Article Category - Commercial Law Advice By Aaron Strickland 04 April 2019

As part of the NSW Government’s Better Business Reforms package, a new section of the Fair Trading Act commenced last month.

The new section, 86AB, provides that any clause in an agreement that restricts a customer’s ability to complain to Fair Trading about the supply of goods or services by a person or business will be void. This section applies moving forward, but importantly also applies retrospectively to existing agreements.

Essentially, consumer advocates had expressed concerns about suppliers of goods and services relying on non-disclosure clauses to stop their customers making complaints to Fair Trading, for example where products were unsafe.

This was most noticeable in the case of Thermomix, where serious incidents highlighting the unsafe nature of the product were not disclosed to the Australian Competition and Consumer Commission or to relevant State authorities because those customers who had complained to the company were asked to sign non‑disclosure agreements before receiving their remedy.

In the NSW Government’s view, it is absolutely vital that products or services that are dangerous are reported to the authorities immediately. This reform will give:

  • Consumers a route to make a report without voiding a non-disclosure agreement;
  • Fair Trading and other authorities the relevant information to investigate the problem and, if necessary, issue a public warning or alert the ACCC to potential problems;
  • Suppliers an obligation when entering into a non-disclosure agreement with a consumer to inform the consumer of their ongoing right to lodge a complaint with Fair Trading.  

Penalties will now apply to suppliers who fail to disclose a consumer’s rights before, or at the time of, entering into the agreement. The penalties for failing to do so are significant – up to $22,000 for corporations or $4,400 for others.

If your business is currently using, or thinking about using a non-disclosure agreement, give our Business Law team a call to arrange for us to review or establish your NDA template to ensure it complies with these changes. We’re here to help on 1800 650 656.

Aaron Strickland | Solicitor