The Australian Competition & Consumer Commission (ACCC) has instituted proceedings against Australia's largest privately-owned waste management company, JJ Richards & Sons Pty Ltd (JJ Richards), alleging a number of terms in its standard form small business contracts are "unfair".
The proceeding is the first of its kind since the unfair contract terms regime in the Australian Consumer Law (ACL) was extended to small business standard contracts entered into, renewed or varied from November 2016.
The ACCC provided a 12 month transition phase from November 2015 allowing companies to alter their standard form contracts before the new regime was implemented but squarely put non-compliant businesses on notice that enforcement action would follow. This prosecution highlights the ACCC's heightened focus on enforcement action in recent months.
On launching the proceedings against JJ Richards, Deputy Chair of the ACCC, Dr Schaper stated:
"This action should serve as a reminder to large businesses that haven’t already to review their standard form contracts to ensure they aren’t considered to be unfair under the changes to the law".
JJ Richards - a test case
The ACCC alleges that eight clauses in JJ Richards' standard form small business contract are void for unfairness. These include the following terms:
- a unilateral variation clause which allows JJ Richards to unilaterally increase prices
- an automatic renewal clause which binds customers to subsequent contracts unless they cancel 30 days before the current term expires; and
- an unlimited indemnity granted in favour of JJ Richards.
What this means for you
Businesses should be proactively reviewing and assessing whether their standard form contracts with small businesses need to be amended to avoid prosecution by the ACCC.
HDY's Regulatory Risk + Strategy team has significant expertise in advising clients on compliance with the unfair contract terms regime. The team would be happy to discuss this alert and how we can assist your business.