Many businesses offer goods and services to consumers under contract. Before you enter a contract, make sure you understand what you are agreeing to. Do not rush into an agreement you are unsure about—a contact is enforceable by law and some contracts last for many years. Unless you have been unfairly forced into a contract or a cooling-off period applies, it may be difficult for you to get out it without a penalty if you simply change your mind.
A contract is an agreement made between two or more parties that is intended to be legally enforceable. A contract arises when one party makes an offer and the other party communicates an intention to accept it. Contracts can be in writing or made verbally. You could be entering a contract by:
signing a document
selecting a good in a shop and paying for it at the check-out counter
clicking on an 'I agree' button on a web page.
Terms and conditions
Contract terms and conditions set out the rights and responsibilities of each party to the contract. You should make sure you read and understand the terms and conditions of a contract before you accept it. Sometimes you will be asked to tick a box to confirm you have read and understood all the terms and conditions before you are asked to sign.
If you do not think the contract will meet your needs, try to negotiate with the business and ask for the terms and conditions to be amended. If you are still unhappy with contract offered to you by the business, shop around for an arrangement that better suits your needs.
Fine print and disclaimers
Advertisements often use fine print or disclaimers to provide important information to consumers about a product or service. Businesses may use disclaimers in their advertising (such as 'conditions apply' or asterisks) to qualify their offers as long as they are specific, clear, and highly visible.
For example, a mobile phone may be advertised in the main caption as costing only $49 per month*. The asterisk may then lead you to fine print at the bottom of the advertisement. The fine print provides information including: the duration of the contract; the total cost of the product over the life of the contract; and exit fees that may apply if the contract is terminated prior to the natural expiry date of the contract.
The Trade Practices Act states that a corporation should not behave in a manner that is likely to be misleading or deceptive. This applies to advertisements and the use, size and positioning of fine print and disclaimers related to a product or service.
To prevent a statement being misleading, asterisks and fine print should be prominent enough to form part of your overall impression of the advertisement. The advertiser should clearly direct your attention to significant terms and conditions.
Some examples of disclaimers and fine print which may be misleading in some circumstances include:
conditions in obscure locations of the advertisement
text that is too small
text flashed on screen for only a moment
voice-overs that are too quick or too quiet.
Have you been forced or coerced into a contract?
If you have been forced or coerced into a contract, you may have been the target of unconscionable conduct. Unconscionable conduct occurs when a business is unreasonable, bullying, oppressive and lacking good faith. In general, the conduct must be more than just unfair; it must be so harsh or unreasonable that it goes beyond the kind of behaviour acceptable in everyday business.
The Trade Practices Act contains specific prohibitions against unconscionable conduct directed at consumers. Rather than specifically define what will be unconscionable, the law lists factors that the courts may take into account when deciding whether unconscionable conduct has occurred. In consumer transactions, these include:
whether the business used undue influence, undue pressure or unfair tactics
whether you were able to understand documentation used
the relative bargaining strengths of the business and you
the price and terms on which the goods or services could have been acquired elsewhere
whether one party required the other to comply with conditions not 'reasonably necessary' to protect their legitimate business interests
Note that unconscionable conduct does not automatically occur because one of these factors exists. Only a court can determine whether unconscionable conduct has occurred and the court may take into account any factors it deems relevant. Consumers and the ACCC can bring civil action in the Federal Court for unconscionable conduct.
Cooling-off periods
A 'cooling-off' period is a safeguard designed to give you the opportunity to change your mind about a purchase or agreement that you have made.
Cooling-off periods may apply to the purchase of some goods and services, for example, contracts entered into via door-to-door sales. The laws in relation to cooling-off periods vary between states and territories, so you should check with your local office of fair trading to find out if a cooling off period applies in your situation. You should make your inquiries quickly - if a cooling off period does apply to your contract or purchase, you may only have a few days to act.
You can search our Consumer & business directory (see the link in the menu on the left) for the contact details of your local office of fair trading.
