Add Category
Posted
The Australian Competition and Consumer Commission will test its new found powers to protect small business from unfair contracts in an action against one of Australia's largest waste management companies, JJ Richards.
In the first action of its type since the Australian Consumer Law was extended to cover standard contracts involving small businesses, the ACCC will take JJ Richards to the Federal Court alleging numerous clauses in the company's standard contract breach the new laws.
The ACCC said the contracts which were used until at least April this year were unfair because they created a significant imbalance in the rights and obligations of JJ Richards and their small business customers.
The ACCC will also allege the standard contracts were not "reasonably necessary" to protect JJ Richard's legitimate interests and would, if relied on, cause significant financial detriment to small businesses.
JJ Richards is ranked in the top 100 of an IBISWorld survey of Australia's biggest privately-owned businesses, with annual revenues of around $680 million from a range of recycling and waste collection services.
The unfair contract terms the ACCC has raised in its action include:
- Allowing JJ Richards to unilaterally increase its prices
- Removing any liability for JJ Richards where its performance is "prevented or hindered in any way"
- Allowing JJ Richards to charge customers for services not rendered for reasons that are beyond the customer's control
- Allowing JJ Richards to suspend its service but continue to charge the customer if payment is not made after seven days
- Creating an unlimited indemnity in favour of JJ Richards
"This is the first time the ACCC has taken court action to enforce the new laws that protect small businesses from unfair contract terms," ACCC deputy chair Michael Schaper said.
"In 2016, the ACCC engaged with a range of industries to encourage compliance with the new laws and reviewed small business contracts in a range of industries, including the waste management industry."
That consultation phase saw a number of large corporations including Australia Post, News Limited, Optus and Scentre Group (Westfield's local spin-off) amend or remove contract terms which may have been deemed "unfair".
The new law covers contracts between businesses where one of the firms employs less than 20 people and the contract is worth up to $300,000 in a single year, or $1 million if the contract runs for more than a year.
The ACCC argued standard form contracts provide little, or no, opportunity for the responding party to negotiate the terms — they are offered on a 'take it or leave it' basis.
"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, " Dr Schaper said.
The ACCC will ask the court to deem the terms unfair, and consequently void, and place injunctions on JJ Richards preventing it entering into future contracts with small businesses that contain them.
Topics: regulation, recycling-and-waste-management, company-news, consumer-protection, australia