Comprehensive Study Notes on Unsolicited Agreements, Unconscionable Conduct, Unfair Terms, and Competition Law
Week 8: Unsolicited Consumer Agreements
Introduction to Unsolicited Consumer Agreements
Often referred to colloquially as "door-to-door selling."
The practice involves hawkers or selling agents who may "play on human weaknesses."
In 2009, the Ministerial Council of Consumer Affairs (MCCA) accepted a national law covering unsolicited consumer sales, which is now part of the Australian Consumer Law (ACL).
The regime consists of two primary parts:
Protections in the ACL relating to unsolicited consumer agreements.
Protections in the ACL relating to lay-by agreements (though not covered in this specific discussion).
Legal Definition (Section 69(1) of the ACL)
An agreement is defined as an unsolicited consumer agreement if:
It is for the supply, in trade or commerce, of goods or services to a consumer.
It is made as a result of negotiations between a dealer and the consumer in each other's presence at a place other than the business or trade premises of the supplier, or by telephone.
The negotiations can be the only ones or part of a series preceding the agreement.
The consumer did not invite the dealer to that place or to make the telephone call for the purpose of the negotiations (regardless of whether an invitation existed for a different supply).
The total price paid or payable:
Is not ascertainable at the time the agreement is made; or
If ascertainable, is more than (or another amount prescribed by regulations).
Section 1AA Clarification: A place for negotiations can include public places and does not need to be a place where the dealer requires the consumer's consent to enter.
The Four Key Elements of an Unsolicited Consumer Agreement
1. Trade or Commerce: The agreement must occur within trade or commerce for the supply of goods/services to a consumer.
2. Negotiation Context: Made via negotiations between a "dealer" and a consumer, either in person (away from the supplier's premises) or by telephone.
3. Lack of Invitation: The dealer was not invited by the consumer for those specific negotiations.
4. Price Threshold: The price is either not ascertainable or exceeds .
Relevant Case Law: ACCC v ACN 099 814 749 Pty Ltd [2016] FCA 403; ACCC v Unique International College [2017] FCA 727.
Definitional Issues and Scenarios
"Cold-calling": A sales agent calls a consumer and directs the conversation so that the consumer eventually invites them to their home.
"Expanding the Scope": A consumer invites an agent for an insulation quote, but the agent then tries to sell unrelated products like double glazing.
"Seminar Registers": A consumer attends an investment seminar, signs a register, and is later contacted by an agent to buy a product.
Exemptions (Section 69(4) and Regulation 81)
Certain agreements are not considered unsolicited:
Business contracts.
Discontinued negotiations agreements.
Agreements made during a "party plan" event.
Renewable agreements of the same kind.
Subsequent agreements of the same kind.
Presumption of Unsolicited Status (Section 70)
Section 70 creates a rebuttable presumption in civil proceedings that an agreement is an unsolicited consumer agreement.
This was a policy decision to ensure consumers are not disadvantaged by having to prove every element of the definition.
Identifying the Dealer (Section 71)
The dealer who negotiates is often not the same entity as the supplier. Section 71 clarifies the meaning of a "dealer."
Issues arise when corporate suppliers (e.g., Roof & All Pty Ltd) hire natural persons for door-to-door sales. ACL application to corporations remains relevant here (Topic 1).
Case Reference: ACCC v Unique International College [2017] FCA 727.
Express Supplier Obligations: Telemarketing and Contact Hours
Telemarketing: Governed by the Telecommunications (Do Not Call Register) Industry Standard (2007). Section 5 prohibits calls at the following times:
Weekdays: Before or after .
Saturdays: Before or after .
Sundays: Prohibited all day.
Face-to-Face: Section 73 prohibits negotiations during:
Sundays or Public Holidays: All day.
Other days: Before or after .
Mandatory Disclosure and Behavioral Duties
Section 74: Dealers must advise the consumer of their purpose at the outset and display identification prescribed by regulations. Case: ACCC v Lux Distributors [2013] FCAFC 90.
Section 75(1): Dealers must leave the premises upon request.
Section 75(2): If a consumer requests a dealer to leave, the consumer must not be contacted for a similar purpose for at least .
Case: ACCC v Energy Australia [2014] FCA 336 (contravened for calling consumers continuously).
Case: ACCC v AGL Sales [2013] FCA 1030 (concerning "do not knock" signs).
Section 76(a): Dealers must inform consumers of their termination rights prior to making the agreement.
Case: Anderson v Matangi Enterprise Pty Ltd (Civil Claims) [2017] VCAT 1559.
Consumer Rights and Termination Process
Section 78 & 79: Requirement to provide specific documents. Agreements must comply with detailed requirements in Competition and Consumer Regs 2010 (Cth) regs 85-87.
Cases: ACCC v Cornerstone Investment Aust Pty Ltd [2018] FCA 1408; [2019] FCA 1544.
