Unsolicited Consumer Agreements: ACL Rules for Builders

What it is

An unsolicited consumer agreement is a sales contract that was negotiated face-to-face or by phone away from the seller business premises, where the buyer did not invite the seller to make the offer. The rules sit in Part 3-2 Division 2 of the Australian Consumer Law (sections 69 to 95). They apply to any residential builder, renovator or specialist trade that knocks on doors, sets up at a shopping centre kiosk, runs a phone bank or visits prospects at home without an appointment the prospect requested.

The threshold for the rules to bite is a total payment of more than $100 or, if the payment is not ascertainable at the time, any agreement entered into off the seller premises following uninvited contact.

When the rules apply to a builder

The rules catch:

• A door-to-door sales rep selling roof restorations, solar, gutters, decks, fencing, insulation, driveway repairs or any building work
• A canvasser at a Bunnings or shopping centre stand who signs prospects to a quote-now-pay-later renovation contract on the spot
• A telemarketer cold-calling a list of recent property buyers offering a free quote that converts into a signed agreement during the call
• A storm-chaser knocking on doors after a hailstorm offering roof or render repairs

The rules do not catch:

• A buyer who phones the builder to request a quote, then signs an agreement at home when the builder visits
• A walk-in at the display home or builder office
• Online sales where the buyer fills in a form and is later visited
• Repeat work for an existing customer who initiated the contact

The test is whether the buyer invited the offer. A flyer in the letterbox followed by a phone call from the buyer is not an unsolicited approach. A phone call from the seller followed by a home visit is.

What the builder must do

Section 73 requires the salesperson, as soon as practicable on first contact and before starting negotiations, to:

• Explain the purpose of the visit or call
• State that the salesperson is obliged to leave the premises immediately on request
• Inform the buyer of the right to require the salesperson to leave

Section 74 sets permitted contact hours. Visits or calls are permitted only between 9am and 6pm on weekdays, 9am and 5pm on Saturdays, and not at all on Sundays or public holidays. Section 75 prohibits remaining at the premises once the buyer has asked the salesperson to leave.

Sections 78 to 79 require the agreement to be in writing, given to the buyer at the time of signing, and to include a prominent notice of the buyer cooling-off rights and a tear-off cancellation notice the buyer can return.

The 10 business day cooling-off period

Section 82 gives the buyer 10 business days from the day after the agreement is given to the buyer to terminate for any reason without penalty. The seller can supply goods up to $500 (including GST) during cooling-off, can supply electricity and gas, and can do emergency repairs, but cannot supply other services, cannot demand payment for services and cannot accept payment in any other case.

If the builder breaks the disclosure rules (no cooling-off notice, wrong hours, no name given, no required documents), section 86 extends cooling-off to three months and section 87 can extend it to six months in some cases. A buyer who terminates is entitled to a full refund of money paid and the return of any traded-in goods, with no offset for installation work already done.

Penalties and exposure

Breaches of sections 73 to 79 are civil and criminal offences. Penalties under section 224 can reach $50 million per breach for a body corporate or the greater of three times the benefit or 30 per cent of turnover. Penalties for individuals run up to $2.5 million. Past ACCC matters have produced six and seven figure penalties for door-to-door insulation, solar and home-improvement traders.

What a builder should put in place

Train every external sales rep on the section 73 first-contact script and have them sign off on it. Set CRM rules to block lead booking outside permitted hours. Use a standard unsolicited agreement template that contains the section 79 cancellation notice, the cooling-off statement and the tear-off slip. Lock CRM and finance systems so no payment can be processed for off-premises sales until cooling-off has run. Record every sales visit time and date so allowed-hours compliance can be evidenced.