Court will not stand for unfair contract terms any longer

As of November 2016, the Australian Consumer Law (ACL) was extended to provide that small businesses contracts can no longer contain unfair terms.

A contract term will be deemed unfair if:

  • It would cause a significant imbalance to the parties’ rights and obligations under the contract;
  • It is not necessary to protect the legitimate interests of a party; and
  • It would cause detriment to a party if relied upon.

The ACCC are heavily pursuing companies who ignore the amendments to the ACL.

A well-known long running family business JJ Richards was too late in amending its contract terms and conditions to make them compliant with the ACL. The ACCC issued proceedings against them.

JJ Richards did not contest the alleged breaches of the ACL and cooperated by signing consent orders.

In this instance, clauses relating to automatic renewal, price variation, exclusivity, credit terms, indemnity and termination were deemed void.

If you have not reviewed your terms and conditions lately then you should be aware of the JJ Richards matter and the ACCC’s active approach in ensuring contract terms are fair and in accordance with the ACL.

Below is a link to a copy of the JJ Richards Service Agreement and a copy of the Corrective Notice ordered by the Federal Court which sets out the declared unfair terms which may be of interest to you.

If you would like to discuss your current terms and conditions with one of our experienced commercial lawyers at Scanlan Carroll please do not hesitate to contact us on 9853 0311.

Alternatively, if you would like to discuss a contract that you have entered into which may contain unfair contract terms imposed by the other party which you would like to have declared void please call us.