Contract crackdown

29 March, 2017

The Australian Competition and Consumer Commission has warned it will be taking enforcement action against several companies across a range of industries over business-to-business (B2B) unfair contract terms this year.

The ACCC has a number of in-depth investigations underway across a range of industries following the introduction of the B2B unfair contract terms laws in November last year.

Delivering the keynote address at a University of NSW forum on recent developments in competition and consumer law, ACCC deputy chair Dr Michael Schaper said the regulator would be taking enforcement action.

“A number of investigations have been commenced, either in response to issues raised in the ACCC’s recent industry review or as a result of complaints made to the ACCC,” he says.

“Our enforcement teams are looking at a variety of contracts across a range of industries.”

Since the laws were introduced the ACCC has received 48 complaints from businesses about unfair contract terms.

The ACCC says several clauses it identified as being potentially unfair continue to be used in standard form contracts, including terms that allow the contract provider:

  • an unreasonable ability to cancel or end an agreement
  • potentially broad and unreasonable powers to protect themselves against loss or damage at the expense of small businesses, through the inclusion of broad indemnities or excessive limitations of liability
  • the ability to unilaterally change the terms of the contract
  • an unreasonable ability to limit or prevent small businesses from exiting their contracts

In November, the ACCC published a report Unfair terms in small business contracts, examining 46 standard form contracts across seven industries.

Some traders removed or amended their terms after being contacted by the ACCC, but in some cases they took no action.

Schaper was concerned many potentially unfair contract terms were still appearing in standard contracts.

“Businesses that seek to tip the scales too far in their favour at the expense of small businesses leave themselves open to court action by the ACCC,” he said.

The ACCC is also investigating complaints about payment terms and unfair commercial practices that have the effect of delaying payment times for suppliers.

“The potential for large businesses to unilaterally alter their payment terms and unfairly delay payment times for their suppliers is a significant concern to the ACCC, and may also raise issues of misleading or potentially unconscionable conduct,” he said.

“Ensuring small businesses receive protection under new unfair contract terms law is a priority for the ACCC in 2017.”