Supplementary Order Paper No 207

  • superseded on 10 July 2013

No 207

House of Representatives

Supplementary Order Paper

Tuesday, 16 April 2013

Consumer Law Reform Bill


Proposed amendments

Hon Craig Foss, in Committee, to move the following amendments:

Clause 2

In clause 2(1), replace subsection (2) (line 5 on page 9) with subsections (2) and (3).

Replace clause 2(2)(a) (line 11 on page 9 to line 2 on page 10) with:

  • (a) in Part 1, sections 6(3), 7, 9, 10, 11, 12B, 18, 22, 23, 23A, 25, 30, 31, 35, 36, 39, 40A, 41, 43, 59, and 63 (relating generally to contracting out, unsubstantiated representations, unsolicited goods and services, disclosure of trader status, layby sales, uninvited direct sales, extended warranties, auctions, infringement offences, carriage of goods, and gas and electricity); and

After clause 2(2) (after line 3 on page 10), insert:

  • (3) Sections 11A and 26A (relating to unfair contract terms) come into force on the day that is 15 months after the date on which this Act receives the Royal assent.

Clause 6

In clause 6(3), replace the definition of transparent (lines 14 to 19 on page 12) with:

transparent, in relation to a term in a contract, means a term that 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

In clause 6(3), move the definition of uninvited direct sale agreement (lines 26 and 27 on page 12) to its appropriate alphabetical order.

Clause 9

In the heading to clause 9, replace section 12A (line 7 on page 15) with sections 12A to 12B.

In clause 9, replace section are (line 8 on page 15) with sections are.

In clause 9, replace new section 12A (line 11 on page 15 to line 38 on page 16) with:

12A Unsubstantiated representations
  • (1) A person must not, in trade, make an unsubstantiated representation.

    (2) A representation is unsubstantiated if the person making the representation does not, when the representation is made, have reasonable grounds for the representation, irrespective of whether the representation is false or misleading.

    (3) This section does not apply to a representation that a reasonable person would not expect to be substantiated.

    (4) In this section and sections 12AA to 12B, representation means a representation that is made—

    • (a) in respect of goods, services, or an interest in land; and

    • (b) in connection with—

      • (i) the supply or possible supply of the goods or services; or

      • (ii) the sale or grant or possible sale or grant of the interest in land; or

      • (iii) the promotion by any means of the supply or use of the goods or services or the sale or grant of the interest in land.

12AA Court must have regard to certain matters
  • (1) In proceedings concerning a contravention of section 12A, and in assessing whether a person had reasonable grounds for a representation, a court must have regard to all of the circumstances, including—

    • (a) the nature of the goods, services, or interest in land in respect of which the representation was made:

    • (b) the nature of the representation (for example, whether it was a representation about quality or quantity):

    • (c) any research or other steps taken by or on behalf of the person before the person made the representation:

    • (d) the nature and source of any information that the person relied on to make the representation:

    • (e) the extent to which the person making the representation complied with the requirements of any standards, codes, or practices relating to the grounds on which such a representation may be made, and the nature of those requirements:

    • (f) the actual or potential effects of the representation on any person.

    (2) Subsection (1) does not limit section 44.

12AB Limitation on commencement of proceedings in relation to unsubstantiated representations
  • Despite anything to the contrary in Part 5, only the Commission may commence proceedings, apply for an order, or apply for an injunction in relation to a contravention of section 12A.

In clause 9, new section 12B, replace industry or profession (line 3 on page 17) with trade, business, industry, profession, occupation, activity of commerce, or undertaking.

In clause 9, new section 12B(a), replace industry or profession (line 7 on page 17) with trade, business, industry, profession, occupation, activity of commerce, or undertaking.

New clause 10A

After clause 10 (after line 19 on page 17), insert:

10A New section 14A inserted
  • The following section is inserted after section 14:

    14A When vendor bids are misrepresentations
    • (1) This section applies where property (being goods, services, or an interest in land) is offered for sale—

      • (a) by auction (as defined in section 36V); or

      • (b) by any other bidding process in which all bids are disclosed.

      (2) The vendor of the property makes a false or misleading representation with respect to the price of the property if the vendor, or any agent acting on behalf of the vendor, makes a vendor bid for the property.

      (3) However, subsection (2) does not apply if—

      • (a) there is a reserve price for the property; and

      • (b) the bid is made before the reserve price is reached and is clearly identified as a vendor bid.

      (4) If property is unsold at the end of an auction or other bidding process referred to in subsection (1), any subsequent reference to a particular bid as being the amount at which the property was passed in is a false or misleading representation with respect to the price of the property if the bid was a vendor bid.

      (5) In this section, vendor bid means a bid made by the vendor or any person (including an auctioneer) acting as agent for the vendor.

