Building Law 11: ACL, Unfair Terms and Misrepresentation in Land Sales

This report examines the impact of the Australian Consumer Law (ACL) on land sales, particularly concerning unfair contract terms and misrepresentation. It outlines the ACL's role in protecting consumers and businesses in the context of land transactions. The report covers the definition of consumer contracts under the ACL, emphasizing the intention of the purchaser. It details the limitations imposed on sellers, including deceptive conduct, unfair terms, and misleading advertisements, while also outlining consumer guarantees. The report explores unfair contract terms, as defined by the Trade Practices Amendment (Australian Consumer Law) Act, and their implications for developers' contracts. It addresses the criteria for determining unfair terms and the factors considered by courts in assessing standard form contracts. The report also discusses misrepresentation, including false statements and misleading conduct, as prohibited under the ACL. It references relevant cases, such as OPR WA Pty Ltd v Marron and Williams v Pisano, to illustrate legal principles. The report emphasizes the importance of transparency and consumer protection in land sale contracts, highlighting the responsibilities of developers and the rights of consumers. This report is available on Desklib, a platform providing past papers and solved assignments.

Running head: BUILDING LAW
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The Australian Consumer Law (ACL) includes all the statutory requirements, remedies
or courses of actions that would provide a guideline for the individuals and businesses who are
dealing in commerce or trade. The ACL Act is the national law that deals with fair consumer and
trading protection. The ACL also entails that a term of a consumer contract is void if the terms of
the contract is unfair and the contract is a standard form of contract1. The contracts for sale
between an individual as buyer and the developer as seller are considered standard form of
contracts unless established otherwise.
A consumer contract under the ACL refers to any contract for the sale or grant of a
interest in land to any individual either predominantly or wholly for household, domestic or
personal purpose. In order to determine whether a sale contract or a contract for grant f interest is
a consumer contract under the ACL, the court shall consider the intention of the purchaser. In
case land purchased in not used for private purposes, such contracts shall not be subject to the
Australian Consumer Law2.
As per Schedule 2 of the Competition and Consumer Act 2010, a contract for sale shall
be considered as consumer contract under the Australian Consumer law provided such land be
held for any household purpose as was found by the Supreme Court of West Australia in OPR
WA Pty Ltd v Marron [2016] WASC 395. In case such land is held for the purpose of business
investment, it shall be considered as a consumer contract under the Australian Consumer Law.
The judgment of the court in this case establishes the fact that all lands purchased for household
or private purposes shall be governed by the ACL. The ACL imposes certain limitations on the
1 Latimer, Paul. "Protecting Consumers from Unfair Contract Terms: Australian Comparisons." (2016).
2 Simons, Josh. "The end of'unfairness' in commercial contracts: Proposed extension of'unfair contract terms' laws to
business to business transactions." Governance Directions 66.7 (2014): 431.

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sellers and at the same time, endows the buyers with consumer guarantee with respect to the
manner of carrying out the business operations.
The limitations imposed upon the seller include application of deceptive or misleading
conduct, use of unfair terms and bait advertisements. The paper entails about the impact, the
Australian Consumer Law has on the sale of land with respect to unfair contract terms and
misrepresentation.
Unfair Contract terms
The Trade Practices Amendment (Australian Consumer Law) Act (No. 1) 2010 (the
ACL) aims at regulating unfair terms in standard form consumer contracts. The statute has
substantial impact on developers’ contracts in relation to individuals3. After the commencement
of the statute, the provisions for unfair terms stipulated under the statute that any unfair terms
used in the standard form of contracts shall be considered as void and unenforceable.
The ACL has laid down the terms that shall be considered as unfair terms, which are as follows:
 Any term that leads to a substantial imbalance in the rights and obligations of the parties;
 Any term that is not rationally necessary to safeguard the genuine interests of the
developer; and,
 Any term that would be unfavorable for the purchaser, both financially or otherwise, if
the purchaser relies on such terms;
Although several clauses are incorporated in a developer’s contract that tends to result in
favor of the developer and provides him with flexibility to complete the development project, but
3 Pearson, Gail. "Current Issues for Consumer Protection Law in Australia." Consumer Law and Socioeconomic
Development. Springer, Cham, 2017. 199-208.

