The ACCC has had another Federal Court victory with the new business-to-business unfair contract laws. The ACCC v Servcorp Limited serves as a timely reminder that:
The respondent was Servcorp Limited and two of its related entities (Servcorp), who supplied serviced office spaces and virtual office services, office suites, secretarial services, IT and communications services to customers.
This makes plain how the new laws work: necessarily, Servcorp had customers or tenants who were businesses, including many which were small businesses.
Servcorp provided service contracts to customers, including small business customers.
Terms which were declared unfair included those which had the effect of:
Servcorp was required to pay the ACCC's costs of $150,000 and implement a program to ensure compliance.
The Australian Consumer Law (ACL), from 12 November 2016, applies unfair contract rules to any 'standard form contracts' involving 'small businesses'.
This means if an agreement is a 'small business contract' and the contract is a 'standard form contract', then any clause which is found to be unfair is deemed to be void and is not enforceable.
A contract will be a small business contract if:
A contract is presumed to be a standard form contract unless proven otherwise. The court will take into account factors such as:
Under the ACL, a term of a small business contract is unfair if:
If a court finds a term to be unfair, then the court may grant one of the following remedies:
If you continue to assert that a term is legitimate, or seek to enforce or rely on it when it has been declared unfair by a court, you could be found to be engaging in false or misleading conduct, which carries pecuniary penalties of up to $1.1m for corporations and $220 000 for individuals for each infringement.
For more information, contact Maddocks on (03) 9258 3555 and ask to speak to a member of the Commercial team.
  FCA 1044.
 Being Schedule 2 of the Competition and Consumer Act 2010 (Cth).
Alisha Wright is an Associate in Maddocks’ Commercial Team.
Alisha advises extensively in a range of matters including:
Alisha has recently assisted with providing advice to SMSFs in relation to their compliance obligations and the drafting of bespoke shareholders agreements.
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