Clause 11A: new section 26A

In clause 11A, replace new section 26A (lines 30 to 36 on page 20) with:

26A Unfair contract terms in standard form consumer contracts
  • If a court has declared, under section 46I, that a term in a standard form consumer contract is an unfair contract term, a person must not—

    • (a) include the unfair contract term in a standard form contract (unless the term is included in a way that complies with the terms (if any) of the decision of the court); or

    • (b) apply, enforce, or rely on the unfair contract term in a standard form contract (even if the term was included in the contract before the declaration was made under section 46I).

Clause 12B: new section 28B

In clause 12B, new section 28B(1), replace on an Internet site (line 3 on page 22) with via the Internet.

In clause 12B, replace new section 28B(2) (lines 5 to 8 on page 22) with:

  • (2) Where goods or services are offered for sale by a person in trade via the Internet, and the sale is managed by an intermediary that is not party to any resulting sale (such as, for example, where the intermediary operates an on-line bidding process), the intermediary must take all reasonable steps to ensure that the person offering the goods or services for sale complies with subsection (1).

Clause 15: new section 31A

In clause 15, replace new section 31A(1)(b) (lines 13 to 15 on page 25) with:

  • (b) there is no other requirement, under any other enactment, for a supplier in those circumstances to—

    • (i) report to a government agency; or

    • (ii) do any other thing in relation to goods of a kind referred to in paragraph (a) (for example, to have in place a process for the voluntary recall of goods of that kind).

Clause 17: new section 33C

In clause 17, new section 33C(3), replace (1)(a) (line 25 on page 29) with (1)(b).

Clause 18: new section 36K

In clause 18, new section 36K(2)(a)(i), delete referred to in subsection (1) (lines 31 and 32 on page 39).

Clause 18: new section 36L

In clause 18, replace new section 36L(2)(b) (lines 6 to 8 on page 41) with:

  • (b) either—

    • (i) the total price payable, and any other consideration to be given, under the agreement is disclosed in the agreement; or

    • (ii) if the total price or consideration is not ascertainable at the time at which the agreement is entered into, the method by which the total price or consideration will be calculated; and

Clause 18: new section 36UA

In clause 18, new section 36UA(2)(a), replace Order in Council (line 11 on page 50) with regulations.

In clause 18, new section 36UA(3), replace Order in Council (line 17 on page 50) with regulations.

Clause 18: new section 36Z

In clause 18, new section 36Z(4), replace and (2) (line 29 on page 52) with to (3).

Clause 18: new section 36ZAA

In clause 18, replace new section 36ZAA (line 33 on page 52 to line 6 on page 53) with:

36ZAA Vendors selling in trade
  • The Consumer Guarantees Act 1993 does not apply to goods that are ordinarily acquired for personal, domestic, or household use if—

    • (a) the goods are sold at auction; and

    • (b) the vendor is selling the goods in trade as a supplier (within the meaning of the Consumer Guarantees Act 1993); and

    • (c) the goods are acquired for the purposes of a business; and

    • (d) the terms of the auction provide for contracting out in accordance with the Consumer Guarantees Act 1993 (see sections 43 and 43A of that Act).

Clause 18: new section 36ZA

In clause 18, replace new section 36ZA(1)(c) (lines 23 to 29 on page 53) with:

  • (c) the property is offered for sale with a reserve price and the vendor bid is less than the reserve price.

In clause 18, replace new section 36ZA(2) and (3) (lines 30 to 36 on page 53) with:

  • (2) In this section, vendor bid means a bid made by the vendor or any person (including an auctioneer) acting as agent for the vendor.

Clause 19: new section 37

In clause 19, new section 37(e), after order (line 5 on page 55), insert or decision.

Clause 26: new section 46C

In clause 26, new section 46C(1)(c), replace 46D (line 1 on page 65) with 40(1) or (1A).

Clause 26A: new section 46I

In clause 26A, replace new section 46I(2)(c) (lines 28 and 29 on page 66) with:

  • (c) the term is not one described in section 46K(1) (in other words, a term that cannot be declared to be an unfair contract term); and

Clause 26A: new section 46L

In clause 26A, after new section 46L(3) (after line 22 on page 68), insert:

  • (4) However, in relation to insurance contracts only, for the purposes of subsection (1)(b), a term in an insurance contract may be treated as being reasonably necessary in order to protect the legitimate interests of the insurer if the term relates to the underwriting risk accepted by the insurer.

Clause 35A: new section 5A

In clause 35A, replace new section 5A (line 22 on page 76 to line 7 on page 77) with:

5A Guarantee as to delivery
  • (1) Where a supplier is responsible for delivering, or for arranging for the delivery of, goods to a consumer there is a guarantee that the goods will be received by the consumer—

    • (a) at a time, or within a period, agreed between the supplier and the consumer; or

    • (b) if no time or period has been agreed, within a reasonable time.

    (2) Where the delivery of the goods fails to comply with the guarantee under this section, Part 2 gives the consumer a right of redress against the supplier and, in that case, the consumer may,—

    • (a) if, and only if, the failure is of a substantial character, reject the goods under section 18(3); and

    • (b) in all cases, obtain damages under section 18(4) (other than damages relating to the remedies set out in section 18(2)), whether or not the consumer also rejects the goods.

