LEGAL ADVENTURES OF THE CLARKE FAMILY
Chapter 2 - UNFAIR CONTRACTS
As business has continually been booming with the warmer weather, Dave decides to add a package to his business where he will provide a weekly pool service at a discount price if customers book a minimum period of two full months.
To start things off, he commissions a brochure with a standard pro forma contract that includes the following terms in small print:
“Our prices are subject to change without notice, and if you terminate this contract you will be required to pay a fee of $50.00”.
At first, things seem to be going well and this package slowly picks up in popularity due to the cheaper pricing.
One day, a long-time customer called Angela requesting the 2-month service. Dave provides Angela with the brochure and advises her to return it signed so he can start the service.
She comes back the next day and complains to Maggie about the clause with the price change and fee. She says
“It is unfair to ask me to sign such a contract. I shouldn’t have to be subjected to this kind of restriction! I’m a long-time customer and I should be treated better than this.”
Maggie agrees with Angela and brings it to Dave’s attention, but he refuses to budge. He says to Maggie “Your complaint is not valid. The clause is there for commercial reasons. I hire contractors to do your pool. If you walk away from the contract I will be out of pocket. It is reasonable!”
Australian Consumer Law is governed by the Competition and Consumer Act 2010 (Cth), and protects all consumers from unfair contracts.
This only applies to standard form contracts – these are essentially the same or similar contract being offered to all consumers, such as mobile phone contracts or any contract where you find standard small print.
Q and A
Q: I think my contract contains an unfair term like Angela’s. Am I still bound by my contract?
A: If your contract contains an unfair term then that term will be struck out. However this does not mean you are no longer bound by your contract. Your contract will remain valid if it can operate without the inclusion of the unfair term.
Q: How can I tell if a term in my contract is unfair?
A: This depends on the court’s satisfaction of a number of factors, including those listed below.
Is there a significant imbalance caused by the term between your rights and obligations and those of the other party?
Is the term reasonably necessary to protect the legitimate interests of the business?
Would the term cause you detriment (financial/non-financial) if the business tried to enforce it?
How transparent is the term?
How can E Berman & Co Solicitors help me?
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