ACCC taking action to enforce new unfair business terms laws

locked-into-contractRecruiters, who use standard form terms of business, might take note that the Australian Competition and Consumer Commission (ACCC) has started taking court action to enforce the unfair terms in standard form small business contracts provisions, which were introduced into the Australian Consumer Law in November last year.

Two proceedings have now been commenced in the Federal Court, where the ACCC is seeking declarations that some standard terms are unfair and void, together with injunctions, publication orders, compliance program orders and costs.

One proceeding is against Servcorp, a large provider of serviced office facilities; the other is against JJ Richards & Sons Pty Ltd, a large privately owned waste management company.

Amongst the business terms coming under attack are:

  • terms binding customers to subsequent contracts;
  • terms permitting unilateral increase in prices;
  • indemnity or hold harmless terms;
  • exclusivity terms; and
  • terms permitting one party to unilaterally determine whether the contract has been breached.

Frequently, terms such as these reflect an approach to contract drafting that was considered “smart practice” in the past. But that approach will need to change under the influence of consumer law and demands for more sophisticated relational¬†contracts.

It will be interesting to see how the proceedings unfold and what future actions the ACCC may take, having indicated, last year, that the contracting sector is one of the sectors that it is targeting.




Andrew C. Wood