The Death of Unfair Contracts

The widespread usage of unfair contract terms is discussed in the submission of the Australian Consumers' Association to the Committee of Inquiry into the Competition Provisions of the Trade Practices Act 1974 (commonly referred to as the Dawson Inquiry) at <http://tpareview.treasury.gov.au/submissions.asp> at 13 February 2004.

See, for example, Ross Norrie , ‘Crackdown to Spread Nationwide: New Deal on Mobiles, Credit Cards’, Herald Sun (Melbourne), 5 February 2004, 28. The Standing Committee of Officials of Consumer Affairs Unfair Contract Terms Working Party has observed in the recent Unfair Contract Terms — A Discussion Paper (January 2004) 17, that ‘(i)t has become increasingly clear that many such standard form contracts contain clauses which are unfair or unnecessarily one-sided to the detriment of the purchaser’. The Discussion Paper is available in pdf format at <http://www.fairtrading.qld.gov.au/oft/oftweb.nsf/AllDocs/RWPCD456F7C38F523684A256E240014EF7C?OpenDocument&L1=Publications> at 13 February 2004.

These examples were compiled by Nicole Rich, lawyer, Consumer Law Centre Victoria and are based on actual mobile phone contracts of clients of the Consumer Law Centre Victoria's legal practice. Further examples and discussion of unfair terms in telecommunications contracts can be found in Communications Law Centre, Report on Fair Terms in Telecommunications Consumer Contracts 2003, May 2003.

More precisely, ss 53(g), 69, 70 and 71.

Australian Competition and Consumer Commission, (February 2004) ACCC Consumer Express 1.

‘[Clause 10.4 of the] Commonwealth Bank's current Usual Terms and Conditions for Consumer Lending [PF 1] is typical … [of] unlimited or very broad unilateral change clauses in … standard form home loan, personal loan and credit card facilities’, above n 1, Annexure II, 1. A series of arguably unfair contract terms is set out in Annexure II of the Association's submission.

Australian Consumers' Association, above n 1, Annexure II, 1.

SCOCA Working Party, above n 2, 8. The Discussion Paper notes, ‘Queensland and Victoria jointly chair the Unfair Contract Terms Working Party (the Working Party) which was set up in late 2002 by the Standing Committee of Officials of Consumer Affairs (SCOCA) at the direction of the Ministerial Council on Consumer Affairs (MCCA). All state and territory fair trading agencies are represented on the Working Party, together with nominees from Commonwealth Treasury, the Australian Competition and Consumer Commission and the Australian Securities and Investments Commission.’

SCOCA Working Party, above n 2, 17.

Based on the experiences of clients of the Consumer Law Centre Victoria's legal practice.

See, for example, Field Chris , ‘Codes of Conduct — The new face of consumer protection’ (1999) 24 Alternative Law Journal 109, 157, Field Chris : ‘Pay day lending: An exploitative market practice’ (2002) 27 Alternative Law Journal 1, 36; Smith Simon , ‘Consumer Affairs — The Cinderella of Government Policy Making’ (2003) 28 Alternative Law Journal 182.

This article focuses on the Australian context. The SCOCA Working Party Discussion Paper examines the state of unfair contract terms regulation in NZ, the US, Canada and Thailand. See above, n 2, 35–8.

Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447.

Ibid, 474, per Deane J.

Blomley v Ryan (1956) 99 CLR 362.

Louth v Diprose (1992) 175 CLR 621.

Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447.

See above n 2, 21-23 for a discussion of this point.

Contracts Review Act 1980 (NSW).

SCOCA Working Party, above n 2, 8.

Council Directive 93/13/EEC.

Fair Trading (Amendment) Act 2003 s 32W. The SCOCA Working Party Discussion Paper adopts the following definition of unfair contract terms: ‘… unfair contract terms are those terms in a contract which are to the disadvantage of one party but which are not reasonably necessary for the protection of the legitimate interests of the other party’. See above, n 2, 8.

The Unfair Terms in Consumer Contracts Regulations 1999 (UK), reg 5(1).

Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 (‘Renard’).

Ibid 258.

Ibid 268.

See also, Burger King Corp v Hungry Jack's Pty Ltd [2001] NSWCA 187 (unreported, New South Wales Supreme Court of Appeal, 21 June 2001); Garry Rogers Motors (Aust) Pty Ltd v Subaru (Aust) Pty Ltd [1999] ATPR 41–703.

Carter J W Peden E , ‘Good Faith in Australian Contract Law’, (2003) 19 Journal of Contract Law 1, 1. See also Heffey Peter Paterson Jeannie Robertson Andrew , Principals of Contract Law (2002) 269–70; Paterson J M , ‘Duty of good faith: Does it Have a Place in Contract Law?’ (2000) 74(6) LIJ 48.

Office of Fair Trading, Unfair Contract Terms: Guidance for consumer advisers on the Unfair Terms in Consumer Contracts Regulations 1999 (August 2000) 2.

Director General of Fair Trading v First National Bank plc [2002] 1 AC 481 at [17].

Consumer Affairs Victoria, ‘Preventing Unfair Terms in Consumer Contracts', Guidelines on Unfair Terms in Consumer Contracts Amendments to the Fair Trading Act 1999’ (2003) 4.

Ibid 4.

Schedule 3 Indicative and Illustrative List of Terms Which May be Regarded as Unfair.

UK Office of Fair Trading, above n 23, Appendix 2 ‘Terms that may be considered unfair’.

Scottish Law Commission, ‘Unfair Terms in Contracts: A Joint Consultation Paper’, Consultation Paper No 166; Paper No 119 (2000).

SCOCA Working Party, above n 2, 8.

Ibid 9–10.

See, eg, O'Dea v Allstates Leasing System (WA) Pty Ltd (1983) 152 CLR 359; AMEVUDC Finance Ltd v Austin (1986) 162 CLR 170; Esanda Finance Corporation Ltd v Plessnig (1989) 166 CLR 131.

Shields Janice C , Bounced Checks: Billion Dollar Profits II, Consumer Federation of America (1998).

SCOCA Working Party, above n 23.

Pursuant to the new ss 32V of the Fair Trading Act, Part 2B does not apply to contractual terms contained in a contract to which the Consumer Credit (Victoria) Act 1995 applies.

Australian Consumers' Association, above n 1.

A copy of the Black and White List of Consumer Contract Terms in Telecommunications Contracts can be obtained free of charge from the Consumer Law Centre Victoria.