What is a consumer lease?
A ‘Under the Australian Consumer Law, a person who buys goods or services for less than $40 000 or for personal or home use. lease’ is defined in the NCC as a An agreement that the law will enforce. for the (1) An agreement to pay for the temporary use of something, for example a car. Also called renting or leasing. (2) To employ someone to do work. of goods by a person for a specified time at a specified rental under which they have no right or obligation to purchase the goods (s 169). Consumer leases are regulated by Part 11 of the NCC.
If the A document that sets out an agreement between a landlord and a tenant for the renting out of property, or for the use of other personal property such as a car. contains an option or right to purchase the goods, it may be a ‘sale by instalments’ agreement under section 9 of the NCC, and thus potentially be a regulated A contract relating to the giving of credit. and not a consumer lease A contract to hire goods for a particular period and to make the agreed payments during that time..
The NCC (s 171(1)) does not apply to leases with fixed periods of four months or less, or to leases for indefinite periods. The NCC (s 171(2)) also does not apply to goods hired by an employee in connection with their remuneration or other employee benefits.
Section 172 of the NCC provides that where a A person or organisation directly involved in a court case. Parties include the plaintiff or applicant, the defendant, and any third party added to the action, but not independent witnesses. claims that the NCC applies to a consumer lease, and that it was entered into for personal purposes, it is presumed to be so unless the contrary is established. This is consistent with the equivalent provisions of the NCC in respect of A debt that does not have to be paid until some future time. Being allowed to pay later, in the future, for something you are getting now. contracts.
However, section 172 applies only to contracts entered into on or after 1 July 2010. For contracts entered into before 1 July 2010, section 150 of the Uniform Credit Code (‘Old Code’) applies (item 3(3) sch 1 National Consumer Credit Protection (Transitional and Consequential Provisions) A written law made by parliament. Also called an ‘Act of parliament’, ‘statute’ or legislation. 2009 (Cth)).
A consumer lease must be in writing and disclose, at a minimum, the following:
- a description of the goods (s 174(1)(a));
- the amount the A person who rents property, for example a tenant who rents a house from a landlord. must pay before the goods are delivered (s 174(1)(b));
- the amount of A state tax on the transfer of ownership of property such as land, or on leases. and other government charges the lessee must pay (s 174(1)(c));
- any charges additional to rental (s 174(1)(d));
- the amounts and timing of rental payments (s 174(1)(e));
- the number of rental payments and the total amount payable (s 174(1)(f));
- the conditions on which the lessee may terminate the lease (s 174(1)(g)); and
- the liabilities of the lessee on The end of something. Contracts terminate when the parties have done what they agreed. A contract can also be terminated without being completed, for example if one party breaks the contract, or it is impossible to carry out. of the lease (if any) (s 174(1)(h)).
The lessee must get a copy of the lease, and a statement (in the form prescribed by the NCCP Regulations) that explains the lessee’s rights and obligations under the lease (form 17: information statement) within 14 days of entry into the lease (s 175 NCC).
For leases entered into after 1 March 2013, lessors are required to provide periodic statements (s 175C) and an ‘end of lease statement’ in the prescribed form at least 90 days prior to a lease term ending (s 175H).
Repossession of leased goods
Section 178 of the NCC requires that a A person who owns property and leases it (rents it out) to another person. give a lessee 30 days written notice before repossessing leased goods.
However, this rule does not apply:
- at the end of the term of the lease (s 178(2)(a));
- if the lessor believes on reasonable grounds that the lessee has or A document that sets out what a person wants to happen to their money and other property after they die. dispose of the goods in breach of the lease (s 178(2)(b));
- where the lessor cannot find the lessee after making reasonable efforts (s 178(2)(c));
- if the lessee is Being unable to pay your debts in full when they are due. (s 178(2)(d)); or
- if the An independent body that hears legal claims brought by parties and decides between them. Serious cases are heard by a judge and jury, or just a judge. Less-serious cases are heard by a magistrate. allows the lessor to do otherwise (s 178(2)(e)).
Termination and variation of consumer leases
Section 178A of the NCC allows the lessee to terminate a consumer lease, by written notice, prior to the leased goods being provided.
There are provisions in the NCC that cover:
- lease variations by agreement (s 177A);
- hardship variations (s 177B);
- reopening unjust contracts (s 177F); and
- enforcement (s 179D),
in relation to consumer leases entered into after 1 March 2013. These provisions largely mirror those that apply to credit contracts and consumer leases entered into before 1 March 2013 to which the NCCP Act applies.
National Consumer Credit Protection Amendment Bill 2019
At the time of writing (1 July 2020), there is a Bill before the Senate that relates to consumer leases and payday loans (i.e. small amount credit contracts). This Bill is the National Consumer Credit Protection A change made to a legal document or Act of parliament. (Small Amount Credit Contract and Consumer Lease Reforms) Bill 2019 (No. 2) (Cth). If this Bill is passed by both houses of parliament in its current form, it will impose further obligations on consumer lease providers and payday lenders, and increase consumer protection.
Some traders, car dealers, finance brokers and lenders sign consumers up for consumer lease when in fact the consumers intend to enter into a ‘rent to buy’ (sale by instalments) agreement or loan contract. A consumer who enters into a lease in such circumstances should obtain advice about whether they can seek to have the transaction reopened as unjust (see ‘Unjust contracts’, above), or whether the consumer lease provider has engaged in Something done by a manufacturer or seller that is unfair, dishonest or likely to mislead a consumer when buying goods or services. under section 12DA of the ASIC Act.
Responsible lending obligations
Lessors are required to comply with provisions that are largely equivalent to the responsible lending provisions imposed upon credit providers. These are set out in Part 3–4 of the NCCP Act.