The Fair Trading Act has Changed

The Fair Trading Amendment Act 2021 places new obligations on businesses and provides new protections for consumers and small businesses.

There are three significant new protections to address unfair practices:

1. unfair contract terms provisions are extended to cover standard form small trade contracts
2. unconscionable conduct in trade is prohibited
3. people will be able to direct uninvited direct sellers to leave or not enter their residential property.

These provisions will come into effect on 16 August 2022.

It is important that businesses understand the implications of these changes.

Significant new protections

Prohibition on unconscionable conduct – 16 August 2022

There is a new prohibition against unconscionable conduct in trade. The term itself is not defined in the Fair Trading Act, but there is a non-exhaustive list of factors that the court can consider when assessing whether a trader’s conduct is unconscionable. This includes:

• the relative bargaining power of the trader engaging in the conduct and any affected person who is disadvantaged or likely to be disadvantaged by the conduct
• the extent to which the trader and an affected person acted in good faith
• whether the affected person was reasonably able to protect their interests when taking account of their particular characteristics and circumstances
• whether the affected person was able to understand any documents provided by the trader
• whether the trader subjected an affected person to unfair pressure or tactics or otherwise unduly influenced them.

Conduct can be unconscionable regardless of whether:

• there is a system or pattern of unconscionable conduct
• a particular individual is identified as disadvantaged
• there is a contract or not.

Traders that engage in unconscionable conduct can be fined up to $600,000 for a business and $200,000 for an individual.

Extension of unfair contract terms to cover standard form small trade contracts – 16 August 2022

The unfair contract terms provisions, which currently apply to standard form consumer contracts only, are extended to include standard form small trade contracts. A contract is a ‘small trade contract’ if:

• each party is engaged in trade
• it is not a consumer contract
• it does not comprise or form part of a trading relationship that exceeds an annual value threshold of $250,000 (including GST, if applicable) when the trading relationship first arises.

These new protections will not apply to relevant insurance contracts entered into before 1 April 2025 (or any earlier date appointed by the Governor-General by Order in Council). Contracts entered into before 16 August 2022 (and not varied or renewed on or after that date) will also not be considered small trade contracts.

If the Court declares a term unfair, it will be an offence for a person to include, apply, enforce, or rely on the term in a small trade contract. The offence is punishable by a fine of up to $200,000 for an individual or up to $600,000 for a body corporate, and civil remedies will also apply.

New directions to leave or not enter premises for uninvited direct selling – 16 August 2022

Under a new provision, residents can direct people to leave or not enter their property if they are there to

negotiate uninvited direct sale agreements, which include consumer credit contracts.

• may be verbal or in written or other visual form
• must be audible or visible
• may be a general standing direction (eg, through a notice on a gate or front door directing salespeople not to call) or be specific (eg, a face-to-face spoken direction). If the direction is specific, the uninvited direct seller must not enter or re-enter the premises within 2 years of the direction for the purpose of negotiating an uninvited direct sale agreement.

A breach of this section could result in a fine of up to $10,000 for an individual or up to $30,000 for a body corporate. Certain civil remedies are also available such as an order cancelling or varying a contract or directing the payment of compensation.

For prosecutions relating to directions to leave or not enter, it is a defence if the defendant can prove that the person who gave the direction no longer resided at the premises at the time of the contravening conduct, or if permission was given for such conduct.

Other changes

Other provisions came into force on 17 August 2021. These include changes to bring the Fair Trading Act into line with other legislation that the Commission oversees.

Key changes and dates