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in order to establish the infringement of the ACL provisions, it is important to prove that the
imbalance on part of the developer was significant.
Further, in order to determine whether any particular term is necessary to safeguard the
interests of the developer, the developer is required to provide evidence about the market in
which they function, the economic factors that are imposed by the financiers, planning schemes
and other regulations of the councils that provides the developer with a level of flexibility4. The
statute requires the developers to ensure that their contracts include provision that provide
discretion to the extent it is necessary to deliver finished products to the consumers and it must
not provide any additional freedom as it would otherwise amount to unfair contractual terms.
The terms that are not considered as unfair include the following:
 any term that defines the subject matter of the contract;
 any term that highlights the upfront price payable under the developers contract;
 any tern that is expressly allowed or are required to be incorporated by the state or
Commonwealth law;
As discussed, earlier about the restrictions that are imposed on the businesses with respect to
the incorporation of the unfair terms in a standard form of consumer contracts, consumers are
often made to sign standard contracts relating to the sale of land5. The new provisions related to
unfair contracts terms purports to create transparent contracts in relation to consumer
transactions with a view to deal with the risk that may arise with respect to such contracts. The
4 Casson, Jonathan. "Small business and unfair contract terms: Changes on the horizon." LSJ: Law Society of NSW
Journal 3.2 (2016): 76.
5 Nahan, N., and Eileen Webb. "Unfair contract terms in consumer contracts." Consumer Law and Policy in
Australia and New Zealand. 2013.

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terms would also serve the purpose of preventing the businesses from incorporating terms that
may be unfavorable to the legitimate interest of the consumers.
The incorporation of section 23 of the ACL stipulates that a term shall be considered void
if such term is unfair and it affects the legitimate interest of the consumers. Further, the
provisions of ACL are applicable only to transactions the value of which do not exceed $40000
or for transactions that are made to serve household and private purposes6. Thus, if the sale of
land is made for household purpose, it shall become subject to the provisions of unfair terms
stipulated under the contract. According to the definition of interest of land mentioned under
Schedule 1, section 2 of the Australian Competition and Consumer Act 2010 (Cth), it is equal
to the legal estate of land. It further includes shares of a company owning the land, right, a
power, or privilege, held in relation to a land and occupancy right in the land or a building
erected on it.
The provisions of ACL are not applicable to business contracts rather the applicability of
the provisions with respect to unfair terms is confined to standard form of contracts only.
Nevertheless, as per section 27(1) of the Act, it is required to prove that a standard form of
contract is not a contract that considers the contrary7. The onus of proof is on the seller to
establish that the contract was subject to negotiation. Several factors that are laid down under
Section 27(2) must be taken into consideration by the courts in order to determine whether the
contract is a standard form of contract. This is because all contracts are deemed as standard form
of contract unless the seller is able to establish the contrary.
6 Competition, Australian, and Consumer Commission. "Compliance and enforcement policy." (2017).
7 Pearson, Gail. "Further challenges for Australian consumer law." Consumer Law and Socioeconomic Development.
Springer, Cham, 2017. 287-305.

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The provisions related to unfair terms as stipulated under section 24 of the ACL can be
applied to a contract after the contract is assessed to be a standard form of contract by the court.
The terms of the contract shall be considered as unfair if I causes an imbalance between the
rights and responsibilities of the parties, and fails to safeguard the legitimate interests of the party
who is otherwise, entitled to the benefits assured by the contract8. Further, it shall be considered
as detrimental for the part in case the party acts, relying on the terms included in the contract.
While entering into a sale of land contract, the businesses must not incorporate any terms
into the contract that violates the rights of a party excluding the restricted terms. They must not
include terms that entitle only one party to terminate the contract, or terms that sets out penalties
only for one party and other clauses that permits unilateral variation of interest in land and terms
that restricts the right of one party towards legal actions9.
In Director of Consumer Affairs Victoria v Craig Langley Pty Ltd & Matrix Pilates and
Yoga Pty Ltd (Civil Claims) it was found that a contract that has been subject to negotiation by
the parties cannot include any term that can be deemed as unfair term.
In ACCC v Bytecard Pty Ltd 2013, the court decided in favor of the Australian
Completion and Consumer Commission against the defendant company in relation to the sale of
an interest in land. This is the first case that applied the relevant provisions relating to the newly
incorporated unfair contract terms under the ACL.
In the case of Director of Consumer Affairs Victoria v AAPT Ltd (Civil Claims) [2006]
VCAT 1493 the court held that if an additional term is added along with unfair term, to a contract
8 Butler, Desmond, et al. "Contract Law Case Book." (2013).
9 Evans, Phil. "The building and construction industry code of conduct (WA)." Brief 44.6 (2017): 22.

