The Fair Trading Amendment Bill was introduced to parliament in December 2019 and has most recently had its first reading in February. The bill is closely centred around new protections against unfair practices – namely prohibiting unconscionable conduct in trade and extending the current Act’s protections against unfair contract terms in standard form consumer contracts to also apply to small trade contracts.
In order to better protect consumers and small businesses from unfair commercial practices, the legislation reform targets common unfair practices in the market, including:
- Imbalances in bargaining power;
- The lack of legal or commercial sophistication of some parties;
- The presence of take-it-or-leave-it standard form contracts.
To be deemed unconscionable in the context of conduct in trade, the Bill has expanded its definitions to consider more variables affecting a party’s conduct, such as:
- The relative bargaining power of the parties;
- The extent to which the parties acted in good faith;
- Whether the party affected was reasonably able to protect its interests;
- Whether the part affected was able to understand the documents provided;
- Whether the affected part was subjected to unfair pressure/tactics which influenced their decision-making in an apparent manner;
- Whether a party failed to disclose to the affected party in;
- Whether a party failed to disclose to the affected party intended conduct that might adversely affect that party’s interests or would be at risk to that party’s interests;
- Any other circumstance the court considers relevant.
Factors influencing unfair practices in consumer contract and small trade contract creation have also been reformed, with new variables listed below:
- The circumstances in which the contract was entered into;
- Whether the party obtained independent legal or professional advice;
- The terms of the contract;
- The form of the contract;
- Whether the terms allow a party to reasonably meet its obligations;
- Whether the obligations are reasonably necessary;
- The conduct of the parties;
- The length of time a party is given to remedy a breach;
- Whether any enforcement action that was taken was lawful;
- Any other conduct of the parties after the contract was entered into.
