ACCC investigation

The terms complained of included terms giving the supplier the right to unilaterally vary the quantity to be delivered to the buyer or to terminate the agreement if the supplier believed it would not be able to supply the order. There were also terms that restricted the right of the purchaser to raise issues about defects.

A term is an unfair contract term if it creates a significant imbalance in the parties’ rights and obligations under the contract, is not reasonably necessary to protect a party’s legitimate business interests or is likely to cause financial or other harm to the other party if enforced.

From 10 November 2023, the ACCC will be able to take court action to seek pecuniary penalties for breaches of unfair contract terms. The maximum penalty will be the greater of $50 million or three times the value of the benefit derived or, if that value cannot be determined, 30 per cent of the company’s turnover during the period it engaged in the conduct.

After receiving the complaints, the ACCC initiated an investigation and called for copies of the contracts. All of the companies that the ACCC engaged with during the investigation co-operated and amended their contracts to address the concerns of the ACCC.

Whether you are a supplier to businesses in the rural community or a buyer, all standard form contracts should be reviewed. FCW Lawyers can assist with this review so that any concerns can be addressed prior to the November deadline and your contracts can remain legally compliant.