Fair Trading Amendment Unfair Contract Terms Bill by alicejenny

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									                 PARLIAMENT OF VICTORIA

Fair Trading Amendment (Unfair Contract Terms)
                  Bill 2010



                      TABLE OF PROVISIONS
Clause                                                                Page
  1      Purpose                                                         1
  2      Commencement                                                    1
  3      Principal Act                                                   2
  4      Purposes of the Principal Act                                   2
  5      Definitions                                                     2
  6      New sections 32V and 32VA substituted                           4
         32V      Terms that define main subject matter of consumer
                  contracts etc. are unaffected                          4
         32VA Contracts to which this Part does not apply                4
  7      New sections 32W and 32X substituted                            5
         32W Meaning of unfair                                           5
         32X      Examples of unfair terms                               6
  8      Unfair terms of consumer contracts                              8
  9      Repeal of section 32Z                                           9
  10     Injunctions relating to unfair terms                            9
  11     Repeal of section 32ZB                                         10
  12     Declaration by Court or Tribunal                               10
  13     Repeal of section 32ZD                                         10
  14     New section 32ZDA substituted                                  10
         32ZDA Standard form contracts                                  10
  15     New clause 20 inserted in Schedule 3                           12
         20       Transitional provision—Fair Trading Amendment
                  (Unfair Contract Terms) Act 2010                      12
  16     Regulations                                                    13
  17     Repeal of Amending Act                                         13
                             ═══════════════

ENDNOTES                                                                14




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                     PARLIAMENT OF VICTORIA

    Introduced in the Assembly




          Fair Trading Amendment (Unfair
              Contract Terms) Bill 2010


     A Bill for an Act to amend the Fair Trading Act 1999 in relation to
                 unfair contract terms and for other purposes.




    The Parliament of Victoria enacts:


           1 Purpose
                      The purpose of this Act is to amend the Fair
                      Trading Act 1999 in relation to unfair contract
                      terms.
5          2 Commencement
                      This Act comes into operation on a day to be
                      proclaimed.




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      s. 3


                            3 Principal Act
     See:                              In this Act, the Fair Trading Act 1999 is called
     Act No.
     16/1999.                          the Principal Act.
     Reprint No. 4
     as at
     11 June 2009
     and
     amending
     Act Nos
     45/2009,
     68/2009,
     1/2010 and
     11/2010.
     LawToday:
     www.
     legislation.
     vic.gov.au


                            4 Purposes of the Principal Act
5                                      For section 1(bb) of the Principal Act
                                       substitute—
                                     "(bb) to provide for the regulation of unfair terms
                                           in consumer contracts;".
                            5 Definitions
10                                (1) In section 32U of the Principal Act—
                                           (a) the definition of prescribed unfair term is
                                               repealed;
                                           (b) the definition of standard form contract is
                                               repealed;
15                                         (c) the definition of unfair term is repealed.
                                  (2) In section 32U of the Principal Act insert the
                                      following definitions—
                                       "constitution has the meaning given by the
                                            Corporations Act;
20                                     consumer contract has the meaning given by
                                           section 32Y(5);




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                       interest, in relation to land, means—
                             (a) a legal or equitable estate or interest in
                                 the land; or
                             (b) a right of occupancy of the land, or of a
5                                building or part of a building erected on
                                 the land, arising by virtue of the
                                 holding of shares, or by virtue of a
                                 contract to purchase shares, in an
                                 incorporated company that owns the
10                               land or building; or
                             (c) a right, power or privilege over, or in
                                 connection with, the land;
                       rely on, in relation to a term of a consumer
                             contract, includes the following—
15                           (a) attempt to enforce the term;
                             (b) attempt to exercise a right conferred, or
                                 purportedly conferred, by the term;
                             (c) assert the existence of a right conferred,
                                 or purportedly conferred, by the term;
20                     ship has the meaning given by the Admiralty Act
                            1988 of the Commonwealth;
                       transparent, in relation to a term of a consumer
                            contract, has the meaning given by
                            section 32W(3);
25                     unfair, in relation to a term of a consumer
                            contract, has the meaning given by
                            section 32W(1);
                       upfront price has the meaning given by
                            section 32V(2).".




