Challenging a maths software contract & loan contract

This Guide is for information only. It is recommended that you get legal advice about your situation. See the Fact Sheet: Getting Help

If you have decided you have a dispute about your loan to buy a maths program you may want to lodge a dispute in an independent dispute resolution scheme. This Guide will assist you in lodging and running your dispute.

Also see Fact Sheet: Maths programs and loans.

What you need to know

1. You have a dispute with two companies:

(a) The company that sold you the maths software (the supplier)

(b) The company that gave you the loan (the lender)

The lender must be a member of an independent dispute resolution scheme (EDR). There are two relevant schemes:

• Financial Ombudsman Service ph: 1300 780 808 www.fos.org.au

• Credit Ombudsman Service ph: 1800 138 422 www.cosl.com.au.

You can lodge a dispute against the lender in one of the above EDR schemes.

The supplier will NOT be a member of an EDR Scheme. However, you can argue that the lender is responsible for the actions of the supplier because the supplier is the agent of the lender.

If you only have a problem with the maths product and not the loan you can take action against the supplier in the General Division of the Consumer, Trader & Tenancy Tribunal (CTTT).

2. The relevant laws:

• The Consumer Credit Code (loans pre 1/7/10) and the National Consumer Credit Protection Act (Cth) (loans after 1/7/10)

• The Fair Trading Act (NSW) and the Australian Securities and Investments Commission Act 2001 (Cth)

• Consumer Claims Act (NSW)

Lodging in EDR

Step 1 – download a dispute form from either www.fos.org.au or www.cosl.com.au.

Step 2 – write down what happened when you got the contracts. This will help you work out what your dispute is. Some questions to answer as a guide to writing your statement are:

1. How did you get in contact with the sales company? Did you enter a competition or were you called at home?

2. When the sales person came to your home:

(i) When did s/he arrive?

(ii) When did s/he leave?

(iii) Who was there?

(iv) What did s/he say?

3. What did the salesperson say about the product? What were the benefits supposed to be? How would it work?

4. How did the sales person explain the loan contract?

5. What did you say to the sales person about your children’s needs, your financial circumstances?

6. Was the product installed after the cooling off period expired?

7. Did you try to cancel the sales contract under the cooling off period?

8. Did the salesperson record your income and expenses correctly? Did you express concerns that you could not afford the repayments?

For information on your rights under any cooling off period go to www.fairtrading.nsw.gov.au

Step 3

Complete a dispute/complaint form

If you have trouble completing the form ring the EDR scheme or get advice. This Guide is to assist you in completing the form to tell the EDR scheme about your dispute.

See below for some arguments that you can use in your dispute in EDR.

Affordability

If you could not afford to make the repayments on your loan when it was granted you may be able to argue the loan should not have been given to you. Granting a person a loan when they could not afford to repay it is arguably unjust.

You should produce evidence of your income and other debts at the time you applied for the loan to show that you could not afford the loan repayments.

Consumer Credit Code (before 1/7/10) and the National Consumer Credit Protection Act (for loans taken out after 1/7/10)

Unjustness

Section 70(1) of the Consumer Credit Code (s.76 of Schedule 1 of the National Consumer Credit Protection Act) deals with the circumstances in which a contract may be considered unjust. The factors possibly relevant to your circumstances are:

(a) the consequences or results arising from the non-compliance with, or contravention of, any or all of the provisions of the contract;

(b) whether or not there was any material inequality in bargaining power between the parties to the contract;

(d) whether or not it was reasonably practicable for the applicant to negotiate for an alteration of the contract;

(e) whether or not any provisions of the contract impose conditions which are unreasonably difficult to comply with;

(f) whether or not any party to the contract (other than a corporation) was not reasonably able to protect his or her interests because of age;

(g) whether or not and when independent legal or other expert advice was obtained by the party seeking relief under this Act;

(h) the extent (if any) to which the provisions of the contract and their legal and practical effect were accurately explained by any person to the party seeking relief under this Act, and whether or not that party understood the provisions and their effect;

(i) whether any undue influence, unfair pressure or unfair tactics were exerted on or used against the party seeking relief under this Act by any other party to the contract;

(j) the commercial or other setting purpose and effect of the contract;

(k) whether the credit provider took any measures to ensure the party seeking relief understood the nature and implications of the transaction, and the adequacy of those measures;

(l) whether at the time of the contract was entered into the credit provider knew, or could have ascertained by reasonable inquiry of the debtor that the debtor could not pay in accordance with its terms or not without substantial hardship;

(m) whether the terms of the transaction or the conduct of the credit provider is justified in light of the risks undertaken by the credit provider;

(n) the terms of other comparable transactions involving other credit providers and, and if the injustice is alleged to result from excessive interest charges, percentage rates;

(o) any other relevant factor.

The mere fact that one or more of the criteria listed is present does not automatically make a contract unjust. No single factor is determinative as to whether a contract is unjust; it is a matter of balancing all of the facts and circumstances of each transaction.

