Determining if the Contract is Unfair

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The first B2B standard terms contract test case goes to Court

Since 2010 consumers have been able to challenge certain unfair contracts in the Courts.

In November 2016 that right was effectively extended to small businesses where that business had less than 20 employees and the upfront payment was $300000 or less or $1,000,000 if payable over 12 months.


Under the new laws introduced last year a term in a standard form contract will be unfair if it is excessive , favours one party unreasonably , not necessary to protect the legitimate interests of the party seeking to impose it and would cause a detriment to the other party . In such cases the court could avoid the unfair term so that it became unenforceable


For some time now the ACCC has been proactive in this space . Earlier this year it organised meetings with some large business enterprises such as Uber Fairfax Lendlease and Sensis which resulted in these businesses changing terms in their standard forms which may have been unfair.

In addition the ACCC had announced that it was going to zero in on unfair contracts as part of its compliance strategy this year


Early in September the ACCC commenced action against the waste management entity JJ Richard and Sons Pty Ltd ( the company ) in the Federal Court alleging that at least 8 terms in their contracts were unfair and should be declared void


Those terms include for example :


Allowing the company to unilaterally vary the prices it charges


Continuing to charge customers for services after the contract has been suspended or terminated


Giving the company an overarching and unlimited indemnity in any circumstance


These are just 3 of a number of terms which the ACCC has promised to target with others including automatic contract renewal and liquidated damages on the radar


Although the federal court is yet to determine this test case it would be wise for all businesses but particularly those larger enterprises to consider reviewing their contract terms to ensure they are fair or risk the possibility of an action by the ACCC or other party in the courts


If you have not had your standard terms contract reviewed then this is the time to contact David or Reuben at PBL to do so

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Raea Khan Circle
Director Lawyer
Raea Khan

Raea is Managing Director and Principal Lawyer for PBl Law Group. Raea assists clients with major projects, property developments, construction and strata law.

He has worked in Western Australia and Queensland assisting with expansion projects in the energy and resource sector and now predominately advises clients in Strata and Community Association matters.

He is a member of the Australian College of Strata Lawyers where majority of his work is advising developers and owners corporations with dispute related minor and major defects, strata governance and common property litigation. He is proficient at leading negotiations and meetings.

Raea has a particular interest in the commercial aspect of any dispute and always tries to weigh up the risk, reward and benefit of legal proceedings at each different stage.

Raea enjoys all forms of competitive sport, including Crossfit and actively participates in Triathlons, representing Australia as an age group athlete. He was a member of Red Head Surf Lifesaving club.

  • Strata Law
  • Construction & Major Projects
  • Commercial and Business Law
  • Planning & Environment Law