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     s. 6


                   6 New sections 32V and 32VA substituted
                              For section 32V of the Principal Act substitute—
                            "32V Terms that define main subject matter of
                                 consumer contracts etc. are unaffected
5                                 (1) Section 32Y(1) does not apply to a term of a
                                      consumer contract to the extent that, but only
                                      to the extent that, the term—
                                        (a) defines the main subject matter of the
                                            contract; or
10                                     (b) sets the upfront price payable under the
                                           contract; or
                                        (c) is a term required, or expressly
                                            permitted, by law.
                                  (2) The upfront price payable under a consumer
15                                    contract is the consideration that—
                                        (a) is provided, or is to be provided, for the
                                            supply, sale or grant under the contract;
                                            and
                                       (b) is disclosed at or before the time the
20                                         contract is entered into—
                                      but does not include any other consideration
                                      that is contingent on the occurrence or non-
                                      occurrence of a particular event.
                           32VA Contracts to which this Part does not
25                              apply
                                  (1) This Part does not apply to—
                                        (a) a contract of marine salvage or towage;
                                            or
                                       (b) a charterparty of a ship; or
30                                      (c) a contract for the carriage of goods by
                                            ship.




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                           (2) Without limiting subsection (1)(c), the
                               reference in that subsection to a contract for
                               the carriage of goods by ship includes a
                               reference to any contract covered by a sea
5                              carriage document within the meaning of the
                               amended Hague Rules referred to in
                               section 7(1) of the Carriage of Goods by Sea
                               Act 1991 of the Commonwealth.
                           (3) This Part does not apply to a contract that is
10                             the constitution of a company, managed
                               investment scheme or other kind of body.".
            7 New sections 32W and 32X substituted
                       For sections 32W and 32X of the Principal Act
                       substitute—
15                  "32W Meaning of unfair
                           (1) A term of a consumer contract is unfair if—
                                (a) it would cause a significant imbalance
                                    in the parties' rights and obligations
                                    arising under the contract; and
20                              (b) it is not reasonably necessary in order
                                    to protect the legitimate interests of the
                                    party who would be advantaged by the
                                    term; and
                                (c) it would cause detriment (whether
25                                  financial or otherwise) to a party if it
                                    were to be applied or relied on.
                           (2) In determining whether a term of a consumer
                               contract is unfair under subsection (1), a
                               court or the Tribunal may take into account
30                             such matters as it thinks relevant, but must
                               take into account the following—
                                (a) the extent to which the term is
                                    transparent; and
                                (b) the contract as a whole.


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     s. 7


                                  (3) A term is transparent if the term is—
                                       (a) expressed in reasonably plain language;
                                           and
                                       (b) legible; and
5                                      (c) presented clearly; and
                                       (d) readily available to any party affected
                                           by the term.
                                  (4) For the purposes of subsection (1)(b), a term
                                      of a consumer contract is presumed not to be
10                                    reasonably necessary in order to protect the
                                      legitimate interests of the party who would
                                      be advantaged by the term, unless that party
                                      proves otherwise.
                             32X Examples of unfair terms
15                                (1) Without limiting section 32W, the following
                                      are examples of the kinds of terms of a
                                      consumer contract that may be unfair—
                                       (a) a term that permits, or has the effect of
                                           permitting, one party (but not another
20                                         party) to avoid or limit performance of
                                           the contract;
                                       (b) a term that permits, or has the effect of
                                           permitting, one party (but not another
                                           party) to terminate the contract;
25                                     (c) a term that penalises, or has the effect
                                           of penalising, one party (but not
                                           another party) for a breach or
                                           termination of the contract;
                                       (d) a term that permits, or has the effect of
30                                         permitting, one party (but not another
                                           party) to vary the terms of the contract;