Section 82 (Cooling-off Period): Contracts can be terminated within a period ranging from up to , depending on compliance and negotiation methods.
Termination Procedure: Notice can be oral or written. Written notice can be delivered personally, by post, email, or fax to the supplier (not necessarily the dealer).
Section 83: Termination renders the principal and related contracts void.
Section 84: Supplier must refund the consumer immediately upon notification.
Section 87: Repayment of payments received after termination.
Section 88(2): Prohibits listing the consumer as a debtor/defaulter after termination.
Enforcement and Penalties for Unsolicited Agreements
Permitted hours contravention (S 170): Pecuniary penalty of for bodies corporate and for individuals.
Disclosure of identity (S 171) and Termination period info (S 173): Similar penalties (corp: ; individual: ).
General Civil Pecuniary Penalties (S 224): Up to for corporations and for individuals.
Defenses include: Honest and reasonable mistake of fact; acts of third parties; accidents outside the person's control.
Week 9: Statutory Unconscionable Conduct
Introduction to Unconscionability
Prohibition exists under the ACL, linking to Unsolicited Consumer Agreements and Unfair Contract Terms (UCTs).
Aimed at scenarios where weak bargaining positions are exploited.
Common Law and Equitable Foundations
Equity developed to prevent victimization, not just to rescue people from their own "foolishness."
South Australian Railways Commissioner v Egan (1973): Courts generally bind parties to harsh contracts in commercial dealings if terms were agreed upon.
Commercial Bank of Australia Ltd v Amadio (1983): Fundamental case providing two themes:
1. An unequal relationship where one party has a "special disability/disadvantage."
2. The stronger party is aware of the disability and exploits it.
Unconscionable Conduct in the ACL
Previously under Trade Practices Act (TPA) ss 51AA, 51AB, and 51AC.
Now covered under ACL Sections 20, 21, and 22.
Section 20 ACL (Equitable Principles)
Refers to "unwritten law" (equitable principles as in Amadio).
Kakavas v Crown Melbourne Ltd [2013] HCA 25.
Applies to commercial agreements that might fall outside standard consumer definitions.
Section 21 ACL (Consumer/Business Protections)
Prohibits unconscionable conduct in the supply or acquisition of goods/services.
ASIC v Kobelt [2019] HCA 18: Evolution of the statute to move away from restrictive equitable preconditions to a lower bar of "moral disapprobation."
The conduct must offend the "conscience": ACCC v Quantum Housing Group Pty Ltd [2021] FCAFC 40.
Section 22 ACL (Factors for Consideration)
Expands relief to small businesses for commercial transactions.
Identifies 12 matters for the court to consider, including:
Relative bargaining strengths: Paciocco v ANZ [2016] HCA 28.
Conditions not reasonably necessary to protect legitimate interests.
The consumer's ability to understand documents (Amadio principles).
ACCC v Simply No-Knead (Franchising) (2000).
Remedies and Penalties (Statutory Unconscionability)
Section 224(3A) Penalties for Corporations: The greater of:
(a) ;
(b) Three times the value of the benefit obtained;
(c) If value cannot be determined, of adjusted turnover during the breach period.
Individual Penalties: Maximum of .
Other orders: Declaring contract void, varying terms, refunds, or returning property.
Week 10: Unfair Contract Terms (UCT)
Context and Rationale
Balances "consumer sovereignty" and "freedom of contract."
Emerged due to the prevalence of Standard Form Contracts where the caveat emptor rule provides insufficient protection.
Integrated into ACL Chapter 2 in 2010; extended to small business contracts in 2015.
Operative Provisions (Section 23)
A term is void if:
The term is unfair;
The contract is a standard form contract.
The rest of the contract remains binding if it can operate without the unfair term.
Defining Consumer and Small Business Contracts
Consumer Contract (S 23(3)): Supply of goods/services or interest in land to an individual for Personal, Domestic, or Household (PDH) use/consumption.
Small Business Contract (Original S 23(4)):
One party employs fewer than persons (regular casuals counted).
Upfront price < 300,000< if duration > 12\,months).
Updated Thresholds (2022 Bill): Small business defined as having fewer than or a turnover less than .
Standard Form Contracts (Section 27)
Typically prepared by one party and offered on a "take it or leave it" basis with no negotiation opportunity.
Section 27(1): Rebuttable presumption that a contract is a standard form contract if alleged.
The Three-Limb Test for Unfairness (Section 24(1))
A term is unfair if it satisfies all three:
1. Significant Imbalance: Causes a significant imbalance in rights and obligations (Claimant must prove on balance of probabilities).
2. Legitimate Interests: Not reasonably necessary to protect the legitimate interests of the advantaged party (Rebuttable presumption of "not necessary" per S 24(4)).
3. Detriment: Would cause detriment (financial or otherwise) if applied.
Court Considerations (Section 24(2) & 24(3))
The court must consider any relevant matter, but must check:
Transparency: Is the term expressed in reasonably plain language, legible, presented clearly, and readily available?
