The Australian Competition and Consumer Commission (ACCC) is continuing to educate business and take enforcement action to ensure that small businesses receive the protections of the new unfair contract terms laws.
Since 12 November last year, when the laws were extended to small business contracts, the ACCC has taken successful court action against a major waste management company, JJ Richards & Sons Pty Ltd, for unfair contract terms including an automatic five-year rollover clause, a unilateral price variation term and a broad indemnity provision.
The ACCC has also commenced proceedings against serviced office space provider, Servcorp Ltd, alleging that 19 terms in its Service Agreement used with small business clients are unfair. The matter is currently before the court.
Earlier this year, a number of major traders such as Uber, Fairfax Media, Jetts Fitness, Lendlease Property Management and Sensis amended their standard small business contracts in response to unfair contract terms concerns raised by the ACCC. These changes have an effect upon thousands of small business contracts across Australia.
Small businesses should look out for common types of terms which may be unfair:
- automatic renewal terms binding customers to subsequent contracts unless they cancel the contract within a certain timeframe
- terms allowing a trader to unilaterally increase its prices or alter the terms and conditions of the contract
- terms that broadly limit a trader’s liability towards a small business, or which require a small business to indemnify a trader in an unreasonably broad range of circumstances
- terms that allow traders to cancel or terminate an agreement without cause
If small business thinks a contract term is unfair, it should ask the provider to amend or remove the unfair term. If this is unsuccessful, a small business can:
- contact the ACCC (or the Australian Securities and Investments Commission (ASIC)) if it relates to a financial service or product)
- seek the assistance of the state’s Small Business Commissioner (contact the VSBC here) or ASBFEO
Click here for more information from the ACCC regarding unfair contract terms.
To see the VSBC’s information sheet on the unfair contract terms laws, click here.