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                             (e) a term that permits, or has the effect of
                                 permitting, one party (but not another
                                 party) to renew or not renew the
                                 contract;
5                            (f) a term that permits, or has the effect of
                                 permitting, one party to vary the
                                 upfront price payable under the contract
                                 without the right of another party to
                                 terminate the contract;
10                          (g) a term that permits, or has the effect of
                                permitting, one party unilaterally to
                                vary the characteristics of the goods or
                                services to be supplied, or the interest
                                in land to be sold or granted, under the
15                              contract;
                            (h) a term that permits, or has the effect of
                                permitting, one party unilaterally to
                                determine whether the contract has
                                been breached or to interpret its
20                              meaning;
                             (i) a term that limits, or has the effect of
                                 limiting, one party's vicarious liability
                                 for its agents;
                             (j) a term that permits, or has the effect of
25                               permitting, one party to assign the
                                 contract to the detriment of another
                                 party without that other party's consent;
                            (k) a term that limits, or has the effect of
                                limiting, one party's right to sue another
30                              party;
                             (l) a term that limits, or has the effect of
                                 limiting, the evidence one party can
                                 adduce in proceedings relating to the
                                 contract;




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     s. 8


                                       (m) a term that imposes, or has the effect of
                                           imposing, the evidential burden on one
                                           party in proceedings relating to the
                                           contract;
5                                       (n) a term of a kind, or a term that has an
                                            effect of a kind, prescribed by the
                                            regulations.
                                  (2) Before recommending the making of a
                                      regulation for the purposes of subsection
10                                    (1)(n) prescribing a kind of term, or a kind of
                                      effect that a term has, the Minister must take
                                      into consideration—
                                        (a) the detriment that a term of that kind
                                            would cause to consumers; and
15                                      (b) the impact on business generally of
                                            prescribing that kind of term or effect;
                                            and
                                        (c) the public interest.".
                   8 Unfair terms of consumer contracts
20                       (1) For the heading to section 32Y of the Principal
                             Act substitute—
                              "Unfair terms of consumer contracts".
                         (2) For section 32Y(1) of the Principal Act
                             substitute—
25                            "(1) A term of a consumer contract is void if—
                                        (a) the term is unfair; and
                                        (b) the contract is a standard form
                                            contract.".
                         (3) Section 32Y(2) of the Principal Act is repealed.




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                  (4) For section 32Y(3) of the Principal Act
                      substitute—
                       "(3) The contract continues to bind the parties if
                            it is capable of operating without the unfair
5                           term.".
                  (5) For section 32Y(5) of the Principal Act
                      substitute—
                       "(5) A consumer contract is a contract for:
                                 (a) a supply of goods or services; or
10                               (b) a sale or grant of an interest in land—
                               to an individual whose acquisition of the
                               goods, services or interest is wholly or
                               predominantly for personal, domestic or
                               household use or consumption.
15                         (6) In subsection (5)(b), a reference to the sale or
                               grant of an interest in land is a reference to
                               the sale or grant of an interest in land in trade
                               or commerce.
            9 Repeal of section 32Z
20                     Section 32Z of the Principal Act is repealed.
           10 Injunctions relating to unfair terms
                  (1) For the heading to section 32ZA of the Principal
                      Act substitute—
                       "Injunctions relating to unfair terms".
25                (2) For section 32ZA(1) of the Principal Act,
                      substitute—
                       "(1) The Director or any other person may apply
                            to the Supreme Court, the County Court or
                            the Tribunal for an injunction against any
30                          person who is applying or relying on, or
                            purporting to apply or rely on, a term of a
                            consumer contract that is a standard form
                            contract that the court or Tribunal has


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     s. 11


                                       declared under section 32ZC(1) to be an
                                       unfair term.".
                          (3) Section 32ZA(4) of the Principal Act is repealed.
                   11 Repeal of section 32ZB
5                              Section 32ZB of the Principal Act is repealed.
                   12 Declaration by Court or Tribunal
                          (1) For section 32ZC(1) of the Principal Act
                              substitute—
                               "(1) The Director or a party to a consumer
10                                  contract may apply to the Supreme Court,
                                    the County Court or the Tribunal for an order
                                    declaring that a term of such a contract is an
                                    unfair term.".
                          (2) After section 32ZC(1) of the Principal Act
15                            insert—
                            "(1A) Subsection (1) does not apply unless the
                                  consumer contract is a standard form
                                  contract.".
                          (3) In section 32ZC(4) of the Principal Act—
20                                 (a) after "consumer contract" insert "that is a
                                       standard form contract"; and
                                   (b) omit "or that a term of a standard form
                                       contract is a prescribed unfair term".
                   13 Repeal of section 32ZD
25                             Section 32ZD of the Principal Act is repealed.
                   14 New section 32ZDA substituted
                               For section 32ZDA of the Principal Act
                               substitute—
                        "32ZDA Standard form contracts
30                                 (1) If a party to a proceeding alleges that a
                                       contract is a standard form contract, it is
                                       presumed to be a standard form contract


