The Australian Competition and Consumer Commission (ACCC) has taken action against two companies in a bid to protect small Australian businesses from unfair contracts.
Changes to the Australian Consumer Law (ACL) came into effect in November 2016 now provide the ACCC with the ability to bring actions against companies that include unfair terms in their contracts with small businesses.
In September, JJ Richards & Sons (JJ Richards), one of Australia’s largest, privately owned waste management companies, was the first to be taken to task by ACCC since those changes. Now a second company has had proceedings brought against it.
The ACCC alleges that up until April this year, JJ Richards’ standard form contract with small businesses included terms that caused damage to those businesses. These terms included binding customers to further contracts unless they cancelled the current one within 30 days of it ending, allowing JJ Richards to increase its prices, giving exclusive rights to remove waste from a property and allowing them to suspend collection service if payments were not paid within 7 days.
While proceedings against JJ Richards have only just begun, the ACCC has also bought an action against Servcorp, which supplies office space and virtual office services worldwide.
Servcorp’s contract terms allegedly include unfair terms that allow Servcorp to increase its contract price, terminate contracts and impose penalty-type consequences on the customer, limit Servcorp’s liability while imposing unreasonable liability on the customer, and acquire a customer’s property without notice.
What does this mean for your business?
Whether you’re a large business that maintains contracts with smaller businesses, or you are one of those smaller businesses, you should consider reviewing any agreements for terms which may be deemed "unfair".
For more information regarding what is considered to be ‘unfair’ terms, click here to read our full article.
Alternatively, if you would like advice regarding contract terms, please get in touch with Jacqui Barrett at Hall & Wilcox on + 61 2 8896 6037.
