Regulator says some of the big waste fleet owner's small business contracts are void
The Australian Competition and Consumer Commission (ACCC) says it has started proceedings in the Federal Court against waste industry giant JJ Richards & Sons in a high-profile test of recent small business contract protections.
From November 12 last year, the unfair contract terms provisions of the Australian Consumer Law (ACL)were extended to cover standard form contracts involving small businesses, it points out.
The ACCC alleges that eight clauses in the company’s standard form small business contract are void because they are unfair under the ACL.
ATN is awaiting a response from the company.
A big fleet owner, JJ Richards is one of the largest privately-owned waste management companies in Australia and provides recycling, sanitary, and green waste collection services.
The ACCC alleges that until at least April this year, JJ Richards entered into standard form contracts containing terms the ACCC alleges are unfair because they:
- create a significant imbalance in the rights and obligations of JJ Richards and small businesses
- are not reasonably necessary to protect JJ Richard’s legitimate interests
- would, if relied on, cause significant financial detriment to small businesses.
“This is the first time the ACCC has taken court action to enforce the new laws that protect small businesses from unfair contract terms,” ACCC deputy chair Dr Michael Schaper says.
“Where we identify large operators, like JJ Richards, using unfair contract terms that cause harm to small businesses, we will take appropriate enforcement action.”
The ACCC alleges eight unfair contract terms:
- bind customers to subsequent contracts unless they cancel the contract within 30 days before the end of the term
- allow JJ Richards to unilaterally increase its prices
- remove any liability for the company where its performance is “prevented or hindered in any way”
- allow it to charge customers for services not rendered for reasons that are beyond the customer’s control
- grant JJ Richards exclusive rights to remove waste from a customer’s premises
- allow JJ Richards to suspend its service but continue to charge the customer if payment is not made after seven days;
- create an unlimited indemnity in favour of JJ Richards
- prevent customers from terminating their contracts if they have payments outstanding and entitles JJ Richards to continue charging customers equipment rental after the termination of the contract.
“In 2016 the ACCC engaged with a range of industries to encourage compliance with the new laws and reviewed small business contracts in a range of industries, including the waste management industry,” Schaper says.
“This action should serve as a reminder to large businesses that haven’t already to review their standard form contracts to ensure they aren’t considered to be unfair under the changes to the law.”
The ACCC seeks declarations that the terms are unfair and consequently void, and injunctions to prevent JJ Richards from relying on those terms or entering into future contracts with small businesses that contain them.