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in favor of the consumer, it would counter balance the unfair term in case the consumer is
unaware of the terms.
It is imperative for the developers to take reasonable steps to ensure that they have
sufficient knowledge about the rules that have been imposed on them by the recently introduced
provisions relating to unfair contract terms under the ACL so that the terms incorporated in the
contract are not deemed as unfair terms. In case the court believes the term of a contract to be
unfair, the aggrieved parties whose rights are breached must be entitled to terminate the contract.
However, if there is a scope that these contract can still be valid and enforceable even after the
removal of the unfair terms from the contract, the court shall orders to remove such unfair term
and declare the contract to have a binding effect upon the parties10.
Misrepresentation
The term may be defined as a false statement that is made by one party in order to
persuade the other party to enter into the contract, where such statement does not form any term
of the contract. As per the Commonwealth and the state legislations, it is an offense to induce a
person to enter into a contract by using false statements or by making misleading representations.
The Australian Consumer Law (ACL) characterizes any false statements or misleading
representations as an offence under section 2, Schedule 2 of the Act. Several instances of
misrepresentations include testimonials for good or service, goods being new, any specific
history or standard, value, quality, availability of repairing facilities, etc.
10 Smith, Nicholas. "Intellectual property: Misleading and deceptive conduct: When copying is not enough." LSJ:
Law Society of NSW Journal 11 (2015): 76.

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According to section 18 of the ACL, a person within the scope of trade and commerce is
prevented from engaging into any conduct that may cause misrepresentation either by way of
misleading or deceptive conduct. According to section 30 of the ACL, a business or person is
prohibited from making any misleading or false representation relating to sale or promotion of a
property in land11. It also entails the sponsorship, approval, affiliation of individual by whom the
statement is made, the kinds of benefits associated with the land, the venue, the price, the
permission to have access to the facilities associated with the land. The section is applicable
when there is misrepresentation and deceiving whole dealing with contracts for sale of land.
In Given v Pryor (1979)12, the court explained what might amount to misrepresentation
and misleading conduct. In this case, the court asserted that representation is not restricted to
verbal statement but extends to any form of oral or written statement, words, plans, drawings,
maps and photographs and gestures and other conducts. Mere silence with respect to a fact shall
be deemed as misrepresentation especially under circumstances where silence can have a
negative impact on the purchaser.
In Williams v Pisano [2015]13, the issue in question before the New South Wales court of
appeal was to decide whether a seller of a private home who confesses having committed
misrepresentation with respect to the quality of the house is liable under the statutory provisions
of misleading and deceptive conduct stipulated the Australian Consumer Law. While
determining the issue, the court had taken the proportionate liability regime as provided by Part
VIA of the statute into consideration. In this case, the seller of the property was the owner of the
11 Tran-Tsai, Kye. "Property law: Off-the-plan contracts: The sun has set on vendors' rescission rights." LSJ: Law
Society of NSW Journal 3.1 (2016): 80.
12 [1979] 39 FLR 437.
13 NSWCA 177.

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building which implies that the owner shall be accountable for any defects arising out of the
work carried out by her in the building.
The seller and his wife owned the plot for several years and they decided to refurbish the
same. The wife had obtained a builder permit and engaged consultants and a builder to develop a
plan based on cost plus payment mode. The wife supervised the renovation work carried out by
the builder but there was no detailed architectural supervision carried out. The vendors had made
an advertisement for the sale of the property. A real estate agent had been engaged in order to
assist for the sale. The wife introduced herself as the project designer.
The sellers and the agent to the purchaser contended that the renovation work of the
property had been carried out in the best possible way considering any expenses. After the
property was sold, it was discovered by the purchaser that various short cuts were adopted while
carrying out the renovation process, which led to significant defects14. One of the significant
defects included a major problem related to water penetration. The trial judge held that the cost
to remedy the damages was worth $1.2 million.
The trial judge held that the wife was liable for the violation of warranties stipulated by
her being the owner of the building. The purchaser made a further claim against the husband
under the provisions of ACL that he was not accountable for the warranties. It was held by the
trial judge that the representation made by William with respect to the claim, that the
representation was made with respect to “trade and commerce” hence, the husband was imposed
14 Greenwood, Verity, and Larry Dwyer. "Consumer protection as essential to destination
competitiveness." CAUTHE 2015: Rising Tides and Sea Changes: Adaptation and Innovation in Tourism and
Hospitality (2015): 486.

