The ACCC has successfully taken legal action to enforce new laws that protect small businesses from unfair contract terms.
The Federal Court declared that eight terms in the standard form contract used by waste management company JJ Richards to engage small businesses wre unfair, and therefore void.
These terms had the effect of:
- binding customers to subsequent contracts unless they cancel the contract within 30 days before the end of the term
- allowing JJ Richards to unilaterally increase its prices
- removing any liability for JJ Richards where its performance is “prevented or hindered in any way”
- allowing JJ Richards to charge customers for services not rendered even when caused by reasons beyond the customer’s control
- granting JJ Richards exclusive rights to remove waste from a customer’s premises
- allowing JJ Richards to suspend its service but continue to charge the customer if payment is not made after seven days
- creating an unlimited indemnity in favour of JJ Richards
- preventing customers from terminating their contracts if they have payments outstanding and entitling JJ Richards to continue charging customers equipment rental after the termination of the contract.
From 12 November 2016 the unfair contract terms provisions of the Australian Consumer Law were extended to cover standard form contracts involving small businesses.