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PART 4 OF THE FAIR TRADING ACT 1999

TRADE PRACTICES ACT IN MELBOURNE

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Part 4 – Fair Trading Act 1999

APPLICATION TO PART 4 – OFF-BUSINESS SALES

Section 59 Fair Trading Act specifies certain agreements that operate outside Part 4 Fair Trading Act.

In addition, both sections 60 and 68 Fair Trading Act refers to agreements for the “…supply in trade or commerce of goods or services of a kind ordinarily used for personal, household, or domestic use…” The phrase “trade and commerce” as defined by section 3 Fair Trading Act includes a business not carried on for profit.

The phrase “services of a kind ordinarily used for personal, household, or domestic use” is not defined in the Act. However, taking the ordinary meaning it excludes any commercial use and therefore any commercial agreement made between a company and other trading companies are excluded from the coverage of the Fair Trading Act. This is supported by the courts in their definition of a similar phrase in the Trade Practices Act in which they conclude that any business and commercial use would be excluded.  

SITUATION 1

It appears that Division 2 refers particularly to “door-to-door” sales. Hence, where a purchaser contacts you by telephone resulting in an employee being sent to the site to quote the cost of the work and the customer accepts your quote, it appears that the agreement is a Contact Sales Agreement under section 60 Fair Trading Act. In particular, section 60 (1) (b) Fair Trading Act refers to the presence of both the purchaser and the supplier in the sense that they are together and in the same place when the agreement is made. This is further supported by the following provisions in Division 2, in particular section 61 Fair Trading Act, which refers to the requirement for:

a)    Written agreements that set out terms and conditions of the agreement (s 61 (1)(a) Fair Trading Act);

b)    Agreement to be signed by the purchaser (s 61 (1)(f) Fair Trading Act); and

c)    A copy of the agreement must be given to the purchaser immediately after the purchaser signs the agreement (s 61 (1) (i) Fair Trading Act).

Clearly, the matters in section 61 Fair Trading Act could not be complied with if the supplier and the purchaser are not both present in the same place. If any agreements made between a company and purchasers are as described above, the company must comply with the provisions in section 61 Fair Trading Act. Section 62 Fair Trading Act provides that any failure to do so will place both your company and the employee liable to a maximum monetary penalty. In addition, the agreement will not be enforceable against the purchaser because of non-compliance with section 61 Fair Trading Act.  

SITUATION 2

Where a purchaser telephones you for a quotation to be given and your service is accepted over the telephone, it appears that the agreement is a Non-Contact Sales Agreement under section 68. Reference in section 68 (1) (b) Fair Trading Act to “...otherwise than in the presence of the purchaser...” means otherwise than in the physical presence of the purchaser. The telephone booking in this circumstance would have to comply with Division 3, in particular the requirements in section 69(1), (3), and (4) Fair Trading Act. This means that during the telephone booking and before the agreement is made, one must provide the purchaser with the following information:

a)    Total amount payable by the purchaser;

b)    Any postal or delivery charges payable by the purchaser;

c)    Any rights, the purchaser has about cancelling the agreement, and how this may be done;

d)    The full name and full business address or telephone number of the supplier

Such information must be given clearly and must be given to the purchaser in writing at or before the time that the services are performed. According to section 70 Fair Trading Act, any failure to do so would result in penalties similar to that of section 61 Fair Trading Act.

RIGHT OF PURCHASER TO CANCEL AGREEMENT

CONTACT SALES AGREEMENTS

Under section 63 Fair Trading Act, a purchaser in the two ways described below may cancel the agreement.

    (i)    Cooling-off period (5 business days)

A purchaser may cancel the agreement by giving written notice of cancellation within 5 clear business days (that is, not including weekends or public holidays) from the day the agreement was reached unless a longer period is specified in the agreement. The result of the cancellation is that the contract is rescinded by mutual consent (section 64). This means that the obligations under the contract do not have to be performed and money paid by the purchaser under the agreement must be repaid to them (section 65). However, one can deduct from this any reasonable charges for services rendered under the agreement before cancellation (section 66).

    (ii)    Cancellation by non-compliance of supplier with section 61(1) (b) (c) and     (i)    (30 clear days)

If the Contact Sales Agreement does not comply with section 61 (1) (b) (c) or (i), the purchaser may cancel the agreement by giving written notice 30 clear days from when the agreement was reached. That is, if:

a)    The Contact Sales Agreement does not include a front page that advises the purchaser of the right to cancel the agreement and is signed by the purchaser (section 61(1) (b)); or

b)    The Contact Sales Agreement does not contain a notice that sets out the name, address, date, details of agreement and which may be used by the purchaser to cancel the agreement (section 61 (1) (c)); or

c)    A copy is of the Contact Sales Agreement is not given to the purchaser at the time the agreement was made.

The result of the cancellation is the same as cancellation at the cooling-off period. Obviously, where services are provided immediately it will not be possible to give all the notice sought by the legislation and the cooling-off period should not apply after the service has been provided or so common sense would dictate.

NON-CONTACT SALES AGREEMENTS

In a Non-Contact Sales Agreement, a cancellation period can be specified in the agreement. However, any time specified that is shorter than five business days after the agreement is made will be void since section 71 (2) Fair Trading Act deems this the minimum period required to give the purchaser an opportunity to cancel the agreement.

The result of cancellation of a Non-Contact Sales Agreement is similar to that of the Contact Sales Agreement except that these requirements are specified in sections 70 to 75 Fair Trading Act.

TRADE PRACTICES ACT (CTH) 1975

The Trade Practices Act does not contain provisions that specifically address Contact and Non-Contact Sales Agreements. However, general provisions of the Trade Practices Act relating to unconscionable conduct, consumer protection and conditions and warrantees may cover such agreements.

NEED MORE INFORMATION

Behan Legal assists and advises on these important issues. For an appointment, call  03 9646 0344 .

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