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with a penalty of $1.7 million. The court held that there was a joint liability on part of each of the
vendors.
The husband appealed against the decision of the trial court. The following grounds of
appeal were submitted before the court including that the representation of the vendor had not
been made “in trade or commerce” and thus the ACL was not applicable to the defendant. The
court further supported its decision on Taco Co of Australia Inv v Taco Bell Pty Ltd (1982)15.
The court held that when it comes to the sale of land, the vendors of land shall be subject to the
same rules of misrepresentation as discussed above in relation to the contract for the sale of land.
In the case of Australian Equity Investors, An Arizona Ltd Partnership v Colliers
International (NSW) Pty Ltd (No 4) [2011]16 it had been provided by the court that there has
been violation of provisions Section 30 of the ACL. The violation was caused in relation to
valuation on the ground that it made misleading and false statement related to the payable price
for the land.
Thus, from the above discussion, it can be stated that the Australian consumer law has
become more stringent in its application when it comes to the sale of land for serving household
and domestic purpose. It requires application of the statutory provisions with a view to safeguard
the rights of the consumers. The businesses must have knowledge about the impact and
outcomes of unfair terms and misrepresentation with respect to consumer contracts in relation to
sale of land must take reasonable steps to avert the legal liabilities.
15 [1982] 2 TPR 48.
16 [2011] FCA 442.

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Reference
ACCC v Bytecard Pty Ltd 2013
Australian Equity Investors, An Arizona Ltd Partnership v Colliers International (NSW) Pty Ltd
(No 4) [2011] FCA 442
Butler, Desmond, et al. "Contract Law Case Book." (2013).
Casson, Jonathan. "Small business and unfair contract terms: Changes on the horizon." LSJ: Law
Society of NSW Journal 3.2 (2016): 76.
Competition, Australian, and Consumer Commission. "Compliance and enforcement policy."
(2017).
Director of Consumer Affairs Victoria v AAPT Ltd (Civil Claims) [2006] VCAT 1493
Director of Consumer Affairs Victoria v Craig Langley Pty Ltd & Matrix Pilates and Yoga Pty
Ltd (Civil Claims)
Evans, Phil. "The building and construction industry code of conduct (WA)." Brief 44.6 (2017):
22.
Given v Pryor (1979) 39 FLR 437
Greenwood, Verity, and Larry Dwyer. "Consumer protection as essential to destination
competitiveness." CAUTHE 2015: Rising Tides and Sea Changes: Adaptation and Innovation in
Tourism and Hospitality (2015): 486.
Latimer, Paul. "Protecting Consumers from Unfair Contract Terms: Australian Comparisons."
(2016).

11BUILDING LAW
Nahan, N., and Eileen Webb. "Unfair contract terms in consumer contracts." Consumer Law and
Policy in Australia and New Zealand. 2013.
Pearson, Gail. "Current Issues for Consumer Protection Law in Australia." Consumer Law and
Socioeconomic Development. Springer, Cham, 2017. 199-208.
Pearson, Gail. "Further challenges for Australian consumer law." Consumer Law and
Socioeconomic Development. Springer, Cham, 2017. 287-305.
Simons, Josh. "The end of'unfairness' in commercial contracts: Proposed extension of'unfair
contract terms' laws to business to business transactions." Governance Directions 66.7 (2014):
431.
Smith, Nicholas. "Intellectual property: Misleading and deceptive conduct: When copying is not
enough." LSJ: Law Society of NSW Journal 11 (2015): 76.
Supreme Court of West Australia in OPR WA Pty Ltd v Marron [2016] WASC 395.
Taco Co of Australia Inv v Taco Bell Pty Ltd (1982) 2 TPR 48
Tran-Tsai, Kye. "Property law: Off-the-plan contracts: The sun has set on vendors' rescission
rights." LSJ: Law Society of NSW Journal 3.1 (2016): 80.
Williams v Pisano [2015] NSWCA 177