Protect your school from unfair contract terms
As you embark upon another exciting school year, you will no doubt encounter circumstances where you are contracting with third parties to provide goods and services to your school. As always, when engaging with these contractors, we recommend that you obtain advice on the terms of the contract before entering into the contract so that you know exactly what you are getting into.
The recent action by the Australian Competition and Consumer Commission (ACCC) against Fuji Xerox provides an unfortunate reminder that many service providers, including those providing goods and services to Catholic schools, do not always contract on a fair basis. Many contracts include unfair, misleading and onerous terms that ultimately lead to detrimental impact on schools which could be avoided with up-front proactive advice.
Unfair contract terms
Where one party is contracting with a small business through a standard form contract, a term within that contract that is deemed ‘unfair’ will be void and cannot be relied upon by the contracting party. A standard form contract is one that has been prepared by one party to the contract and is not subject to negotiation between the parties.
The unfair contract terms provisions of the Australian Consumer Law aim to protect small businesses from unfair terms in standard form consumer contracts and standard form business contracts.
What is an unfair term?
A term of a consumer contract or small business contract is unfair if:
- It would cause a significant imbalance in the parties’ rights and obligations arising under the contract; and
- It is not reasonably necessary to protect the legitimate interests of the party who would be advantaged by the term; and
- It would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on.
Examples of unfair term might include terms that:
- permit one party (but not the other party) to avoid or limit performance of the contract;
- permit one party (but not the other party) to terminate the contract;
- penalise one party (but not the other party) for a breach or termination of the contract;
- permit one party (but not the other party) to vary the terms of the contract;
- automatically renew the contract;
- permit one party (but not the other party) to renew or not renew the contract;
- limit one party’s right to sue another party.
CASE STUDY: ACCC v Fuji Xerox
The ACCC recently commenced legal proceedings against printing company Fuji Xerox Australia Pty Ltd and a related company on the basis that a number of its standard form small business contracts contain a total of 173 unfair contract terms, including automatic renewal terms, excessive exit fees and unilateral price increases.
The ACCC is seeking, amongst other remedies, declarations that the identified terms are unfair and consequently void in addition to injunctions preventing Fuji Xerox Australia Pty Ltd from relying on the unfair terms in its current contracts and from entering into further contracts that contain those terms.
How can Brennan Law Partners assist?
If your school has a contract with Fuji Xerox or another service provider that you would like reviewed to ensure it doesn’t contain unfair terms, contact us now.
We recommend that you obtain advice before entering into any contract with a third-party service provider. We have previously discussed the value of this in our BLP Brief “Getting proactive with contracts: A guide for school principals”.
Also, if you are currently unhappy with a contracted service provider, contact us to assist with resolving the issues. We have successfully assisted many principals in disputes with third party contractors, including disputes about unfair contract terms.
It is also worth noting that the scope of the unfair contract terms provisions will expand this year, increasing the protections available to small businesses and consumers, including schools. These changes are set to come into effect in July 2021. If you would like to know how these changes effect your school, contact us to discuss.
All our BLPBundles include one third party service provider contract review, advice and negotiation. Enquire about a legal subscription now!
