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Fair Trading Amendment (Unfair Contract Terms)
Act 2010
No. 21 of 2010
TABLE OF PROVISIONS
Section
1
2
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5
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7
8
9
10
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13
14
15
16
17
Purpose
Commencement
Principal Act
Purposes of the Principal Act
Definitions
New sections 32V and 32VA substituted
32V
Terms that define main subject matter of consumer
contracts etc. are unaffected
32VA Contracts to which this Part does not apply
New sections 32W and 32X substituted
32W Meaning of unfair
32X
Examples of unfair terms
Unfair terms of consumer contracts
Repeal of section 32Z
Injunctions relating to unfair terms
Repeal of section 32ZB
Declaration by Court or Tribunal
Repeal of section 32ZD
New section 32ZDA substituted
32ZDA Standard form contracts
New clause 20 inserted in Schedule 3
20
Transitional provision—Fair Trading Amendment
(Unfair Contract Terms) Act 2010
Regulations
Repeal of Amending Act
═══════════════
ENDNOTES
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i
Victoria
Fair Trading Amendment (Unfair
Contract Terms) Act 2010†
No. 21 of 2010
[Assented to 1 June 2010]
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.
2 Commencement
This Act comes into operation on a day to be
proclaimed.
1
Fair Trading Amendment (Unfair Contract Terms) Act 2010
No. 21 of 2010
s. 3
3 Principal Act
See:
Act No.
16/1999.
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
In this Act, the Fair Trading Act 1999 is called
the Principal Act.
4 Purposes of the Principal Act
For section 1(bb) of the Principal Act
substitute—
"(bb) to provide for the regulation of unfair terms
in consumer contracts;".
5 Definitions
(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repealed;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repealed;
(c) the definition of unfair term is repealed.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;
consumer contract has the meaning given by
section 32Y(5);
2
Fair Trading Amendment (Unfair Contract Terms) Act 2010
No. 21 of 2010
s. 5
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
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
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—
(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;
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);
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).".
3
Fair Trading Amendment (Unfair Contract Terms) Act 2010
No. 21 of 2010
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
(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
(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
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
contract is entered into—
but does not include any other consideration
that is contingent on the occurrence or nonoccurrence of a particular event.
32VA Contracts to which this Part does not
apply
(1) This Part does not apply to—
(a) a contract of marine salvage or towage;
or
(b) a charterparty of a ship; or
(c) a contract for the carriage of goods by
ship.
4
Fair Trading Amendment (Unfair Contract Terms) Act 2010
No. 21 of 2010
s. 7
(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
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
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—
"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
(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
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
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.
5
Fair Trading Amendment (Unfair Contract Terms) Act 2010
No. 21 of 2010
s. 7
(3) A term is transparent if the term is—
(a) expressed in reasonably plain language;
and
(b) legible; and
(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
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
(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
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;
(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
permitting, one party (but not another
party) to vary the terms of the contract;
6
Fair Trading Amendment (Unfair Contract Terms) Act 2010
No. 21 of 2010
s. 7
(e) a term that permits, or has the effect of
permitting, one party (but not another
party) to renew or not renew the
contract;
(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;
(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
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
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
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
party;
(l) a term that limits, or has the effect of
limiting, the evidence one party can
adduce in proceedings relating to the
contract;
7
Fair Trading Amendment (Unfair Contract Terms) Act 2010
No. 21 of 2010
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;
(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
(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
(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
(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—
"(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.
8
Fair Trading Amendment (Unfair Contract Terms) Act 2010
No. 21 of 2010
s. 9
(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
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
(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.
(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
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".
(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
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
9
Fair Trading Amendment (Unfair Contract Terms) Act 2010
No. 21 of 2010
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
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
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
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—
(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
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
(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
10
Fair Trading Amendment (Unfair Contract Terms) Act 2010
No. 21 of 2010
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
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
to the transaction;
(b) whether the contract was prepared by
one party before any discussion relating
to the transaction occurred between the
parties;
(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;
(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
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
regulations.".
11
Fair Trading Amendment (Unfair Contract Terms) Act 2010
No. 21 of 2010
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
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
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.
(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
commencement day—
(a) is renewed on or after the
commencement day, Part 2B as
amended by the Fair Trading
Amendment (Unfair Contract
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
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
amended by the Fair Trading
Amendment (Unfair Contract
12
Fair Trading Amendment (Unfair Contract Terms) Act 2010
No. 21 of 2010
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
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
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.
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).
═══════════════
13
Fair Trading Amendment (Unfair Contract Terms) Act 2010
No. 21 of 2010
Endnotes
ENDNOTES
†
Minister's second reading speech—
Legislative Assembly: 15 April 2010
Legislative Council: 6 May 2010
The long title for the Bill for this Act was "A Bill for an Act to amend the
Fair Trading Act 1999 in relation to unfair contract terms and for other
purposes."
14