Unfair contract terms: Let the supplier beware

The Australian Competition and Consumer Commission has signalled its intention to adopt a more enforcement-based approach to protect consumers.

Early this year the consumer watchdog released an industry review of unfair contract terms and amendments to its compliance and enforcement policy. Both signal a tougher stance, requiring business to be more proactive when reviewing consumer contracts.

The unfair terms regime applies to standard-form consumer contracts, and renders void any provisions which are deemed unfair. While many businesses view the risks as being low, the potential effect of contract provisions being void can significantly affect the bottom line.

All standard-form consumer contracts must meet strict tests for fairness under the Australian Consumer Law. They need to be expressed in reasonably plain language, be legible and presented clearly, as well as made readily available to affected parties.

Terms that are confusing, unclear or inconsistent are much more likely to be considered unfair. For example, an airline ticket printed with the words “NON ENDNON REF” was found not to be clearly or legibly expressing a restriction that the ticket was non-refundable, even though accompanying documentation referred to non-refundability.

The unfair terms regime can also apply to organisations which may supply goods or services that would not usually be thought of as consumer goods. For example, if an individual buys a photocopier for personal use then the unfair terms regime would apply to that one transaction.

Your solicitor can draft a standard-form consumer contract to minimise the possibility that it will be voided by the use of unfair terms.