Where is the ACL found?
The ACL is in Schedule 2 of the Competition and Consumer Act 2010, which replaced the Trade Practices Act 1974.
What does the ACL cover?
The ACL protects consumers in many ways. It addresses unfair contract terms, automatic guarantees for goods and services, unconscionable conduct, and false or misleading representations.
Unfair contract terms
Standard form contracts are pre-set terms that businesses offer and are not negotiated by the parties. The ACL applies to consumer contracts (mainly for personal, domestic, or household use) and small business contracts. A contract term is unfair if it creates a significant imbalance between the parties, is unnecessary to protect legitimate interests, or would cause detriment if enforced. Examples include terms that exclude supplier liability, make a consumer liable for damage to delivered goods, or impose exit fees.
Automatic guarantees for goods and services
The ACL provides automatic guarantees when buying goods and services valued under $100,000 or normally purchased for personal or household use.
- Goods: Must be safe, durable, and of acceptable quality. The product type and cost determine what counts as acceptable.
- Services: Must be delivered with acceptable care, skill, and technical knowledge. Businesses must take steps to avoid loss or damage.
When goods or services fail to meet these guarantees, consumers can request repair, replacement, or a refund, depending on the situation.
Service contract cancellations
Consumers may cancel a service contract if the service lacks acceptable care or skill, is unfit for its intended purpose, or is not delivered within a reasonable time when no end date is agreed.
Unconscionable conduct and false representations
The ACL also provides relief when a business engages in unconscionable conduct or makes false or misleading representations. Compensation may apply for loss or damage that the business could reasonably have foreseen, including lost time or productivity.
Enforcement of the ACL
The ACL is enforced by the Australian Competition and Consumer Commission (ACCC) alongside state and territory consumer protection agencies, such as NSW Fair Trading. The Australian Securities and Investments Commission (ASIC) may also be involved in relevant matters.
Enforcement agencies can investigate businesses following complaints, marketplace intelligence, whistleblowers, or targeted compliance operations. They have tools ranging from education and formal warnings to civil or criminal actions, including fines, compensation orders, or injunctions.
How does the ACL affect my business?
Businesses must understand their obligations under the ACL to comply with the law. For example, refusing refunds for faulty items, even if on sale, violates the ACL. Standard form contract terms may also be unenforceable if deemed unfair.
Businesses engaging in unconscionable conduct or making false or misleading statements may face heavy penalties. On the other hand, small businesses also benefit from protections under the ACL when entering standard form contracts with other businesses.
Conclusion
The ACL provides essential rights to consumers and protections for small businesses in their dealings with other entities. Business owners should understand its implications and seek professional advice if unsure about compliance obligations.
For more information or legal advice specific to your business, call 02 9150 6991 or email [email protected].