We have previously written articles regarding unfair contract terms.
The Australian Consumer Law is contained in the Competition and Consumer Act 2010. This Federal Legislation seeks to provide protection to consumers where there is a standard form contract used for the provision of goods or services. A standard form contract is one which a company uses for all its customers and is typically provided on a 'take it or leave it basis'- for example, mobile phone contracts or internet provider contracts to name just a couple.
The provisions of the Australian Consumer Law allow a consumer to argue that a contract, or particular terms of a contract, are unfair and to seek compensation for any loss that is incurred as a consequence of this.
Generally, a term of a standard form contract is unfair if it would cause a significant imbalance in the parties' rights and obligations arising under the contract, is not reasonably necessary to protect an interest of the party being advantaged by the term and would cause detriment to a party if it were to be relied upon.
These protections apply to an individual who acquires goods or services, as well as small businesses. A small business is defined as one which has 20 or less employees and where the upfront price payable is less than $300,000 or $1 million for contracts lasting more than 12 months.
As of 10 November 2023, there are going to be some significant changes to the Australian Consumer Law. These changes include:
- broadening the definition of a 'small business' to encompass businesses with up to 100 employees or annual turnovers of up to $10 million (and the removal of any reference to the value of the contract);
- banning businesses from proposing, using or relying on unfair contract terms in standard form contracts;
- providing a mechanism for the ACCC to pursue legal action and fine companies. The penalties in this regard can be up to $50 million, three times the value of the benefit derived or 30% of the adjusted turnover during the breach period.
Perhaps the most significant changes insofar as farmers are concerned though are fertiliser contracts.
Fertiliser contracts have long been a bone of contention for farmers. Fertiliser contracts were often provided on a 'take it or leave it' situation, with the farmers having little to no negotiating power. To make matters worse, these contracts in some instances contained potentially unfair terms, such as the ability of the supplier to vary the quantity of product to be delivered without the farmers agreement, or the restriction of the farmers ability to complain about any defects with the products supplied.
As a result of an investigation by the Australian Competition and Consumer Commission into fertiliser companies and the use of potentially unfair contract provisions, suppliers in the fertiliser industry have reached an agreement to revise their contract terms.
This is a significant win, but farmers will need to take steps to ensure that any contracts they enter into are in line with the revised contract terms agreed to by the fertiliser industry.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.