The Law Handbook 2024

696 Section 7: Consumers, contracts, the internet and copyright In 2013, the ACCC published the Unfair Contract Terms report, which details the outcomes of its compliance activities with respect to unfair contract terms. The report indicated that many businesses amended standard form contracts as a result of certain ACCC activities. The types of contract terms that were the focus of the ACCC report were: • terms that allow the business to change the contract without consent from the consumer; • terms that cause confusion about the agency arrangements that apply and that seek to unfairly absolve the agent from liability; • terms that unfairly restrict the consumer’s right to terminate the contract; • terms that suspend or terminate the services being provided to the consumer under the contract; • terms that make the consumer liable for things that would ordinarily be outside of their control; • terms that prevent the consumer from relying on representations made by the business or its agents; • terms seeking to limit consumer guarantee rights; • terms that remove a consumer’s credit card chargeback rights when buying the service through an agent. ASIC has also published an information sheet that includes examples of unfair contract terms relevant to insurance. Potential unfair terms include those that allow the insurer under a home building policy to settle a claim by paying the amount it would cost the insurer to rebuild or repair the home, rather than the amount it would cost the insured. Case examples ACCC v Bytecard Pty Ltd [2013] FC no. VID301 Bytecard (better known as NetSpeed Internet Communications) was a provider of internet access services throughout Australia. The case concerned the terms and conditions in NetSpeed’s standard contract in use from 1 January 2011 to April 2013. The ACCC was concerned that a number of terms were unfair terms of a consumer contract, and hence void under section 23 of the ACL. Under its terms, NetSpeed was able to: • unilaterally vary the amount payable under its contracts without prior notice, however it did not have to allow consumers to terminate to avoid the obligation to pay the varied amount or an opportunity to negotiate; • require the consumer to indemnify NetSpeed in any circumstances (including where the consumer was not in breach of the contract and any loss may have been caused by NetSpeed’s breach and even wilful misconduct), yet there was no corresponding term applicable to NetSpeed; • terminate its contracts at any time without cause, while the consumer’s right to terminate was subject to conditions. It was agreed that each of the terms are unfair as they would cause a significant imbalance in the parties’ rights and obligations arising under the contract. Also, the terms were not reasonably necessary to protect NetSpeed’s legitimate interests, and they would cause detriment (financial or otherwise) to a consumer if applied or relied on by NetSpeed. ACCC v Chrisco Hampers Australia Ltd [2015] FCA 1204 Chrisco offered contracts that allowed its customers to purchase Christmas hampers by paying for the hampers in instalments throughout the year. Chrisco’s order form contained a term that provided that where a customer had fully paid for an order in one year, the customer would automatically roll into a ‘HeadStart Plan’ for the next year. This term allowed Chrisco to continue withdrawing payments from a customer’s bank account or credit card. The money withdrawn could be put towards any future orders made by the customer. If a customer did not place another order, the money would be refunded without interest. Chrisco’s contract gave customers an opportunity to opt out of the HeadStart Plan. The court found that the term was unfair because it caused a significant imbalance in the parties’ rights and obligations arising under the contract. The judge found that although the HeadStart term gave Chrisco a right to withdraw money from customers’ accounts, customers did not have any corresponding right under the contract. The judge also noted that Chrisco’s customers were generally low- to middle-income earners and the goods in the hampers were generally priced above retail prices. ASIC v Bendigo & Adelaide Bank Ltd [2020] FCA 716 The Federal Court found that clauses in certain small business loans that fell within the following categories were unfair: