In October 2016, we reported on the imminent commencement of ‘business to business’ unfair contract provisions in the Australian Consumer Law. As we approach the anniversary of the introduction of those laws, the Australian Competition and Consumer Commission (“the ACCC”) has announced that it has commenced its first enforcement action in relation to an alleged breach of the new laws.
The proceedings issued by the ACCC in the Federal Court against JJ Richards & Sons Pty Ltd (“JJ Richards”) – one of the largest privately owned waste management companies in Australia – allege that eight clauses in its standard form small business contract, which was in use until at least April this year, are void because they are unfair under the Australian Consumer Law.
Amongst the eight clauses in JJ Richard’s standard form small business contract which the ACCC alleges are ‘unfair’ is a clause creating an unlimited indemnity in favour of JJ Richards. Other clauses include: removing any liability for JJ Richards where its performance is “prevented or hindered in any way”; allowing JJ Richards to unilaterally increase its prices; and binding customers to subsequent contracts unless they cancel the contract within 30 days before the end of the term.
The ACCC is seeking declarations from the Court that the terms are unfair and, consequently, void and injunctions to prevent JJ Richards from relying on the terms or entering into future contracts with small businesses that contain them.
ACCC Deputy Chair Dr. Michael Schaper said in a media release that the ACCC’s actions in commencing proceedings against JJ Richards “should serve as a reminder to large businesses that haven’t already to review their standard form contracts to ensure that they aren’t considered to be unfair under the changes to the law”.
Given the ACCC’s actions to actively enforce the new laws, those practices involved in negotiating small business contracts would be well served to heed Dr Schaper’s advice.