If you think the Sales Person acted in a manner that was unfair then you should include a complaint in relation to s70. The types of matters that may be unfair include:

1. Your ability to understand and comprehend English;

2. Any opportunity you were given to read any contract;

3. What explanation, if any, the Sales Person gave you in relation to the Credit Contract such as whether interest would be included;

4. Whether the Sales Person told you the Sales Contract and/or the Credit Contract could be cancelled;

5. Your age, financial literacy, educational background

6. The time the Sales Person came to your house;

7. The length of time the Sales Person stayed in your home;

8. Your ability to service the debt and any inquiries the Sales Person made about your ability to make payments.

For example:

• Did you tell the Sales person you were “unemployed”, or “a single mother on a Pension”, or you had other debts such as mortgages and credit cards. Did that Sales Person ask you whether you had any other debts or expenses?

• Did the sales person engage in any unfair tactics, making promises that you subsequently found to be untrue?

• Did the product look or sound substantially different from the demonstration you received in your home?

Misleading and deceptive conduct

If the Sales Person verbally told you or made certain guarantees as to the suitability of the program, the ease of how the Product works, or in relation to the Credit Contract which you relied on and you later found out to be wrong, misleading, or false then you may be able to claim damages as a result of this conduct..

Fair Trading Act/ASIC Act

Fitness for Purpose

Where the consumer expressly or by implication makes known to the supplier of the purpose for which they have purchased the goods from the supplier, there is an implied condition that the goods supplied under the sale contract are “reasonably fit for that purpose.”

Questions to consider:

• What did you tell the Sales Person that you would be using the Product for?

• Who was going to use the Product, did they have any special needs, were they of a certain age or capacity?

• Did you rely on the Sales Person exercising his/her skill and judgment in recommending the Product in your circumstances?

It is central that there is some sort of disclosure to provide the Supplier an opportunity to exercise skill and judgment in making or selecting goods, therefore the purpose must be stated with sufficient particularity.

False Representation

Did the Sales Person tell you something, which you later found out to be untrue?

A person or corporation shall not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services:

Possible conduct that may contravene this section is:

(a) A representation that you would get a free gift if you entered the contract;

(b) A representation that you would be provided a certain gift or service for free, that was subsequently not provided or not provided as offered;

(c) Representations that you would receive free goods or services of a particular quality which you later did not receive.

Example of claim:

• The sales representative promised the consumer a free lap top if they entered into the sales contract and finance contract, and then on installation only provided a desk top computer.

What should I ask for to resolve the dispute?

This is up to you. Some common ways to resolve this type of dispute are:

1. The maths programs are returned and you are released from the loan;

2. The loan is reduced and a repayment arrangement is made to repay the remaining loan;

3. The loan is cancelled and all loan repayments are refunded.

When in EDR you are encouraged to try and settle your dispute. So be prepared to consider different options so the matter is finalised. Remember: you may lose in EDR so if you can settle your dispute on reasonably fair terms this type of settlement should be seriously considered.

What if the credit provider has commenced action against me in Court?

You can still lodge in EDR. You should do so immediately as the lender can obtain judgment 28 days after you received or were served with the Statement of Claim. You cannot lodge in EDR after the lender has obtained judgment.

The above arguments can also be used as a defence in the court but lodging in EDR is recommended instead as it is free. If you are unsuccessful in EDR you can still go to court.

What if I don’t have a problem with the loan only a problem with the maths program?

File an application in the General Division of the CTTT. The form can be obtained at www.cttt.nsw.gov.au.

This application is against the supplier. To work out who the supplier is look at your sales contract.

Under the heading: What orders do you want?
Tick the box
[] I want an order I don’t owe $___ [being the amount you paid for the software on the sales contract]

Under the heading: Why do you want these orders?
You need to summarise the reasons for your dispute.

There are a number of factors that the CTTT takes into consideration. Your reasons for requesting the orders should cover those factors (where relevant):

(a) Whether or not there was any material inequality in bargaining power between the parties,

(b) Whether or not any party was not reasonably able to protect their interest because of their age, physical or mental capacity,

(d) Whether or not and when independent legal or other expert advice was obtained,

(e) Whether any undue influence, unfair pressure or unfair tactics were exerted on or used against you;

(f) The conduct of the parties to the claim in relation to similar transactions to which any of them has been a party;

(g) Where the subject of the claim is a contract for the supply of goods or services:

(h) Whether or not before or at the time when the contract was made its provisions were the subject of negotiation, and

(i) whether or not it was reasonably practicable you to negotiate for the alteration of or to reject any of the provisions of the contract, and

(ii) whether or not any provisions of the contract impose conditions which are unreasonably difficult to comply with or not reasonably necessary for the protection of the legitimate interests of any party to the claim, and

(iii) if the contract is wholly or partly in writing, the physical form of the contract and the intelligibility of the language in which it is expressed, and

(iv) the extent (if any) to which the provisions of the contract and their legal effect were accurately explained by any person to the claimant and whether or not you understood the provisions and their effect, and

(v) the commercial or other setting, purpose and effect of the contract.

Examples of claims:

• A consumer entering the transaction when they had trouble understanding English, it was late at night and they did not understand the document they were signing.

• A consumer is pressured into making a purchase, and told misleading statements about being able to cancel the purchase under a guarantee.

Need some more help? See Fact Sheet: Getting Help for a list of additional resources.