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Small claim win illustrates the big impact of changes to ACL

| Published by Suzanne Rieschieck

A VCAT small claims decision on 9 August 2017 demonstrates the Tribunal’s readiness to apply the unfair contract provisions in the Australian Consumer Law (ACL) to standard form contracts entered into by small businesses.

The case serves as a reminder that all businesses which operate on standard form contracts must ensure their terms and conditions do not fall foul of the ACL unfair contract provisions. 

Since November 2016, the ACL provisions regarding unfair contract terms have applied to contracts entered into by small businesses.

In Bass Coast Resort Pty Ltd (Bass Coast) v Success Resources Australia Pty Ltd (SRA), VCAT held that SRA could not rely on a clause in its standard form contract which the Tribunal found effectively allowed SRA to provide the opposite of what it was contracted to supply, without refund to its customer. The Tribunal set the clause aside.

SRA was ordered to refund to Bass Coast the cost of a seminar ticket purchased by that company.

Bass Coast purchased a $3,995 ticket to a seminar being offered by SRA.  The seminar was on a convenient date for Bass Coast and promised content relevant to its core business.  The ticket was purchased by Bass Coast completing a standard form application on which it ticked a box that said SRA’s terms and conditions were accepted. 

SRA subsequently postponed the seminar.  SRA invited Bass Coast to attend the same event in Sydney and was offered a $500 goodwill rebate or a discounted ticket for another person to also attend the Sydney event.  Bass Coast declined the offer as the date of the Sydney event was not convenient.  Bass Coast ultimately requested a refund of its ticket price.

SRA sought to rely on its terms and conditions, which it noted had been accepted by Bass Coast.  It noted the event had not been cancelled, only delayed, and that clause 3 of its terms provided that it could: 

“change the Speakers, the Hours, the Dates and/or the Location of the Seminar Services for any reason by notifying you in writing of the change and detailing substitute Speakers, Seminar Hours, Dates and/or Location and:

(a) we shall have no liability to you; and

(b) you shall make no claim against us (including for a refund), in respect of the same.”

The Tribunal found the term to be unfair, and commented that the term “exemplified pure drafting overreach”.  The VCAT Member said that the term purported to “deprive [Bass Coast] of any rights at all” and that the “reservation of rights [to change virtually any details of the event] is not reasonably necessary to protect [SRA’s] rights, and they would cause a significant detriment to [Bass Coast], because they would allow [SRA]to keep [Bass Coast’s] money without supplying anything of value to [Bass Coast]”.

This is a reminder almost one year on from the law changing, that all businesses which operate on standard form contracts must ensure their terms and conditions do not fall foul of the ACL unfair contract provisions.  The precedent effect of a standard term being set aside could lead to disastrous results.

Businesses should contact Suzanne Rieschieck on 03 9609 1544 or srieschieck@rk.com.au, Marika Hubble-Marriott on 03 9609 1697 or mhubble-marriott@rk.com.au or Rohan Harris on 03 9609 1632 or rharris@rk.com.au if you have not yet reviewed your standard form contracts since the changes to the law on November 2016. 

You can also reference a previous article on the changes to the law, New unfair contract term protections for small business almost here!

Suzanne Rieschieck is a Senior Associate in our Dispute Resolution team with extensive experience acting for consumers, small businesses and traders in VCAT and the Courts regarding Australian Consumer Law disputes.