Chapters

Unsolicited Supplies

There are also provisions dealing with unsolicited supplies. They provide for:

  • prohibition of sending unsolicited credit or debit cards (s39);
  • prohibition on asserting a right to payment for unsolicited goods or services or for making an entry in a directory (ss40 and 43);
  • regulation of the rights of recipients of unsolicited goods (s41) or services (s42);

Pyramid Selling

The ACL section 44 prohibits a person from participation in, or inducing another to participate in, a pyramid selling scheme. These provisions are quite detailed because it is necessary to differentiate between legitimate promotional schemes and prohibited pyramid selling.

A pyramid selling scheme is defined as a scheme with both the following characteristics:

  • to take part in the scheme, some or all new participants must make a payment (a participation payment ) to another participant or participants in the scheme; and
  • the participation payments are entirely or substantially induced by the prospect held out to new participants that they will be entitled to a payment (a recruitment payment) in relation to the introduction to the scheme of further new participants.

Pricing

The Australian Consumer Law deals with various pricing practices. It is prohibited for a person to display multiple prices for goods and not be prepared to sell for the lowest displayed price (s47). It is also required that a single price be displayed in certain circumstances (s48).

Referral selling

Referral selling is prohibited under section 49  Referral selling is where a customer is told that he or she will receive a rebate, commission or other benefit in return for:

  • giving the person the names of prospective customers; or
  • otherwise assisting the person to supply goods or services to other consumers

if receipt of the rebate, commission or other benefit is contingent on an event occurring after that contract is made.

Harassment and coercion

Under ACL section 50 a person must not use physical force, or undue harassment or coercion, in connection with:

  • the supply or possible supply of goods or services; or
  • the payment for goods or services; or
  • the sale or grant, or the possible sale or grant, of an interest in land; or
  • the payment for an interest in land.

Unsolicited Consumer Agreements (Door-to-Door Sales and Similar Practices)

Elaborate provisions of the Australian Consumer Law (Part 3-2 Division 2) regulate the practice of door-to-door or telephone selling – called an ‘unsolicited consumer agreement’. These provisions cannot be modified or excluded by contract (s89) nor is a consumer competent to waive rights provided by this legislation (s90). Breaches of these provisions constitute offences under ACL Part 4-2 Division 2.

The legislation deals with the possibility that either the consumer or the supplier may assign its rights under an unsolicited consumer agreement in which case the agreement can be enforced by, or against, the assignee (s91). If goods or services are bought for a third party then that third party has the same rights as the original purchaser (s92).

Definition of unsolicited consumer agreement

An agreement is an unsolicited consumer agreement (s69) if:

  • it is for the supply, in trade or commerce, of goods or services to a consumer (that is, as defined for the purpose of consumer guarantees; and
  • 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 of the goods or services; or by telephone whether or not they are the only negotiations that precede the making of the agreement; and
  • the consumer did not invite the dealer to come to that place, or to make a telephone call, for the purposes of entering into negotiations relating to the supply of those goods or services (whether or not the consumer made such an invitation in relation to a different supply); and
  • the total price paid or payable by the consumer under the agreement is not ascertainable at the time the agreement is made; or if it is ascertainable at that time—is more than $100 or such other amount prescribed by the regulations.

‘Dealer’ is defined in section 71 to mean a person who either enters into negotiations or telephones for the purpose of making a sale. There is a presumption under section 70 that the agreement is an unsolicited consumer agreement if one party asserts that it is and the other party does not prove otherwise.

Negotiating an unsolicited consumer agreement

Sections 73-77 specify certain requirements for the negotiating process.

  • A dealer must not without prior agreement call on a person to negotiate an unsolicited consumer agreement on Sundays or public holidays or before 9.00am or after 6.00pm (5.00 pm on Saturdays) on other days (s73);
  • The dealer must disclose his or her purpose, tell the customer that the dealer will leave on request and provide any prescribed details about the dealer specified in the Regulations (s74);
  • The dealer must leave the premises on request by the customer and must not attempt to contact the customer in the next 30 days (s75);
  • The dealer must tell the customer about the cooling off period before any sale is made and this must be confirmed in writing (whether negotiations are face to face or by telephone) (s76). The form of writing may be the subject of prescription by Regulation.
  • If a dealer acting for the potential supplier other than the dealer breaches these requirements, the supplier is also in breach (s77).

