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Consumer Protection - Contract Review Act

Date: May 21, 2009

Authors: LAC Lawyers

Often times consumers enter into contracts where the terms are not negotiable and are expected to just sign the bottom of the page and be on their merry way. Some of these contracts include mobile phone contracts, car hire contracts, pay television contracts, finance agreements, and even those little car parking tickets issued by the machines when you go into a shopping centre or car parking station.

No one ever really reads the terms which are often drafted in a way that does little to assist the average consumer who more often times than not just accept the terms as they are. The problems will usually arise when the consumer allegedly breaches a term of the contract and the other party threatens or in fact commences legal action relying on the strict terms of the contract. The reverse may also occur in that the consumer believes a wrong has been committed against them and when they make a claim, the other party would rely on the strict terms of the contract and deny the claim. This scenario is probably most common in insurance claims.

Strictly speaking, the courts generally take the view that if a person of sound mind and who is not under duress signs a contract, then technically speaking they have read and agreed on the terms and are in fact bound by those terms. Luckily the government has introduced legislation to assist the consumer.

One piece of legislation that the consumer could rely on is the Contracts Review Act 1980 (NSW). Other states will have an equivalent. Section 7 of the Act provides that if the Court finds a contract or a provision of a contract to be “unjust”, it may do any one of the following:

  1. it may decide to refuse to enforce any or all of the provisions of the contract,
  2. it may make an order declaring the contract void, in whole or in part,
  3. it may make an order varying, in whole or in part, any provision of the contract,

Section 9 of the Act provides the matters to be considered by the Court in determining whether the contract or a term of the contract is unjust. Some matters that the Court would consider would be the result or consequence arising in the event of compliance or non compliance with any or all the terms of the contract. The Court would also take into consideration the bargaining powers of the parties at the time the contract was signed, whether any of the terms were able to be negotiated, whether it was practical for the party seeking relief to negotiate for the alteration of or to reject any of the provisions of the contract, what the educational or economic circumstances of the parties were. This list is not exhaustive.

How can we help?

It is important that a claim for relief under the Contracts Review Act be properly pleaded. LAC Lawyers can assist by reviewing the terms of your contract and advise on the best approach. If we feel you have reasonable prospects of success, we can prepare file and serve the claim on your behalf.

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