Business Owners - Be Aware of Your Disclosure Obligations

02 JUL 2021


NSW Fair Trading has now been given new enforcement powers that require businesses that supply goods or services to consumers in NSW to comply with new mandatory disclosure obligations. 

The new law has been introduced in order to ‘increase transparency and competition, giving consumers the information they need to make meaningful decisions about their future’ so that ‘consumers have a fair chance of understanding what they are signing up to’. 


The reforms require businesses to take reasonable steps to ensure that their consumers are aware of: 

  • the substance and effect of any terms in their contracts which may ‘substantially prejudice’ the interests of consumers; and 
  • whether they have commission or referral arrangements with another suppler when they recommend that a consumer buys goods or services from that third party supplier. 

Disclosures need only be made to ‘consumers’ as that term is defined in the Australian Consumer Law (ACL). Under the ACL, goods or services are considered to be supplied to a consumer if:

  • the amount paid or payable for the goods or services does not exceed $100,000 (for the period of 1 January 2021 to 31 May 2021, the amount did not exceed $40,000);
  • the goods or services are of a kind ordinarily acquired for personal, domestic or household use or consumption;
  • the goods consist of a vehicle or trailer acquired for use principally in the transport of goods; or 
  • the goods are not acquired to re-supply, or for use of transformation in trade or commerce. 

When will a term ‘substantially prejudice’ a consumer?

The reforms provide a non-exhaustive list of terms which may ‘substantially prejudice’ consumers, including terms which:

  • exclude the liability of the supplier; 
  • provide that the consumer is liable for damage to goods that are delivered; 
  • permit the supplier to provide data about the consumer, or data which is provided by the consumer, to a third party in a form that may enable the third party to identify the consumer; or
  • require the consumer to pay an exit fee, a balloon payment or other similar payment. 

What are ‘reasonable steps?’ 

There is no precise criteria for what constitutes ‘reasonable steps’. What is reasonable will depend on the circumstances of each individual case. For example, terms of supply which are concise, simple to read and obvious are less problematic than convoluted terms which are difficult for the everyday consumer to understand. 

NSW Fair Trading advises that the best way for a business to demonstrate they have taken ‘reasonable steps’ is to be ‘clear, upfront and automatic’ with their disclosures, taking into account the nature of the business, the impact of their terms, and their resources. 

For disclosure of key terms and conditions, examples of ‘reasonable steps’ might include:

  • having a short summary of any potentially prejudicial terms in a prominent location on the contract;
  • ensuring a mandatory statement is made verbally to all consumers who are supplied with goods or services; 
  • having a pop up box on a website which must be ticked before a consumer can proceed with a purchase; or
  • prominently displaying any prejudicial terms on the web page, or in store. 

For commission or referral arrangements, NSW Fair Trading gave some examples of reasonable steps, which include:

  • providing the Consumer with disclosure on quotations;
  • using appropriate signage and other attention grabbing measures to direct customer attention to the disclosure;
  • disclosing relevant information online on the same page as the description of the product or service;
  • having the disclosure appear to Consumers in easily readable formats when online; and/or
  • including an automatic disclaimer in the footer of emails.

Further, to minimise any risks, businesses should ask the consumer to confirm that they are aware of the terms or conditions and their effect. For example, such confirmation may be recorded by obtaining explicit verbal consent, by initialling any prejudicial terms in a contract, or by way of a check box on a website, depending on the individual circumstances. 

Reasonable steps must be taken before supplying the goods or services. In practice, this should be done before the consumer signs a contract, makes payment, or otherwise commits to the good or service being offered. 

Everyday examples 

  • An online store has a term that allows them to collect and disclose customers’ personal information to other third parties, including third parties that collect and process user data. 
  • A magazine has a term in its membership agreement with consumers which permits the magazine to automatically renew the agreement for a set period.
  • An event based business which provides that no refunds of any deposit will be payable to a consumer where the consumer has cancelled their booking at any time. 

In each of the above examples, the supplier may be required to take ‘reasonable steps’ before supplying the goods or services, to ensure that the consumer is aware of these terms.


For individuals:

  • a maximum financial penalty of $22,000 may apply; and
  • NSW Fair Trading can issue a penalty notice of $550 per offence.

For corporations:

  • a maximum financial penalty of $110,000 may apply; and 
  • NSW Fair Trading can issue a penalty notice of $1,100 per offence.

Courts can also make orders for the supplier to compensate the consumer for any loss or damage they have suffered.

What this means for you

These requirements will put an onus on businesses and individuals to be able to demonstrate that they have complied with the new laws, and this will likely require a review of their websites and other documentation to:

  • determine if there are any potentially unfair terms or commission or referral arrangements with another suppler covered by the new law; and 
  • if so, ensure that a written record exists of how the business complied and disclosed those terms or arrangements, before supply of the goods or services occurred. 

If you would like advice or assistance in relation to the above or any other Commercial matters, please contact our accredited business law specialists and Partners Justin Thornton on and Rahul Lachman on or otherwise by calling them on (02) 4626 5077.

The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.

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