Requirements for unsolicited consumer agreements

Sections 78-81 set out the requirements for securing the sale.

The dealer must provide a copy of the signed written agreement to the customer immediately with a face-to-face sale and within 5 business days (or such longer period as has been agreed) in the case of a telephone agreement. The agreement can be delivered by post, personally or by email if the customer has consented (s78).

Section 79 provides that the agreement itself:

  • must set out in full all the terms of the agreement, including 
    (i) the total consideration to be paid or provided by the consumer under the agreement or,
    (ii) if the total consideration is not ascertainable at the time the agreement is made, the way in which it is to be calculated; and any postal or delivery charges to be paid by the consumer;
  • its front page must include
    (i) a notice that conspicuously and prominently informs the consumer of the consumer’s right to terminate the agreement; and 
    (ii) conspicuously and prominently sets out any other information prescribed by the regulations;
    (iii) and complies with any other requirements prescribed by the regulations;
  • it must be accompanied by a notice that:
    (i) may be used by the consumer to terminate the agreement; and
    (ii) complies with any requirements prescribed by the regulations;
  • it must conspicuously and prominently set out in full:
    (i) the supplier’s name; and
    (ii) if the supplier has an ABN—the supplier’s ABN; and
    (iii) if the supplier does not have an ABN but has an ACN—the supplier’s ACN; and
    (iv) the supplier’s business address (not being a post box) or, if the supplier does not have a business address, the supplier’s residential address; and
    (v) if the supplier has an email address—the supplier’s email address; and
    (vi) if the supplier has a fax number—the supplier’s fax number;
  • it must be printed clearly or typewritten (apart from any amendments to the printed or typewritten form, which may be handwritten);
  • it must be transparent.

Section 80 provides that if the dealer is acting for a supplier in a fact-to-face sale then the dealer’s details must be given to the customer.

Any amendments to the written document must be signed by both parties (s81).

Terminating unsolicited consumer agreements (‘cooling off period’)

The customer has the right under section 82 to terminate, verbally or in writing (no formalities are specified), for no reason (often called a ‘cooling off period’). The time within which this right may be exercised varies but in the ordinary case it is 10 business days from signing in the case of a face-to-face sale or 10 business days from delivery of the written agreement in the case of a telephone sale.

The cooling off period is 3 months if the dealer has contravened section 73 (permitted hours for negotiating an unsolicited consumer agreement), section 74 (disclosing purpose and identity) or section 75 (ceasing to negotiate on request).

The cooling off period is 6 months if the dealer has contravened section 76 (informing consumer of termination period), any of the requirements set out above or section 86 (prohibition on supplying for 10 business days).

The effect of termination is that the contract is taken to have been rescinded by mutual consent and any ‘related contract or instrument’ is void (s83). A ‘related contract or instrument’ includes a guarantee, indemnity or mortgage/charge taken by the supplier but does not include a tied continuing credit contract or linked credit provider arrangement within the meaning of sections 127(2) or (3) of the Schedule to the National Consumer Credit Protection Act 2009).

The customer can terminate even if the goods or services have been partly or wholly consumed or used (s83(3)(b)). This is justified by the prohibition in section 86 on supplying the goods or services or receiving payment for them for 10 business days after contract signing or delivery in the case of a telephone contract. In other words there is a cooling off period on performance of the contract as well.

Once termination is effected, the supplier must refund any money paid (ss84 and 87) and the customer must return any goods not consumed or notify the supplier where they can be collected (s85). If the supplier fails to collect them within 30 days the goods become the property of the consumer. The customer may be liable to compensate the supplier for damage to goods due to lack of care by the customer but not for fair wear and tear. The customer may also be liable to pay for any service delivered after the 10-day cooling off period.

The supplier must not attempt to enforce a terminated contract nor provide the customer’s name as a defaulter or debtor to a credit agency (s88).

© 2013 Hobart Community Legal ServiceFeedbackDisclaimer