Submission: Reforming Contract Law

This submission in response to the Commonwealth Government’s discussion paper on the scope to reform Australian contract law.

The submission:

  • highlights the significance of consumer contracting (which is estimated by the Productivity Commission to amount to 60 per cent of GDP) and argues that consumer contracts, not only contracts between businesses, need to take prominence in the Government’s review;
  • argues that consumer contracting and consumer protection policy has a significant effect on competition and productivity, and any reform seeking to reduce costs for business and encourage foreign investment would be counter-productive if it erodes the ability of consumers to participate effectively in markets;
  • argues that the widespread use of standard form contracts means that the realities of modern consumer contracting are very different to the classical conception of contract as a bargain negotiated by two informed parties on equal footing. Unconscionable conduct and unfair contract terms provisions have partially responded to this development. However, we recommend that any future contract law reform should also include a rule to the effect that if a merchant has reason to believe a consumer would not enter into a contract if they knew it contained a particular term, that term is not part of the agreement.
  • recommends that the Government consider the following as part of any broader reform of the contract law:
    • model contracts in particular industries;
    • ‘double opt-in’ requirements for particular transactions;
    • a general requirement in the Australian Consumer Law that consumer documents be clear and transparent, and that terms be of at least a minimum font size; and
    • a general ‘unfair trading’ prohibition.

To read our full submission, please click: Reforming contract law.

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