In the first court action by the ACCC to enforce new laws that protect small businesses from unfair contract terms, the Federal Court has declared that eight terms in the standard form contract used by JJ Richards & Sons Pty Ltd (JJ Richards) for its small businesses customers are unfair and therefore void.

JJ Richards is one of the largest privately-owned waste management companies in Australia and provides recycling, sanitary and green waste collection services.

Some of the key terms struck down by the Court had the effect of:

• binding customers to new contracts unless they cancel their current contract within 30 days before the end date
• allowing JJ Richards to unilaterally increase prices
• allowing JJ Richards to charge customers for services not rendered for reasons that were beyond the customer’s control
• granting JJ Richards exclusive waste removal rights from a customer’s premises
• allowing JJ Richards to suspend its service but continue to charge the customer if payment is not made after seven days
• creating an unlimited liability indemnity in favour of JJ Richards
• preventing customers from terminating their contracts if they have outstanding payments.

The Court found that the cumulative effect of the terms worsened each other and increased the overall imbalance between the parties.

JJ Richards consented to orders by the Court

1. restraining it from relying on the unfair terms in existing small business contracts or using the terms in future contracts with small businesses;
2. to publish a corrective notice; and
3. provide a copy of the Court orders to all its small business customers involved in an affected contract.

The moral for big business- make sure your standard contracts don’t include unfair terms, because the ACCC may come after you!