The Australian Competition and Consumer Commission has instituted proceedings in the Federal Court against JJ Richards & Sons Pty Ltd (JJ Richards) alleging that eight clauses in its standard form small business contract are void because they are unfair under the Australian Consumer Law (ACL).
JJ Richards is one of the largest privately-owned waste management companies in Australia and provides recycling, sanitary, and green waste collection services.
From 12 November 2016, the unfair contract terms provisions of the ACL were extended to cover standard form contracts involving small businesses.
The ACCC alleges that until at least April this year, JJ Richards entered into standard form contracts containing terms the ACCC alleges are unfair because they:
- create a significant imbalance in the rights and obligations of JJ Richards and small businesses
- are not reasonably necessary to protect JJ Richard’s legitimate interests
- would, if relied on, cause significant financial detriment to small businesses.
“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 Dr Michael Schaper said.
“Where we identify large operators, like JJ Richards, using unfair contract terms that cause harm to small businesses, we will take appropriate enforcement action.”
The ACCC alleges JJ Richard’s standard form small business contracts contain eight unfair contract terms:
- binding customers to subsequent contracts unless they cancel the contract within 30 days before the end of the term;
- 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;
- granting JJ Richards exclusive rights to remove waste from a customer’s premises;
- 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; and
- preventing customers from terminating their contracts if they have payments outstanding and entitles JJ Richards to continue charging customers equipment rental after the termination of the contract.
“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,” Dr Schaper said.
“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.”
The ACCC is seeking declarations that the terms are unfair and consequently void, and injunctions to prevent JJ Richards from relying on those terms or entering into future contracts with small businesses that contain them.
For more information, see Businesses remove unfair contract terms before new law.
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