One-sided protections are (un)fair game for regulator intervention
The ACCC recently announced that three stevedore companies have agreed to make changes to their standard form contracts following an investigation by the regulator.
This announcement is significant as it provides further insight into the ACCC’s approach to the B2B Unfair Consumer Contract legislation introduced in 2016. In this industry-wide review, the ACCC was concerned about terms in the stevedores’ contracts which:
- allowed stevedores to unilaterally vary terms (including pricing) in the agreement without notice;
- limited the liability of stevedores for loss or damage suffered by transport business, with no reciprocal protection;
- indemnified the stevedores for loss or damage, with no reciprocal protection;
- required transport businesses to pay the legal costs of stevedores, in circumstances where those costs would generally be determined by a court (if any).
The stevedore companies cooperated with the ACCC’s investigation and one has provided a court enforceable undertaking.
KWM has blogged previously about the ACCC signalling its disapproval of unilateral variation and limited liability clauses. Also identified as potentially unfair are termination clauses which allow termination by the larger business for any breach of the contract, early termination charges, and entire agreement clauses that could mislead a party about additional rights available to them at law.
The ACCC intervention follows its investigation into container stevedores which flagged unfair contract terms in the standard form contracts offered by container stevedores to land transport operators as an area of concern.
KWM has blogged previously about industries the ACCC has identified use standard form contracts which may give rise to B2B unfair contract concerns including advertising, retail leasing, franchising, telecommunications and waste management and Chairman Rod Sims announced a continuing focus on unfair terms in the agricultural sector in his 2019 enforcement priorities speech. The ACCC has also successfully had terms declared unfair in the waste management industry (see our post here).
The continued ACCC focus on unfair contract terms highlights the need for businesses to review their standard form agreements to ensure compliance with the B2B regime, particularly where those standard form agreements create unequal or non-reciprocal legal rights.