JJ Richards & Sons Pty Ltd admits it’s time to take out the garbage.

Last month, I wrote that recruiters, 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.

One of the companies against which the ACCC took action was JJ Richards & Sons Pty Ltd, a large privately owned waste management company (JJR & Sons). ACCC v JJ Richards & Sons Pty Ltd [2017] FCA 1224 (13 October 2017). The case moved forward very quickly, seemingly with JJR & Sons admirable co-operation.

On 13 October, JJR & Sons admitted that each the following terms in its standard form waste management contracts caused a significant imbalance in the parties’ rights and was not reasonably necessary to protect its legitimate interests.

  • Automatic renewal;
  • Unilateral price variation (after notice);
  • Agreed times (for waste collection – best endeavours but no liability);
  • No credit without notification (JJR & Sons charged customers if they attended for waste collection but were unable to gain access, etc);
  • Exclusivity (customer not to engage another waste removal firm);
  • Credit terms (entitlement to suspend services with no corresponding right to withhold payment for failure to provide services);
  • Indemnity (wide ranging hold harmless provision); and
  • Termination (clause preventing customer from terminating whilst payments outstanding).

As a result, the Federal Court of Australia held that each of the impugned terms was void and imposed orders (by consent):

  • restraining JJR & Sons from relying on the impugned terms;
  • restraining JJR & Sons from using standard form contracts containing an impugned term;
  • requiring JJR & Sons to publish corrective notices;
  • requiring JJR & Sons to provide a copy of the Court’s orders to each person who was a small business that entered into one of the impugned contracts after 12 November 2016. (There were 26,000 contracts. It will be up to JJR & Sons to work out how many of them were with customers, who employed fewer than 20 persons – i.e. were “small businesses”!); and
  • requiring JJR & Sons to establish an Australian Consumer Law compliance program to be undertaken by each employee or other person involved in its business. who deals with Australian customers in order to minimise the risk of future reliance on unfair terms.

Many recruitment, contracting and staffing services providers might be aware of similar terms to those that were impugned in this case. Hopefully, they won’t be in their own terms of business because they will have taken the opportunity over the last twelve months to have them reviewed. If they haven’t, then perhaps … it’s time to take out the garbage!

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Andrew C. Wood

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