Residential home building company Fowler Homes Pty Ltd has admitted that its standard home building contract contained unfair contract terms and has undertaken not to enforce the terms of concern to the ACCC.
The home building contract contained a non-disparagement clause which prohibited clients of Fowler Homes from publishing or sharing negative reviews or any other feedback, including online or on social media, about Fowler Homes' services or its contract without prior permission from Fowler Homes. The clause also required clients to indemnify Fowler Homes against any losses suffered from enforcing those terms.
In response to ACCC's concerns, Fowler Homes has provided a court-enforceable undertaking to the ACCC in which it acknowledges that the non-disparagement clause could have prevented clients from speaking out about issues, and has undertaken not to include the non-disparagement clause in future contracts.
Fowler Homes has also undertaken to send a letter to affected clients, and establish a complaints handling system and a compliance program.
"Businesses should review their standard form contacts to ensure they do not contain unfair terms. From 10 November 2023, businesses may face penalties if they use unfair contract terms in certain standard form contracts, or rely on them in their dealings with clients or customers," ACCC Deputy Chair Mick Keogh said.
Since July 2019, Fowler Homes has signed contracts containing non-disparagement clauses with 434 customers.
"We are disappointed Fowler Homes continued to use unfair non-disparagement clauses in its standard home building contract when the ACCC's actions against other building companies for similar clauses should have been well known and understood within the industry," Mr Keogh said.
A copy of the undertaking can be found at Fowler Homes Pty Ltd.
Background
Fowler Homes is a residential builder which offers building services across the greater Sydney region, NSW.
Notes for editors
In December 2017, building company 101 residential Pty Ltd provided a court-enforceable undertaking and amended its standard home building contract which contained non-disparagement clauses.
In June 2018, the ACCC accepted a court-enforceable undertaking from home builder Wisdom Property Group Pty Ltd to remove unfair contract terms from its standard home building agreements. The agreement included non-disparagement clauses.
On 27 October 2022, legislation establishing a civil penalty regime for unfair contract terms in certain standard form contracts and expanding the class of contracts covered passed Parliament, and will come into effect on 10 November 2023.
