DeskJudge gavel with Justice lawyers having team meeting at law firm in background. Concepts of law warm colours sun light.

Giving NSW Consumers a heads up on ‘substantially prejudicial terms’ Section 47A of the Fair Trading Act 1987 (NSW)

Malcolm Campbell ||

Are you a supplier who, while doing business, supplies goods or services to a consumer in NSW?

If you answered ‘yes’, then you must comply with the disclosure requirements of section 47A of the Fair Trading Act 1987 (NSW) (the Act), which came into force from 1 July 2020.

Section 47A of the Act – Disclosure Obligations in the supply of goods or services

Before making a supply of goods or services to a consumer in NSW, you must take reasonable steps to ensure the consumer is aware of the substance and effect of any term or condition in supply terms that may substantially prejudice their interests. This applies whether you supply the goods or services in store or online and whether such supply is by way of sale, exchange, lease, hire or hire-purchase.

Who acquires goods or services as a ‘Consumer’?

The definition of a ‘consumer’ is that arising under the Australian Consumer Law (Section 3, Schedule 2 to the Competition and Consumer Act 2010). It potentially covers a wide range of your customers. Both individuals or businesses may fall within the definition. A ‘person’ is taken to have acquired goods or services as a consumer if the amount paid or payable for the goods or services:

  1. does not exceed AUD$40,000; or,
  2. exceeds AUD$40,000 but the goods or services are of a kind ordinarily acquired for personal, domestic or household use of consumption.

However, this does not apply where the person acquires goods for the purpose of re-supply (for goods other than gift cards) or in trade or commerce in the course of production, manufacture, repair or treating other goods or fixtures on land.

The monetary threshold of AUD$40,000 will increase to AUD$100,000 from 1 July 2021 (pursuant to the Treasury Laws Amendment (Acquisition as Consumer – Financial Thresholds) Regulations 2020), thereby capturing an even greater number of transactions.

Two key aspects of Section 47A of the Act

Key aspects of the Section 47A disclosure is that:

  1. The disclosure must be made before the supply occurs.
  2. Disclosure requires the supplier to take ‘reasonable steps’ to ensure the consumer is aware of the ‘substance and effect’ of such term or condition.

What terms or conditions are considered ‘substantially prejudicial’?

Section 47A[1] lists at least four terms considered ‘substantially prejudicial’ These are as follows:

  1. excludes liability of the supplier;
  2. requires the consumer to be liable for damage to goods delivered;
  3. allows the supplier to provide to a third party, data about the consumer or data that the consumer has provided, in a form that may allow that third party to identify the consumer; and,
  4. requires the consumer to pay an exit fees, balloon payment or other such similar payment.

However, this above list is not intended to limit the disclosure obligations to these terms. This creates some uncertainty. The word ‘substantial’ implies that there is a high threshold required to meet this test. It raises the question, what else will reasonably be considered a substantially prejudicial term? Will your view be the same as that of the regulator?

In considering what may be a ‘substantially prejudicial’ term or condition in addition to the above, the term or condition should be considered against these two questions:

  1. how will it affect the consumer?
  2. how may the consumer be substantially prejudiced by the fact that the term or condition is in the contract?

Other terms to consider drawing to the attention of the consumer may be those that require the consumer to provide at least a certain period of notice before they can terminate the contract, automatic roll clauses and maybe even a jurisdiction clauses specifying a jurisdiction other than NSW where the consumer is in NSW but you, as a supplier, have no presence here.

What are considered ‘reasonable steps’?

While the Fair Trading Regulations 2019 (NSW) may at some stage be amended to provide specific guidance on what are considerable reasonable steps, in the meantime the only real guidance provided is that by NSW Fair Trading.

NSW Fair Trading NSW provides a general statement to the effect that reasonable steps would be any step(s) that would reasonably create awareness in the consumer, and is sufficient and appropriate in the circumstances.[2] This may be determined by the method of sale (for example, online, at your premises, by telephone), the form of the terms, what is appropriate for your consumers and what is available to you to give effect to this. The clear message from NSW Fair Trading is that whatever method is used, it should make the relevant term or condition clear to a consumer without the need to ask for further explanation.

