and definition of "unconscionable conduct".
The interpretive principles will:
- clarify that the prohibitions against unconscionable conduct in sections 21 and 22 of the ACL (the equivalent to ss.51AB and 51AC of the TPA) are not limited by the equitable or common law doctrines of unconscionable conduct (eg the need to establish a "special disadvantage")
- clarify that unconscionable conduct is not limited to the bargaining practices leading to contract formation, but that Courts can examine the terms and the manner and extent to which the contract is carried out (including the ways in which contracts are renewed, negotiated and terminated)
- ensure the prohibition on unconscionable conduct applies to systematic conduct or patterns of behavior, and is not limited to individual transactions or events. The focus will be on the conduct engaged in rather than the need to identify a person who is at a disadvantage in order to enforce the prohibition.
The Bill will also remove the potentially confusing distinction in the existing provisions between unconscionable conduct that affects businesses and that which affects consumers by combining sections 21 and 22 of the ACL (sections 51AB and 51AC of the TPA) and sections 12CB and 12CC of the ASIC Act into one section. The Bill also provides a non-exhaustive list of types of conduct that may be unconscionable in the context of business and consumer transactions for Courts to consider.
Timing
The Bill was introduced into Parliament on 27 May 2010 and, if passed, the provisions relating to unconscionable conduct will commence immediately after the commencement of the ACL, which is currently expected to be 1 January 2011.
Implications and recommended action
The amendments to the unconscionable conduct provisions will ensure that the Courts are not constrained by equitable principles and may apply the statutory prohibitions against unconscionable conduct according to their terms. The proposed clarifications focus upon the conduct of businesses - as a result, businesses will need to be vigilant in their dealings with customers, be aware that an accumulation of minor incidents can expose them to unconscionable conduct, and should ensure systems are in place to ensure their business practices are not at risk of falling foul of the unconscionable conduct provisions.
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