Did you know that the unfair terms provisions under the Australian Consumer Law (ACL) apply to standard form contracts with not only consumers but small businesses?
The Federal Court has declared that eight terms in waste management company, JJ Richards’ standard form contracts with its small business customers were unfair and as a result of this those clauses were declared to be void.
The courts consider the contract as a whole in determining the issue of unfairness. In this case, terms that were considered unfair in the contract included terms that:
- bind the customer to subsequent contracts unless the contract is cancelled a number of days prior to the end of the term;
- allow JJ Richards to unilaterally increase prices;
- remove liability for JJ Richards where its performance is “prevented or hindered in any way”;
- allow JJ Richards to charge for services not rendered due to no fault of the customer;
- grant JJ Richards exclusive rights to remove waste from the customer’s premises;
- allow JJ Richards to suspend its service but continue to charge the customer if payment is not made after seven days; and
- create an unlimited indemnity in favour of JJ Richards.
It is easy for small businesses to feel pressure from a larger company when negotiating contracts – however is important to remember that unfair contract terms are prohibited and that there is room to negotiate.
I have assisted many businesses in negotiating their contract terms, from distribution contracts to lease agreements. If you need advice in reviewing your contracts, please don’t hesitate to contact me at or call me at 1300 033 934 for a no-obligation quote.