Federal Court rules on unfair contract terms

You might recall that in September, the ACCC took action against one of Australia’s largest privately-owned waste management companies, JJ Richards, over the issue of unfair contract terms. The Federal Court has now declared, by consent, that JJ Richards’ standard form contracts with small businesses do indeed contain eight unfair terms. JJ Richards have agreed to declare these unfair terms void, publish a corrective notice, and inform all affected small business customers of the Court’s orders. The terms declared ’unfair’ include provisions that:

• allowed JJ Richards to suspend its service, but continue to charge the customer if payment was not made after seven days
• created an unlimited indemnity in favour of JJ Richards
• prevented customers from terminating their contracts if they had payments outstanding, and entitle JJ Richards to continue charging customers equipment rental after termination of the contract.

“This is the first court action by the ACCC to enforce new laws that protect small businesses from unfair contract terms,” ACCC Deputy Chair, Dr Michael Schaper said. We urge large businesses to review their standard form agreements with small business and to take appropriate action to remove any unfair contract terms. Check out our media release if you’d like to know more. Kind regards, Small Business team Australian Competition and Consumer Commission (ACCC)