| Published by Suzanne Rieschieck, Rohan Harris, Marika Hubble-Marriott
The provisions apply to protect businesses with less than 20 employees where the upfront price payable under the contract is less than $300,000.
On 6 September 2017 the ACCC issued Federal Court proceedings against waste management company JJ Richards & Sons. The ACCC alleges that various terms in JJ Richards’ standard form contract are unfair and should be declared void and of no effect because they go beyond what is reasonably necessary to protect JJ Richards’ legitimate interests.
The claim alleges that 8 terms in JJ Richards’ standard contract are unfair. The terms being challenged are:
The ACCC challenges each term on a stand-alone basis, but also for the way in which they interact to produce an unfair result. For example, if a customer is behind on payments, it cannot terminate the contract, but JJ Richards can suspend services, continue to charge, and the contract term may even automatically renew. This would lock the small business into a debt cycle with no ability to stop charges from continuing to accrue.
Automatic renewal and unilateral price variation clauses are commonly used by companies that provide services for set periods of time. The proceeding will therefore be closely watched by many traders who have similar standard terms.
The proceeding is another reminder just before the anniversary of the commencement of the change to the law that traders who use standard form contracts should seek legal advice about whether their standard terms may be considered unfair if challenged under the ACL.
You can also reference a previous article on the changes to the law, New unfair contract term protections for small business almost here! Also see our recent alert noting a decision by VCAT which showed the Tribunal’s willingness to enforce the ACL unfair contracts provisions against traders that operate using standard form contracts containing unfair terms.
Businesses should contact Suzanne Rieschieck from Russell Kennedy Lawyers on 03 9609 1544 or firstname.lastname@example.org if you have not yet reviewed your standard form contracts since the changes to the law on November 2016. Suzanne Rieschieck is a Senior Associate in our Dispute Resolution team with extensive experience acting for traders, small businesses and consumers in VCAT and the Courts regarding Australian Consumer Law disputes.
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