ASIC has announced that it has accepted an Enforceable Undertaking (EU) from Mr Rental Australia Pty Ltd, a household goods rental business, after an ASIC investigation into Mr Rental’s standard form rental agreement gave rise to concerns it contained an unfair contract term under the Australian Securities and Investments Commission Act 2001 (ASIC Act) and the Australian Consumer Law.
The agreement stated that it was for an indefinite period until terminated by either party but also included a term allowing Mr Rental to charge a ‘calculation period adjustment’ which was an additional fee charged to consumers who terminated their rental agreements early.
Mr Rental and its franchisees did not have an Australian Credit Licence.
ASIC’s view was that the fee made the agreement a consumer lease for a fixed term which was regulated by the National Credit Code.
Mr Rental has agreed to provide refunds to approximately 1,560 consumers (anticipated to be in excess of $300,000), and amend the standard form rental contract used by the 52 franchisees operating under the Mr Rental banner.
It has also agreed that it or its franchisees will apply for Australian Credit Licences.
Part 11 of the National Credit Code regulates consumer leases which are a contract for the hire of goods by a natural person or strata corporation under which that person or corporation does not have a right or obligation to purchase the goods.
The Code does not apply to a consumer lease for a fixed period of 4 months or less or for an indefinite period or to a consumer lease under which goods are hired by an employee in connection with the employee’s remuneration or other employment benefits.
If an Agreement contains the right of the hirer to retain the hired goods and take title to the goods, it is a “rent to buy” or “hire purchase” arrangement which is a sale of goods by instalments under Section 9 of the National Credit Code.
If you need help with clarifying the application of the National Credit Code to a rental agreement, contact your local Langes representative.
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Posted 13th February 2013 by David Jacobson in legislation, licensing