Update – B2B unfair contract terms

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On 13 October 2017, the Federal Court has declared, by consent, that eight of the contract terms that JJ Richards & Sons Pty Ltd (JJ Richards) used in their standard form contracts are unfair, and therefore, void, pursuant to the Australian Consumer Law (ACL).

These proceedings were initially addressed by us in our articles titled, ‘B2B Unfair Contract Terms being tested by the ACCC’.  By way of background, the clauses in question related to automatic renewal, price variation, timings, exclusivity, credit terms, indemnity, and termination.  They were all found to be void.

The Court held the eight clauses of their standard form contracts were unfair to small businesses because:

  • they reduced JJ Richard’s liability to an unacceptably low level;
  • the clauses were beyond what was necessary to reasonably to protect the interests of JJ Richards;
  • the causes created a significant imbalance between the parties to the contract, mainly due to the lack of corresponding rights in various clauses;
  • some clauses allowed JJ Richards to charge the customer for services, even if no loss had been incurred or the service was not being rendered; and
  • the clauses were not transparent and were in a format which could not be easily understood.

The injunctions sought by the ACCC were granted, and included restraining JJ Richards from relying on the clauses in existing small business contracts and from using the terms in future contracts with small businesses, requiring JJ Richards to implement a compliance program, and requiring it to publicise the decision.

At Bryks Lawyers we have extensive experience in advising on the Australian Consumer Law.  Start the conversation today!

This information is for information purposes only and is not legal advice. You should obtain advice that is specific to your circumstance and not rely on this publication as legal advice. Please contact us if you wish for us to advise you on any issue you may have arising from this publication.

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