Covering unfair contract terms - protection for small business
ON JULY 30, 2013 the Australian Competition & Consumer Commission announced the Federal Court has declared a number of clauses in a certain standard form consumer contract were unfair and therefore void.
That declaration followed action by the ACCC against a company that used the standard form consumer contract, an Internet Service Provider that provides internet connectivity, domain registration, hosting and web design.
"This is the first time the ACCC has commenced legal proceedings based exclusively on the new unfair contract terms provisions of the Australian Consumer Law," ACCC Chairman Rod Sims said.
The company was ordered to pay up to $100,000 in fines and to pay a contribution to the ACCC's costs.
"This is a positive outcome for consumers and acts as a warning to businesses. The ACCC won't hesitate to take action against businesses who continue to include unfair terms in their standard form consumer contracts," Mr Sims said.
"The court's declarations in this matter is a timely reminder for all businesses to review their consumer contracts to ensure that potential unfair contract terms are removed or amended."
This matter was brought to the ACCC's attention by the Australian Communications Consumer Action Network.
Earlier this month a waste management firm landed in court for allegedly breaching unfair contract laws in its dealings with small business.
In its latest action the ACCC is seeking declarations that the contract terms are unfair and therefore void and is seeking injunctions to stop the company from relying on them.
The latest action is under changes the unfair contracts law, which now extends not only to consumers, but also to small businesses.
The law was passed a year in advance to give businesses time to reformulate contracts to comply.
ACCC Commission Michael Schaper reportedly said: "Where we identify large operators, using unfair contract terms that cause harm to small businesses, we will take appropriate enforcement action."
The Small Business Ombudsman has also used the legal changes to hold the big banks to the new rules.
Examples of what is not permitted are rights to unilateral price increases, blanket no liability clauses, charges for services not rendered for reasons that are beyond the customer's control and unlimited indemnities.
And of course, it is no defence that terms such as these unfair contract terms are not actually enforced against small business in day to day operations.
It is the existence of the unfair terms, in other words their availability to be enforced, that can be a breach of the law.