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ACCC steps in as standard form contract goes pear-shaped

Suzanne Rieschieck, Kate Davey & Jack Trainor

The ACCC has continued to show its willingness to deal with businesses that fall foul of the Australian Consumer Law (ACL) unfair contract terms provisions.

After the ACCC raised concerns, fruit trader Red Rich Fruits has agreed to amend a term in its standard form horticulture produce agreement used for fruit growers. The term allowed Red Rich Fruits to seek credit from a grower for produce that it had on-sold to a third party but which was rejected by that third party. The ACCC considered that the term would likely be an unfair contract term under the ACL.

Red Rich Fruits also agreed to amend contractual terms to ensure that they complied with the relevant industry code, the Horticulture Code of Conduct. The terms that related to pricing and payment may have breached the Code’s pricing formula and payment transparency terms.

Changes to the ACL

On 12 November 2016, changes to the ACL took effect such that small businesses are now afforded protection from unfair terms in business-to-business standard form contracts. Since the new laws were introduced the ACCC has commenced several Federal Court proceedings against businesses.

These cases have been discussed in previous alerts:

The trend in those cases has been for the ACCC to obtain the consent of the infringing businesses to remove the problematic terms from their standard form contracts. It remains to be seen whether any business is willing to take on the ACCC and force the Federal Court to make a statement about the bounds of the new regime.

Businesses should contact Suzanne Rieschieck or Jack Trainor from Russell Kennedy Lawyers to seek advice about whether their standard terms may be contrary to the Australian Consumer Law.

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