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Standard fact sheet.

Unsolicited consumer agreements  

What is an unsolicited consumer agreement? 

An agreement is considered to be unsolicited when:

  • a supplier/salesperson approaches or telephones a consumer without that consumer having invited this contact and
  • negotiations take place over the phone, or in person at a location other than the supplier’s premises and
  • the total value of the agreement is more than $100, or the value was not ascertainable at the time the agreement was made.

In the event of a dispute, the onus is on the business to prove that an agreement is not an unsolicited consumer agreement.

The Australian Consumer Law (ACL) includes a number of requirements in relation to unsolicited consumer agreements. Most notably, the ACL grants a cooling-off period of 10 business days to consumers who are offered such an agreement.

It should also be noted that the Corporations Act 2001 prohibits unsolicited hawking of securities, certain financial products and managed investment products.   More information is available from the Australian Securities and Investments Commission at www.asic.gov.au

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Examples of unsolicited consumer agreements 

Some typical examples of situations that may lead to an unsolicited agreement being made are:

  • door-knocking households and offering to sell products or services, or inviting consumers to switch to a different service provider
  • telephoning consumers and offering to sell products or services
  • approaching consumers in the common area of a shopping centre and offering to sell products or services
  • leaving a missed call message on an answering machine for the consumer to respond.

The following situations may also be considered unsolicited approaches:

  • A consumer fills out an entry form to a competition that is sponsored by a supplier, and one of the conditions of entry is that the consumer agrees to be contacted by the supplier about new product information. In this case the consumer has not given their details as an invitation for the supplier to enter into negotiations.
  • A consumer asks a supplier to provide a quote (such as measuring for blinds). Again, the consumer has not invited the supplier to enter into negotiations, so if the supplier does attempt to negotiate with the consumer at the time of providing a quote, or later contacts the consumer to negotiate a deal, then a resulting agreement would be considered an unsolicited consumer agreement. If a supplier leaves a quote with the consumer for deliberation and the consumer then approaches the supplier to accept the quote or negotiate different terms, then this would not be considered an unsolicited consumer agreement.

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What is not an unsolicited consumer agreement? 

Agreements that are not unsolicited consumer agreements do not offer consumers the same protection under the law and may not be covered by a cooling-off period.

The following kinds of agreements are not unsolicited consumer agreements:

  • Business contracts – where the supply of goods or services are not normally acquired for personal or household use.
  • Discontinued negotiations agreements – an agreement made as a result of a consumer discontinuing negotiations for an unsolicited consumer agreement but at a later stage approaching the supplier to enter into such an agreement.
  • Agreements made in the course of a party plan event.
  • Renewable agreements of the same kind – where a consumer and supplier enter another agreement to continue the supply of the same kind of goods or services supplied under an existing agreement.
  • Subsequent agreements of the same kind – occur where goods and services are supplied under an agreement, and within 3 months of their supply, the consumer and supplier enter one or more other agreements for the supply of the same kind of goods and services, worth no more than $500.

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Permitted hours for contacting consumers 

Telemarketing

Telemarketing phone calls are regulated under the Do Not Call Register Act 2006 and associated telemarketing standards. Telemarketing calls cannot be made:

  • weekdays – before 9 am or after 8 pm
  • Saturday – before 9 am or after 5 pm
  • on a Sunday or a public holiday.

Calling on (not telephoning) consumers

A salesperson must not call on (which does not include telephone) a consumer to negotiate a deal:

  • weekdays – before 9am or after 6pm
  • Saturday – before 9am or after 5pm
  • on Sunday or a public holiday.

However, a supplier or agent may visit a consumer at any time if the appointment has been made with the consumer’s consent.

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Requirements when calling on consumers (not telephone) 

Suppliers who contact a consumer, other than by telephone, must meet the following requirements.

Disclose purpose and show identification

The salesperson must explain upfront the purpose of the visit and provide identification. The identification must include information as prescribed in the ACL Regulations, including the name of the salesperson and the organisation they represent.

Cease to negotiate

A salesperson must explain that they are required to leave upon the consumer’s request.

When a salesperson is told to leave, they must not contact the consumer again for at least 30 days about the product or service they were selling during the visit. However, a salesperson can visit the same consumer again about the sale of goods by a different supplier.

Contact details

An agreement signed by a salesperson on the supplier’s behalf must state:

  • that the salesperson is acting on the supplier’s behalf
  • the salesperson’s full name
  • the salesperson’s business address (not a post box) or residential address and
  • the salesperson’s email address (if they have one).

