Unfair contract terms under scrutiny: ACCC

The Australian Competition and Consumer Commission has a number of in-depth investigations underway across a range of industries following the introduction of new business-to-business (B2B) unfair-contract-terms laws in November 2016.

Delivering the keynote address at a UNSW forum on recent developments in competition and consumer law, ACCC Deputy Chair Michael Schaper said the regulator would be taking enforcement action in relation to a number of companies over unfair B2B contract terms this year.

“A number of investigations have been commenced, either in response to issues raised in the ACCC’s recent industry review, or as a result of complaints made to the ACCC. Our enforcement teams are looking at a variety of contracts across a range of industries,” he said.

Since the laws were introduced in November, the ACCC has received 48 complaints from businesses about unfair-contract terms.

In November 2016, the ACCC published a report, ‘Unfair terms in small business contracts’, examining 46 standard-form contracts across seven industries. Some traders removed or amended their terms after being contacted by the ACCC, but some did not.

The ACCC says a number of clauses it identified as being potentially unfair continue to be used in standard-form contracts, including terms that allow the contract provider:

  • An unreasonable ability to cancel or end an agreement.
  • Potentially broad and unreasonable powers to protect themselves against loss or damage at the expense of small businesses, through the inclusion of broad indemnities or excessive limitations of liability.
  • The ability to unilaterally change the terms of the contract.
  • An unreasonable ability to limit or prevent small businesses from exiting their contracts.

“We’re concerned many potentially unfair contract terms are still appearing in standard contracts,” Dr Shaper said. “Businesses that seek to tip the scales too far in their favour at the expense of small businesses leave themselves open to court action by the ACCC.”

The ACCC is also currently investigating complaints about payment terms and unfair commercial practices that have the effect of delaying payment times for suppliers.

“The potential for large businesses to unilaterally alter their payment terms and unfairly delay payment times for their suppliers is a significant concern to the ACCC, and may also raise issues of misleading or potentially unconscionable conduct,” Dr Schaper said.

“Ensuring small businesses receive protection under new unfair-contract-terms law is a priority for the ACCC in 2017.”

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