Business Law

ACCC fights for fairness for small business

Published in: March 2018

ACCC fights for fairness for small business

The Australian Competition and Consumer Commission (ACCC) will this year continue its 2017 push to protect small businesses from aggressive, unscrupulous and unfair traders. 

ACCC took action in 2017 against several large organisations that had issued small business trading partners with contract terms that disadvantaged the smaller entities.

Most of the targeted organisations, including Uber, Fairfax Media, Jetts Fitness, Lend Lease Property Management, and Sensis, had changed their terms and conditions after being approached by ACCC;  others faced court action.

For example, the Federal Court found waste management firm JJ Richards & Sons Pty Ltd (JJR) was in breach of Australian consumer law.

It voided eight “unfair” terms in JJR’s standard small business customer contracts because they:

·        

  • Bound customers to subsequent contracts unless they cancelled within 30 days before the term ended
  • Allowed JJR to unilaterally increase prices
  • Removed any JJR liability if its performance was “prevented or hindered in any way”
  • Allowed JJR to charge customers for services not rendered or caused by circumstances beyond customers’ control
  • Granted JJR exclusive rights to remove waste from customers’ premises
  • Allowed JJR to suspend its service but continue charging if payment was not made after seven days
  • Created an unlimited indemnity in JJR’s favour
  • Prevented customers from terminating contracts if payments were outstanding
  • entitled JJR to continue charging customers for equipment rental after contracts ended.

The court found “the terms exacerbate each other, increasing the overall imbalance between the parties and the risk of detriment to JJR customers”.

ACCC has started proceedings against serviced office provider Servcorp Ltd, alleging 19 terms in its small business client service agreement are unfair. The case is still before the court.

Small business owners and managers who feel their contracts with larger trading partners are unfair should contact ACCC.

ACCC deputy chair Michael Schaper said: “ACCC is serious about enforcing the new laws and we will continue to take action where appropriate to ensure small businesses are protected.

“ACCC engagement has seen tens of thousands of new or existing contracts improved, but this is the tip of the iceberg as Australia’s two million small businesses sign an average of eight standard contracts a year.”

The small business unfair contract laws came into effect in November 2016 as part of a wider package to protect consumers from unscrupulous commercial dealings 

Contract terms are considered unfair if they cause a significant imbalance in the parties’ rights and obligations; are not reasonably necessary to protect the legitimate interests of the party advantaged by the terms; and cause small businesses financial or other detriments, such as lengthy delays.

ACCC has information about the unfair contract terms legislation on its website and has produced an information booklet specifically for small business. 

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by email info@eddyneumann.com.au for clear and expert advice.
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