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NSW businesses must ensure they comply with the mandatory disclosure obligations in respect of their terms of trade.

The new section 47A of the Fair Trading Act 1987 (NSW) commenced operation on 1 July 2020 and, in essence, this requires NSW businesses to:

  • take reasonable steps to ensure that consumers are aware of the substance and effect of any terms or conditions relating to the supply of goods or services which may substantially prejudice the interests of the consumer
  • make this disclosure to consumers before the goods or services are supplied to the consumer

Examples of terms or conditions which “substantially prejudice” the interests of the consumer include but are not limited to:

  • terms which exclude the liability of the supplier
  • terms which impose a liability on the consumer for damage to goods which occurred prior to delivery
  • terms allowing the supplier to provide personally identifiable information about that consumer to third parties
  • exit fees, balloon payments and other similar payments which accrue upon the expiry or termination of an agreement

NSW Fair Trading has suggested that reasonable steps may include:

  • using short, plain English summaries of onerous terms on the front page of a contract
  • providing succinct information to consumers (eg, in information fact sheets or on the businesses’ online payments page)
  • using scrollable pop-up text boxes for online purchases which the consumer can click “I accept” on
  • using images to explain relevant information
  • using prominently displayed signage at the supplier’s place of business
  • obtaining the consumer’s express consent to the onerous terms (eg, having the consumer initial a contract or tick-a-box on an online form)

Whilst NSW Fair Trading applied a grace period between 1 July 2020 and 31 December 2020, as this has now ended businesses must ensure they comply with this regime.

Action Item

Businesses must ensure they properly disclose such contractual terms otherwise penalties and other detrimental and serious consequences for the business could arise.