Contract as a whole: Looking at the entire agreement context.
Examples of Potentially Unfair Terms
Unilateral rights to avoid or limit performance.
Unilateral rights to terminate the contract.
Penalties for breach/termination targeting only one party.
Unilateral rights to vary terms or the upfront price without a right for the other party to terminate.
Rights to unilaterally determine if a breach occurred or to interpret meaning.
Liability limitations for agents or limits on the right to sue.
UCT Enforcement and Penalties
Only courts can declare a term unfair.
Public Enforcement (S 250): Regulator can apply for declarations, injunctions, and compensation claims.
Updated Penalties (2022 Bill):
Corporations: Up to .
Individuals: Up to .
Private Enforcement: Declaration, injunction, or compensation order. Damages under S 236 are not available for UCT.
Week 11: Competition Law - Horizontal Agreements
Introduction to Horizontal Agreements
Agreements between firms at the same functional level (competitors).
Major categories: Price-fixing, restricting outputs, customer/supplier allocation, and bid-rigging.
Cartel Provisions (Part IV Division 1)
Criminal Liability: Indictable offence. Fines for corporations calculated as the greatest of:
(i) ;
(ii) Three times the benefit derived;
(iii) of annual turnover.
Individuals face up to imprisonment and/or a fine of .
Civil Liability: Similar pecuniary penalties under S 76(1A)(aa).
Defining a Cartel Provision (Section 45AD)
Must satisfy:
Purpose/Effect condition (S 45AD(2)).
Purpose condition (S 45AD(3)).
Competition condition (S 45AD(4)).
Contracts, Arrangements, or Understandings (CAU)
These terms are not defined in the Act; left to judicial interpretation.
Often proven via circumstantial evidence because cartel activity is conducted in secrecy (e.g., the "Honda" code word used by TNT, Ansett, and Mayne Nickless in the 1990s).
Case: ACCC v Leahy Petroleum (2007) FCA 794 (discussing what is not an "understanding").
Specific Horizontal Conducts
Price-Fixing: Competitors agree to maintain same prices, or "theft" from consumers who lose price competition benefits.
Restricting Outputs: Creating "artificial scarcity" to drive up prices. Historic examples date back to ancient Athens grain merchants.
Bid-Rigging: Colluding on tenders to guarantee a specific winner at a desired price. Case: ACCC v CC (NSW) Pty Ltd (No.8) (1999).
Market Allocation: Dividing customers, suppliers, or geographical territories to eliminate competition.
Misuse of Market Power (Section 46)
Prohibits firms with substantial market power from engaging in conduct that substantially lessens competition.
Historical Test: Required "Taking Advantage" of power for proscribed purposes.
Current Test ("Effects Test"): Introduced in 2017 following the Harper Review. Prohibits conduct with the purpose, effect, or likely effect of substantially lessening competition.
Market power is defined as the capacity for discretionary behavior (e.g., raising prices above competitive levels) without losing customers.
Case: ACCC v Tasports [2021] FCA 482.
Exemptions (Authorisation and Notification)
The ACCC can allow restrictive behavior if the public benefit outweighs the detriment of lessening competition.
Week 12: Competition Law - Vertical Agreements
Introduction to Vertical Restraints
Behavior between entities at different functional levels (e.g., supplier to wholesaler, wholesaler to retailer).
Two main forms: Exclusive Dealing (S 47) and Resale Price Maintenance (RPM) (S 48).
Exclusive Dealing (Section 47)
Generally prohibited only if it has the purpose, effect, or likely effect of substantially lessening competition (SLC test).
Positive Conduct (Even numbers S 47(2), (4), (6), (8)): Acquisition or supply on a specific condition.
Negative Conduct (Odd numbers S 47(3), (5), (7), (9)): Refusal to supply or acquire because a person has not complied with a condition.
Third-line forcing (S 47(6)-(7)): Supplier requires a consumer to buy goods/services from a third party as a condition of supply.
Resale Price Maintenance (RPM) (Section 48)
Prohibits suppliers from specifying a minimum price below which a retailer cannot sell goods.
Unlike Exclusive Dealing, RPM is per se prohibited (illegal regardless of its effect on competition).
Forms of RPM (Section 96(3)):
(a) Making it known that goods won't be supplied below a specified price.
(b) Inducing/attempting to induce a retailer not to sell below a price.
(c) Entering agreements for minimum resale prices.
(d) Withholding supply because a retailer has sold below price or refused to agree to a price.
Loss Leader Defense (Section 98(2)): A supplier may withhold supply if they believe the retailer is using the goods as "loss leaders" (selling below cost to attract customers).
Case: ACCC v Techtronic Industries Australia Pty Ltd [2023] FCA 1574.
Administrative Administrative ACCC Pathways
Authorisation (S 88): Seeking permission based on public benefit.
Notification (S 93): Providing notice to internalize protection from legal action unless the ACCC intervenes.