ACCC acts on unfair contract terms

The ACL creates a national unfair contract terms regime which applies to standard form consumer contracts and enables a court to find that a term of such a contract is unfair, and so void. This law applies to contracts in all forms including those made online, over the phone or face to face.

A ‘consumer contract’ is a standard form agreement for the supply of goods or services for personal use (that is for business to consumer transactions not business to business transactions).

Under the ACL a term is unfair if:

  1. it would cause a significant imbalance in the rights of the parties to the contract; and
  2. it is not reasonably necessary to protect the legitimate interests of the party it advantages; and
  3. it would cause detriment if applied or relied upon.

The ACCC has commenced action against Advanced Medical Institute (and related companies) alleging unconscionable conduct and breaches of the ACL. In essence, the ACCC alleges that customers were required to enter into long-term contracts that contained unfair contract terms particularly in relation to the ability of the customer to terminate the contract. The contracts contained long notice periods to terminate and fixed termination fees that the ACCC alleges unfairly penalised the customer. A news release is available on the ACCC website with more detail regarding the allegations (which are yet to be heard in court).

Warning: all business owners need to review their trading terms and conditions and internal policies to ensure they are not operating in contravention of the ACL, whether in respect of the consumer guarantee provisions or the provisions regarding unfair contract terms. redchip can review and advise in relation to your contract terms and policies to check for compliance and make sure the ACCC does not come knocking on your door.

Contact Peter McLaughlin on 07 07 3223 6100 or email PeterM@redchip.com.au to discuss how we can help you.

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