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                                                                                   s. 14


                               unless another party to the proceeding proves
                               otherwise.
                           (2) In determining whether a contract is a
                               standard form contract, a court or the
5                              Tribunal may take into account such matters
                               as it thinks relevant, but must take into
                               account the following—
                                (a) whether one of the parties has all or
                                    most of the bargaining power relating
10                                  to the transaction;
                                (b) whether the contract was prepared by
                                    one party before any discussion relating
                                    to the transaction occurred between the
                                    parties;
15                              (c) whether another party was, in effect,
                                    required either to accept or reject the
                                    terms of the contract (other than terms
                                    referred to in section 32V(1)) in the
                                    form in which they were presented;
20                              (d) whether another party was given an
                                    effective opportunity to negotiate the
                                    terms of the contract that were not
                                    terms referred to in section 32V(1);
                                (e) whether the terms of the contract (other
25                                  than the terms referred to in section
                                    32V(1)) take into account the specific
                                    characteristics of another party or the
                                    particular transaction;
                                 (f) any other matter prescribed by the
30                                   regulations.".




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     s. 15


                   15 New clause 20 inserted in Schedule 3
                               After clause 19 of Schedule 3 to the Principal Act
                               insert—
                               "20 Transitional provision—Fair Trading
5                                  Amendment (Unfair Contract Terms)
                                   Act 2010
                                   (1) In this section, commencement day means
                                       the day on which the Fair Trading
                                       Amendment (Unfair Contract Terms) Act
10                                     2010 comes into operation.
                                   (2) Part 2B as amended by the Fair Trading
                                       Amendment (Unfair Contract Terms) Act
                                       2010 applies to any contract entered into on
                                       or after the commencement day.
15                                 (3) Subject to subsection (4), Part 2B as in force
                                       before the commencement day continues to
                                       apply to any contract entered into before the
                                       commencement day.
                                   (4) If a contract entered into before the
20                                     commencement day—
                                         (a) is renewed on or after the
                                             commencement day, Part 2B as
                                             amended by the Fair Trading
                                             Amendment (Unfair Contract
25                                           Terms) Act 2010 applies to the
                                             contract as renewed, on and from the
                                             day (the renewal day) on which the
                                             renewal takes effect, in relation to
                                             conduct that occurs on or after the
30                                           renewal day; or
                                         (b) if a term of the contract is varied on or
                                             after the commencement day, and
                                             paragraph (a) has not already applied in
                                             relation to the contract, Part 2B, as
35                                           amended by the Fair Trading
                                             Amendment (Unfair Contract


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                                                                                     s. 16


                                     Terms) Act 2010, applies to the term
                                     as varied, on and from the day (the
                                     variation day) on which the variation
                                     takes effect, in relation to conduct that
5                                    occurs on or after the variation day.
                           (5) If subsection (4)(b) applies to a term of the
                               contract, sections 32Y(3) and 32ZDA apply
                               to the contract.".
           16 Regulations
10                     Section 165(1)(ab) of the Principal Act is
                       repealed.
           17 Repeal of Amending Act
                       This Act is repealed on the first anniversary of
                       the day on which it comes into operation.
15              Note
                The repeal of this Act does not affect the continuing operation of
                the amendments made by it (see section 15(1) of the
                Interpretation of Legislation Act 1984).
                                 ═══════════════




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Endnotes



                                               ENDNOTES




                           By Authority. Government Printer for the State of Victoria.




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