Posted on April 8, 2011 by Megan Hawley 1

Consumer Laws and Councils

From 1 January 2011 the provisions of various statutes dealing with consumer protection were consolidated into the Australian Consumer Law (ACL), which is contained in Schedule 2 to the Competition and Consumer Act 2010 (formerly the Trade Practices Act 1974).

The ACL applies as a law of NSW and applies to local government authorities.  The ACL introduces many new protections for consumers, most of which are unlikely to be relevant to councils. However, one protection which could be relevant is consumer guarantees.

Consumer guarantees are statutory guarantees that apply to contracts with consumers for the provision of goods and services. In respect of services, the statutory guarantees are that:

• the services will be rendered with due care and skill;
• the services will be fit for purpose; and
• if the contract does not specify a time for provision of the services, they will be provided within a reasonable time.

The consumer guarantees cannot be excluded by contract.

The consumer guarantees only apply to services supplied in trade or commerce, and where the services are supplied to a consumer.

A consumer of services is defined in the ACL as a person who acquires services for an amount of less than $40,000, or if the services are of a kind ordinarily acquired for personal, domestic or household use or consumption.

When a council is exercising its regulatory functions, it is not acting in trade or commerce. However, councils which carry on businesses, such as operating saleyards,  or airports, would be considered to be acting in trade or commerce in respect of those services.

The position is not as clear where council supplies services pursuant to statute, such as where it is acting as a water supply authority. On balance, I am of the view that in that respect a council would still be considered to be acting in trade or commerce.

Councils should ensure that when providing any services, it has regard to the consumer guarantees.

The ACL also incorporates general provisions regarding fairness in dealings. Those provisions are:

• a person must not in trade or commerce, engage in conduct which is misleading or deceptive, or is likely to mislead or deceive;
• a person must not in trade or commerce, engage in conduct that is unconscionable, including in business transactions, and when acquiring goods or services from small businesses; and
• a term of a consumer contract is void if the term is unfair and is in a standard form contract.

In respect of unfair contract terms, councils should consider whether any standard form contracts it uses for the provision of services to consumers, contain any terms which could be considered unfair. Examples include provisions which enable the council to terminate or vary the contract, but not the consumer.

It should be noted that provisions of consumer contracts which may be considered unfair may be appropriate in a commercial contract.

As a general proposition, and given councils’ charter in s8 of the Local Government Act 1993, councils should attempt to follow the principles in the ACL in all of its dealings, whether the ACL strictly applies or not, particularly in respect of dealings with consumers.