26/08/2013

When you buy personal or household goods like televisions, mobile phones, furniture, appliances and other so-called consumer goods, you invariably receive standard documents with pages of conditions attached in small print.

While few of us (including lawyers!) ever bother to read them, a recent case has held that suppliers cannot simply put any terms they wish in those documents if a court would consider the terms to be unfair or unreasonable.

Under the Australian Consumer Law (which is part of what used to be called the Trade Practices Act but is now the Competition & Consumer Act or "CCA"), a consumer is a person who buys goods for mainly personal, domestic or household use.  The CCA also applies to services like plumbers, cleaners, TV repairers or electricians.

So, if your business sells to consumers or you are a consumer (and isn’t that all of us at least some of the time), you will be interested in the case of Australian Competition & Consumer Commission ("ACCC") v Bytecard Pty Ltd (also known as "NetSpeed").

In that case, the Federal Court held, by consent, that certain provisions in standard form contracts under which NetSpeed offered internet access services to consumers were void as unfair terms of a consumer contract.

The terms which were held to be void (and which have now been corrected by NetSpeed) included the following:

•    NetSpeed having the right to unilaterally vary without warning the prices payable under the contract (but without NetSpeed having to allow the consumers time to terminate the contract to avoid the varied prices or giving consumers an opportunity to renegotiate their contract terms)

•    The consumer being required to indemnify NetSpeed in any circumstances, even if the consumer was not in breach of the contract and the loss was caused by NetSpeed’s breach (or even its wilful misconduct!), without there being a similar provision for the benefit of the consumer, and

•    NetSpeed being able to terminate the contract at any time without any reason, while the consumer's ability to terminate the contract was subject to conditions.

It was agreed that each of those terms were unfair because:

•    they led to a major imbalance in the rights and obligations of the respective parties to the contract
•    they were not reasonably necessary to protect NetSpeed's interests, and
•    they would cause hardship to consumers if relied on by NetSpeed.

There is no doubt that both the ACCC and the CCA have real teeth. If you deal with consumers, you should be careful what your contracts provide. However, as a consumer, if you really don't like a provision in a contract when you are buying goods or services and it seems very unfair, you should check it out.
 
If you need help with the provisions in any contract, whether you are a consumer or you sell to consumers, please contact Townsends Business & Corporate Lawyers on (02) 8296 6222.