Financiers worried about the breadth of the linked credit provider provisions (in section 278) of the Australian Consumer Law (“ACL”) (formerly section 73 of the Trade Practices Act (“TPA”)) can take some comfort from the recent decision of the Full Federal Court of Australia in Quikfund (Australia) Pty Ltd v Prosperity Group International Pty Limited (in Liq) [2013] FCAFC 5 (the “Quikfund case”).
The rational of section 278 is to make a financier liable for the wrongful conduct (for example supplying shoddy goods) of a supplier whom the financier has permitted, if not encouraged, to procure credit contracts which facilitate supply of those goods.
And, more threateningly for financiers, earlier cases had found that equipment leases in particular were not excluded from the ACL/TPA by virtue of being a species of financial services.
However, seemingly as brake on this trend, the Quikfund case says that evidence of the necessary consensual arrangement between credit provider and supplier must be strong and pre-existing. It is not enough, for example, that blank copies of the credit provider’s documentation were simply in the supplier’s possession, or had even been made available to the customer at the relevant time.
The evidence must clearly show a consensual arrangement between financier and supplier, for example that the documentation had been provided by the financier for the specific purpose of being passed on to the customer, in order that a credit contract would ensue.