The 'ACL in Wonderland': Redressing Legal Information Asymmetry and Consumer Contract Formalism

Consumers are what is known as ‘contract formalists’. They will assume the written contract is exhaustive and entirely enforceable. Unlike lawyers, they do not instinctively consider whether a term is unenforceable. Nor are they generally aware of their consumer rights under the Australian Consumer Law (‘ACL’). Contract formalism is the result of legal information asymmetry and consumer psychology. It benefits businesses too. In daily interactions, consumers comply with unenforceable terms and unwittingly give up consumer rights. But when consumers are informed about consumer protections, their behaviour can change. This article argues that the ACL is missing a crucial step in assuming that consumers are aware that a contract is subject to the ACL. Rather than assuming, the ACL should require consumer contracts to state at the top and at the signing stage that they are subject to nonexcludable ACL protections. This will reduce the legal information asymmetry.