Examples of ‘reasonable steps’ given by NSW Fair Trading are:

  1. A local club whose membership agreement has a short half page summary of key terms on the front page and which a new member must initial to confirm they have read these key terms.
  2. A video streaming website with a term in relation to possible sharing of customer personal information with third parties. When entering their information online for subscription to the service, a pop-up box will appear to highlight and explain the term to the customer as part of the sign up.

Other examples given by NSW Fair Trading of reasonable steps are:

  1. Short, plain English summaries on a front page.
  2. Information provided in short form at key times (for example, on the payment page).
  3. If the terms are online, then use of scrollable text boxes to display the information.
  4. Use of comics, illustrations, and icons as an explanation tool.

Erring on the Side of Caution and Checking in

If it is arguable whether a particular term or condition is ‘substantially prejudicial’ to a consumer, it may be better to err on the side of caution and include it as a term to be highlighted. Further, the best way to check whether a consumer has been made ‘aware’,  is to ask them directly or provide some checking mechanism by which they are required to acknowledge that they have read the disclosed / highlighted terms or conditions.


The scope of penalties for non-compliance with section 47A of the Act by a supplier are:

  1. A maximum financial penalty of $110,000 for corporations and $22,000 for individuals will apply.
  2. Issue of a Penalty Notice by NSW Fair Trading for each offence of $550 for an individual and $1,100 for a corporation.

How can we help?

The disclosure requirements under clause 47A of the Act are in place now. We can help you to conduct a review of your terms of supply and identify those terms that may be ‘substantially prejudicial’ to a consumer in NSW. We can assist you to put into place tools to ensure consumers are made aware of such terms. Should you require assistance with reviewing your disclosure and compliance obligations, please do not hesitate to contact our Commercial Advice Team who would be more than happy to assist you today.

This material is provided by Coleman Greig Lawyers as general information only in summary form on legal topics current at the time of first publication. The contents do not constitute legal advice and should not be relied upon as such. Formal legal advice should be sought in particular matters.

[1] Section 47A Fair Trading Act 1987 (NSW)



Send an enquiry

Any personal information you provide is collected pursuant to our Privacy Policy.


More posts

Understanding roles in the strata scheme

A strata scheme is a building or group of buildings that have been divided into lots which can be apartments, villas, offices, units or townhouses. This will be articulated in the strata plan.

Can i put my home on Airbnb?

Airbnb is a form of short-term rental accommodation. To add your property to Airbnb in NSW, you are required to meet several laws and regulations governing short-term rentals.

When are liquidators required to seek approval to retain legal counsel?

When does a liquidator (or the company he or she is appointed to) need court, creditor, or committee approval to validly retain a solicitor to act in a liquidation matter which is likely to extend for longer than three months?  The answer to this question has only recently been settled.

Proposed changes to building and construction law in NSW

The Building Bill 2022 (the Bill) is the key avenue through which the NSW Government has proposed to reshape the culture of the building and construction industry by eliminating poor performance and improving the quality of building statewide.

Can you dismiss an employee who fails to return to the office?

Slowly but surely, most employers are requiring employees to return to the office for at least a portion of their working week. Some employers continue to struggle with employees resistant to returning to the office or those who have an expectation that they can continue to work from home whenever it suits them.

New powers to combat phoenixing in construction

The rise of phoenixing in the building and construction industry in Australia in recent years has proved a significant challenge to regulators. Mismanagement of time or cashflow can quickly propel businesses into insolvency.

The NSW Building Commission’s extraordinary powers

In late 2023, the NSW Government passed the Building Legislation Amendment Bill 2023 (Amendment Bill). The Amendment Bill established the NSW Building Commission and granted it extraordinary powers to enter construction sites, inspect work and take away information and materials.

© 2024 Coleman Greig Lawyers   |  Liability limited by a scheme approved under Professional Standards Legislation. ABN 73 125 176 230