    (3) For the purposes of this section, the reference in section 20(1)(b) to an agent of the supplier must be treated as including any carrier or other person who undertakes to deliver the goods on behalf of the supplier.

    (4) A consumer’s rights of redress under Part 2 in relation to the guarantee under this section are limited to those specified in subsection (2).

Clause 36: new section 7B

In clause 36, new section 7B(4), after supply of gas (lines 17 and 18 on page 79), insert (other than non-reticulated gas).

Clause 40A: new section 43(2)

In clause 40A, new section 43(2)(b), after services (line 6 on page 82), insert or, in the case of the guarantee of acceptable quality in section 7A, the gas or electricity.

In clause 40A, new section 43(2A)(b), after services (line 19 on page 82), insert or, in the case of the guarantee of acceptable quality in section 7A, the value of the gas or electricity supplied or likely to be supplied under the agreement.

In clause 40A, new section 43(2A)(c)(ii), replace the other (line 26 on page 82) with another.

Clause 53B

After clause 53B(1) (after line 10 on page 90), insert:

  • (1A) Section 32B(1)(b) is amended by omitting specified in respect of that offence in section 33A and substituting prescribed in respect of that offence.

Clause 67A

In clause 67A, replace a person described in section 67(1) (line 11 on page 98) with disqualified from registration under section 67(1).

Clause 74

In clause 74(1), replace must (line 5 on page 101) with may.

In clause 74(1)(f), delete described in section 67(1) (lines 24 and 25 on page 101).

In clause 74(1)(f), after behalf (line 26 on page 101), insert , knowing that the person is disqualified from registration.

Clause 84

After clause 84(2)(b) (after line 12 on page 107), insert:

  • (ba) engages a person to conduct an auction on his or her behalf, knowing that the person is disqualified from registration:

Schedule 1

In Schedule 1, item relating to the Search and Surveillance Act 2012, item relating to section 47(2) of the Fair Trading Act 1986 (page 111), insert in column 4 All (except sections 118 and 119).

In Schedule 1, item relating to the Search and Surveillance Act 2012, item relating to section 47L of the Fair Trading Act 1986 (page 111), insert in column 4 All (except sections 118 and 119).

Schedule 3

In Schedule 3, Part 2, replace the item relating to section 8 of the Real Estate Agents Act 2008 (line 33 on page 116) with:

Section 8: replace licensed as an auctioneer under the Auctioneers Act 1928 with registered as an auctioneer under Part 2 of the Consumer Law Reform Act 2011.


Explanatory note

This Supplementary Order Paper proposes to amend the Consumer Law Reform Bill. The following proposed changes affect the Fair Trading Act 1986:

  • delaying commencement of the contracting out provisions until 6 months after Royal assent:

  • delaying commencement of the unfair contract term provisions until 15 months after Royal assent:

  • substituting a new definition of transparent in section 2(1):

  • making technical drafting amendments to provisions relating to unsubstantiated representations:

  • inserting a new section 14A that sets out that, in certain circumstances, a vendor bid, or quoting a vendor bid, will be a false or misleading representation as to price:

  • substituting a new section 26A, about unfair contract terms. The replacement—

    • clarifies that the prohibitions on including an unfair contract term in a standard form contract apply only after the court has declared the term to be an unfair contract term:

    • clarifies that if a term has been declared to be an unfair contract term in a standard form contract, it can nonetheless be included in the standard form contract if it is included in a way that complies with any terms set out in the decision of the court that made the declaration:

  • amending new section 28B, which is about disclosure of trader status in Internet sales. The change is intended to future-proof the provision by reflecting the fact that Internet sales may not be done through an Internet “site”, as the Internet may be available otherwise than on a site:

  • amending new section 31A, to make clear that, in relation to voluntary recalls of goods, new section 31A applies only if there is no other requirement to report to a government agency or if there is no other requirement to take any action in relation to those goods:

  • amending new section 36L to clarify the disclosure requirements in relation to the total price payable, or other consideration to be given, in relation to uninvited direct sales agreements:

  • adjusting new section 36ZA, which is about vendor bids at auctions, to reflect the new section 14A:

  • amending new section 46L, about unfair contract terms, to provide that, in insurance contracts, a term may be treated by a court as being reasonably necessary in order to protect the legitimate interests of the insurer (and therefore not be an unfair contract term) if the term reflects the underwriting risk accepted by the insurer.

The following proposed changes affect the Consumer Guarantees Act 1993:

  • substituting a new section 5A, which relates to guarantees as to delivery where the supplier is responsible for delivering, or arranging for the delivery of, goods to a consumer:

  • amending new section 7B(4) to exclude non-reticulated gas:

  • amending new section 43 to include references to new section 7A (which deals with guarantees of acceptable quality in relation to the supply of gas and electricity).

This Supplementary Order Paper also makes a number of minor and technical amendments affecting the Fair Trading Act 1986, the Consumer Guarantees Act 1993, and the Weights and Measures Act 1987.