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General requirements 

The agreement document

Consumers must be given a written copy of the agreement:

  • as soon as it has been signed, for agreements made through face-to-face selling
  • within 5 business days (or longer if the consumer agrees), for agreements negotiated over the phone. Agreements can be provided in person, by post or electronically (if the consumer agrees).

The agreement document must:

  • include the text on the front page (which must be signed and dated by consumer):
    • Important Notice to the Consumer
    • You have a right to cancel this agreement within 10 business days from and including the day after you signed or received this agreement
    • Details about your additional rights to cancel this agreement are set out in the information attached to this agreement
  • be transparent – expressed in plain language, legible and clear
  • be printed – although any changes may be handwritten (and signed by both parties).

The agreement document must clearly state:

  • the consumer’s cooling off rights (right of termination)
  • the full terms of the agreement
  • the total price payable, or how this will be calculated
  • any postal or delivery charges
  • the supplier’s name, address, ABN, ACN, e-mail fax.

Cooling-off

Salespeople must inform consumers of their cooling-off rights. The agreement document must be accompanied by a notice that may be used to terminate the contract (cool-off). This notice must include the supplier’s details including:

  • name and business address (not a post box number)
  • Australian Business Number (ABN) or, if they have one, Australian Company Number (ACN)
  • fax number and email address, if they have these.

Waivers

It is an offence to induce, or attempt to induce, consumers to waive their rights.

Provisions that are void

It is unlawful to include or rely on provisions that exclude, limit, modify or restrict:

  • a consumer’s right to terminate the agreement
  • the effect or operation of the ACL as it relates to unsolicited consumer agreements.

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Cooling-off and termination requirements 

Consumers have 10 business days to reconsider an unsolicited consumer agreement, during which they can cancel the agreement without penalty. This is called the cooling-off period.

For agreements negotiated over the phone, the cooling-off period begins on the first business day after the consumer receives the agreement document.

For agreements that have not been negotiated over the phone, the cooling off period begins on the first business day after the agreement was made.

During the 10 business day cooling-off period, supplier must not accept any payment or supply and goods or services relating to the agreement. Goods or services supplied during the cooling-off period are considered unsolicited supplies.

Extended cooling-off period

Consumers may terminate an agreement up to 3 months after it is made (or the agreement documents are received, if the agreement is by phone) if the salesperson:

  • visited outside of the permitted selling hours
  • did not disclose the purpose of the visit
  • did not produce identification or
  • did not leave the premises upon request.

The period is extended to 6 months if a salesperson:

  • did not provide information about the cooling off period or
  • was in breach of any of the requirements for unsolicited consumer agreements (such as failing to provide a written copy of the agreement, not including required information in the written agreement, or supplying goods or services during the cooling off period).

Terminating an agreement

A consumer may terminate an agreement orally or in writing. The termination date is considered to be the date on which the notice was given or sent by the consumer.

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If a consumer cools-off or terminates 

Once a consumer has given notice during the cooling off period (either orally or in writing) the agreement is void.  The notice is effective even if:

  • written notice has been given, but the supplier has not received it.
  • goods or services supplied have been wholly or partly consumed or used.

Related contracts

If a consumer cancels an unsolicited consumer agreement, then any related contract or instrument is also void, which means it is also effectively cancelled.

For example, a consumer agrees to buy a $900 washing machine from a door-to-door trader, and also signs a separate agreement for servicing the washing machine, costing $80. The second contract is not covered by the cooling off provisions. If the consumer cools off on the washing machine purchase then the service contract is also cancelled.

Supplier obligations

When a consumer cools-off, the supplier must promptly return or refund to the consumer any money paid under the agreement or related contract.

A supplier cannot:

  • take action against the consumer to recover any payments allegedly owed under the agreement
  • place, or threaten to place, the consumer’s name on a list of defaulters or debtors.

What happens to the goods/services after a consumer cools-off?

In regards to goods or services after a consumer cools-off:

  • the consumer must, within a reasonable time, return any goods that have not been consumed or tell the supplier where to collect them.
  • if a consumer has not taken reasonable care of the goods, the supplier can seek compensation for depreciated value.
  • the consumer does not have to pay compensation for normal use of the goods or circumstances beyond the consumer’s control.
  • if the supplier does not collect the goods within 30 days, then the consumer can keep them.
  • if the agreement is terminated after the cooling off period and a service has already been provided, the consumer may have to pay for the service. Obviously, the service can’t be undone once it has been provided.

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Supplier responsibility for failing to comply 

A supplier cannot enforce an agreement if the supplier’s agent (salesperson) has breached the law on unsolicited consumer agreement.

Both the supplier and salesperson may be liable for the breaches.

Suppliers should ensure their sales agents and other representatives are fully aware of legal obligations when using unsolicited marketing approaches.

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