Unfair Contract Terms in a Business to Business Contract

Unfair Contract Terms in a Business to Business Contract

In a recent Federal Court case, Australian Competition and Consumer Commission v J J Richards & Sons Pty Ltd [2017] FCA 1224, the Federal Court found that a number of terms in a standard form contract between a large waste management company and a small business were unfair and therefore void. Under the Australian Consumer Law consumers and small businesses are protected from unfair contract terms imposed on them by standard form contracts. In this case the standard from contract included terms (later found to be void):
* binding customers to a further term of the contract unless notice was given 30 days before the end of the term (automatic rollover); * allowing a unilateral increase in prices during the term;
* requiring the waste management company to be the exclusive provider of services;
* allowing a suspension of service if payment was outstanding for 7 days; and
* preventing the customer from terminating the contract if payments were outstanding. The lesson both for businesses wanting customers to sign standard form contracts and for customers presented with a standard form contract by a supplier is to to carefully review the document to ensure that there are no unfair terms which will impact on the party.