Commonwealth Unfair Contract Terms Legislation Commences 1 July 2010

The start date for the unfair contract terms provisions of the Trade Practices Amendment (Australia Consumer Law) Act (No 1) 2010 has been confirmed to be 1 July 2010.

To refresh your memory, this Act amends the Trade Practices Act 1974 (TPA) and Australian Securities and Investment Commission Act 2001 (ASIC Act) to prohibit unfair contract terms in consumer contracts.

The Act states that a term of a consumer contract will be unfair if the term:

1. would cause significant imbalance in the parties' rights and obligations arising under the contract;
2. is not reasonably necessary in order to protect the legitimate interests of the party who will be advantaged by the term; and
3. would cause detriment (whether financial or otherwise) to a party if the term were to be applied or relied on.