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Report No. 199

Fair Trading Act, 1999 (Victoria):

Fair Trading (Amendment) Act, 2003 (Victoria):

Victoria amended the Fair Trading Act, 1999 which came into force on 9 th October, 2003. It included provisions to address unfair contract terms. The provisions draw heavily on the United Kingdom Unfair Terms in Consumer Contracts Regulations. (See Uniform Contracts Terms, A Discussion Paper, Jan 2004) (Queensland and Victoria).

The provisions cover "consumer contract", which is defined as: 'an agreement whether or not in writing and whether of specific or general use, to supply goods or services of a kind ordinarily acquired for personal, domestic or household use, for the purposes of the ordinary personal, household or domestic use of those goods or services.' The summary of the Act is as follows:

(1) A term in a consumer contract is unfair if contrary to the requirement of good faith and in all the circumstances it causes a significant imbalance in the parties' rights and obligations under the contract, to the detriment of the consumer;

(2) If a consumer believes a term to be unfair, he or she can take the issue to court; a term found to be unfair is void: the rest of the contract continues to bind the parties if it is capable of existing without the term;

(3) In assessing whether a term is unfair, the court can have regard to whether the term was individually negotiated; whether it is a prescribed term; and whether it has an object or effect set out in the Act.

(4) Standard form contracts terms can be prescribed by regulation to be unfair and it is an offence to use or recommend the use of a prescribed term;

(5) The Director can apply to the Tribunal for an injunction where it is believed that a person is using or recommending the use of an unfair term in a consumer contract or a prescribed term in standard form contracts as per section 32-ZA.

An oral contract is covered with respect to common contracts; a term relating to price is covered by the provisions; a contract to which the UCCC 93(referred to earlier) applies, is not covered, and business to business contracts are not covered.

Whilst the individual consumer can take their contract to court, the Victorian Civil and Administrative Tribunal can deal with matters systemically in relation to standard form contracts. Unlike the United Kingdom, Victoria has the ability to develop a 'black' list of terms through regulations which prescribe unfair terms and is also able to prosecute if these are used.

Under section 163, a general provision in the (Victorian) Fair Trading Act, 1999, states that a written contract must be easily legible, in a minimum of 10 point if printed and must be clearly expressed. The Director can apply to the (Victorian) Civil and Administrative Tribunal if it is believed that a term does not comply with this section. The Tribunal can prohibit the supplier using the provision and there is a penalty for failure to comply with the order.

"Unconscionability" has proved popular in Commonwealth jurisdictions where it has undergone something of a renaissance in the last decade especially in Australia. The concept of unconscionability although expressed in wide terms, the courts exercise an "equitable jurisdiction" according to recognized principles. This equitable jurisdiction, exists when one of the parties, 'suffers from some special disability or is placed in some special situation of disadvantage, Commercial Bank of Australia Ltd v. Amadio (1983) 151 CLR 447, as cited in Mulla's Indian Contract and Specific Relief Acts, 12th edn. Vol.-I p.479. The courts do not set aside bargains simply because they appear to be unfair, harsh or unconscionable in the eyes of Judges" Louth v. Diprose (1992) 175 CLR 621, as cited in Mulla's Indian Contract and Specific Relief Acts, 12th edn. Vol. 1, p. 479.



Unfair (Procedural and Substantive) Terms in Contract Back




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