Reform of contract law in Australia is long overdue

by Stephanie Livanes

In brief - Contract law should reflect today's technology, be simplified and be harmonised across jurisdictions

Australia currently does not have harmonisation of contract law between the Commonwealth, the states and territories. When transactions take place on the internet, it can be unclear which jurisdiction is operating.

Attorney-General releases discussion paper

The March 2012, the Australian Attorney-General's Department released a discussion paper, Improving Australia's Law and Justice Framework: A discussion paper to explore the scope for reforming Australian contract law. The paper invites comments from people of all sectors on possible reform to contract law. Submissions from the public are due to the department by 20 July 2012.

It's not exactly a new idea; reform of contract law has been proposed for more than a century, so it's not necessarily going to be an easy change.

So are we too set in our ways or is reform to contract law actually imminent?

Why do we need to reform contract law?

Let's start with a few reasons why reform might be necessary. First, between the Commonwealth, the states and territories, we have approximately 150 statutes for contract law, not to mention common law. It begs the question as to why this would really be necessary, not to mention the complication that may occur in cross-border transactions.

The complex relationship between common law, equity and statute is making it difficult to predict outcomes. We do not currently have harmonisation when it comes to contract law. This means additional costs for consumers and far less predictability. At the very least the government should consider a simplification and harmonisation of some of our existing contract laws.

Contract law needs to adapt to technological change

Another element to consider is that perhaps some of these laws are becoming a little outdated. Some of the common law rules that are still good law today are centuries old.

No doubt we will have the advocates of the old line, 'if it ain't broke, don't fix it', but when we consider the advances in economic, social and, in particular, technological aspects of our society, shouldn't our contract laws that are used and applied day in, day out accommodate us?

The other side of the argument is that over the last three years, less than 5% of the number of cases heard before the High Court involved contract law, which doesn't necessarily create a strong argument for the need for contract law reform in this country.

As the discussion paper points out, technology has transformed consumer behaviour considerably, especially when we acknowledge how many transactions are taking place on the internet. In such instances it can be unclear which jurisdiction is operating. Harmonisation of laws in this area would surely help to eliminate ambiguity and complexity in such instances.

There's an argument that our current laws aren't up to date with the technology of today and that reform of contract law could support Australian businesses better to utilise the wonder that technology really is today.

The discussion paper addresses this issue, stating the possible need for contract law to adapt to new technologies and commercial dealings, including electronic drafting.

Contract law reform will reflect greater use of technology

Reform to contract law is in the pipeline. At the very least, we should expect to see reforms addressing greater use of technology, with more online transactions and electronic drafting occurring and electronic formats being the primary method of communication.

It is to be hoped that the government will seize this opportunity to implement an overall simplification and harmonisation of contract law.

This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2024.

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