AICD submission to the Senate Economics Legislation Committee on Trade Practices Amendment

On 31 July 2009 the AICD provided a submission to the inquiry being conducted by the Senate Economics Legislation Committee into unfair contract terms arising out of the Trade Practices Amendment (Australian Consumer Law) Bill 2009. The submission supports the national harmonization of consumer legislation in circumstances where it leads to greater clarity for company directors as to the law with which they must comply and where it has the capacity to improve the business environment within which companies and their directors operate. However, the AICD expresses strong reservations as to the introduction of the Bill on the basis that the proposed unfair contract provisions have, amongst other things, the potential to:

• create uncertainty for companies as to the enforceability of contractual terms,
• create difficulties for directors in assessing, allocating and managing risks; and
• cause price increases for consumers.

In the event the government proceeds to introduce the Bill, the AICD supports the exclusion of the business to business transactions from the scope of the Bill and recommends that “material detriment” be included as an element of the unfairness test.