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Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
 Consumer credit law

Chapter 14

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e
by Barron & Fletcher. Slides prepared by Kay Fanning.
 Customer Credit Code
• Introduced on 1 November 1996
• Developed uniform credit laws in Australia
• Includes: All credit providers for provision
of credit, wholly or predominantly for
personal, household or domestic purposes

• Ensures: Obligations and liabilities clearly

set out

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e 14-2
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
 Definitions

• Creditor: Person providing the credit

• Debtor: Person receiving the credit

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e 14-3
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
 Credit provider

A credit provider is any person who

provides credit, where a charge is made
for the provision of the credit.

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e 14-4
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
Types of transaction covered
by the Code

• Transactions where credit provided to

individuals wholly or predominantly for
personal, household or domestic
purposes, i.e. not for business or
investment purposes.

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e 14-5
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
 Types of credit covered by the
Code
• Continuing credit contracts
e.g. revolving credit
• Loan contracts
e.g. home loans
personal loans
bank term loans
• Consumer leases: i.e. Hire of goods by a natural person (or strata corporation),
where the lessee does not have a right or obligation to purchase the goods.
• Credit sales contracts: i.e. Credit is provided to a buyer in the course of a sale
of goods or services.
• Mortgages and guarantees: Related transactions providing security for the debt.
• Hire purchase agreements: i.e. A sale of goods by instalments, where there is a
right or obligation to purchase the goods, with the cash price being less than the
ultimate combined amounts paid for the goods).
• Credit-related insurance contracts: required by the credit provider for the
consumer to enter.

Type of credit not covered by the code: Section7.

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e 14-6
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
 Disclosure requirements
(before contract signed)
Precontractual statement
• Clearly understandable
• Conforms to requirements set out in regulation attached
to code
Information statement
• Form 2 - Legal rights and obligations in plain English
Written contract
• Signed by debtor and credit provider
• Information as set out in S15 of Code
• Copy of contract (within 14 days)
• Form 3 - “Before you sign things you must know”
(Penalty for non-compliance: $500 000 plus compensation for
any loss suffered by debtor or guarantor)

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e 14-7
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
 Guarantee
NOT ENFORCEABLE unless
• in writing
• signed by guarantor
• contains warning to guarantor
• guarantor advised to seek legal
advice
• warned of consequences should
debtor fail to pay.

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e 14-8
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
 Disclosure requirements
(after contract signed)
Regular statement of accounts
• Continuing credit card contracts - at least every 40 days
• Continuing credit contracts - between 40 days to three
months
• Other credit contracts - at least every six months
Changes to the contract
• Credit provider has unilateral rights - notified in writing
• Credit provider and debtor mutually agree - notified in
writing
• Contract unjust or causes hardship - may appeal to
Credit Tribunal/Court

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e 14-9
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
 Action against defaulting
debtor
Credit provider makes Default Notice

Debtor, guarantor, mortgager

30 days to remedy

Pay Not pay

Mortgage Debt > $125 000 Debt < $125 000

reinstated
Renegotiate

Repossession Mortgage reinstated

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e 14-10
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
 Advertising
• Regulated by the Code:
• Cost must include:
– the annual percentage rate
or rates
– a statement detailing any
fees or charges that may
apply.

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e 14-11
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
 Linked credit
• Linked credit provider: Credit provider has
a commercial relationship with a supplier of
goods and services, to refer the credit
provider to the prospective purchasers.
• Credit provider and supplier jointly liable to
debtor for loss or damage, e.g. from:
- breach of contract
- misrepresentation
- failure to disclose relevant
material under the terms
of the contract

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e 14-12
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
 Consumer affairs and fair
trading agencies
Major functions:
• Receive complaints
• Take action on behalf of consumers
• Investigate matters on behalf of government
• Advise government
Also:
• Carry out research
• Provide information to the community
• Raise community awareness of Code’s operation
• Provide legal representations to consumer

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e 14-13
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
 Penalties for breaching the
Code
Civil penalties for breach of key requirements:
• Up to $500 000 for each separate breach, plus
compensation for any loss suffered by debtor
or guarantor.
• Order applied for by - Debtor
- Guarantor
- Credit provider
- Government Consumer
Agency

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e 14-14
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia
 Penalties for breaching the
Code
Criminal penalties for breach of key
requirements:
• Up to $10 000 for each separate
breach.

Application by Government Consumer

Agency, Tribunal or Court.

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e 14-15
Copyright © 2000 McGraw-Hill
by Barron & Fletcher. Slides prepared by Kay Fanning.
Australia