Why Is Australian Consumer Law Unfair

Introduction

The “unfair terms” provisions under Part 2-3 of Schedule 2 of the Competition and Consumer Act 2010 (Cth) (CCA), The Australian Consumer Law (ACL), are necessary to protect consumers and ensure fair trading in Australia. Opponents of the “unfair terms” provision believe that individuals have autonomy to contract and that the inequality of bargaining power between consumers and suppliers is acceptable as contracting parties can renegotiate the terms, accept or reject alternatives, or choose to deal with another provider. These beliefs are based on the outdated falsehood that is classical contract theory. However, this theory allowed the capacity for businesses to use one sided contract terms that can sometimes unfairly and inefficiently

The Commission found that there was a growing product complexity which had led or contributed to “greater reliance by consumers on skilled intermediaries; widespread use of standard form contracts which though offering cost and price savings, consumers’ inability to vary terms has raised unfairness concerns; more emphasis on regulated (and often complex) information disclosure; and the growth of sometimes prescriptive, industry-specific consumer regulation” [11]. The Commission determined that there was a deficiency of the prior framework to deal with unreasonable and one-sided contract terms, “unfair terms”, especially including those giving a supplier the right to vary contracts at any time for any reason, or removing the liability of an essential service provider for interruptions in supply [11]. However, the Commission determined that their greatest concerns arose from standard-form, non-negotiable contracts, commonly used for products and services like mobile phones, rental cars, credit and computer software [11]. They determined that the contracts had advantages for consumers in competitive markets as the cost savings for traders will flow through as lower prices; they are offered on a non-negotiable basis, with the terms apparently rarely read [1]. Therefore, the Commission determined that the contention was that consumers can be exploited if things went awry. As a result, the Commission recognised that while prices for contracting parties could rise in the short term as a result of regulating unfair terms in contract; they considered that the benefits of a fairer market outweighed these costs [11]. That the current framework allowed the capacity for businesses to use one sided