Visy Paper Pty Ltd (trading as Visy Recycling), Cleanaway Pty Ltd and Suez Recycling & Recovery Pty Ltd have reviewed and amended potentially unfair contract terms in their standard form contracts following an ACCC investigation into the use of unfair contract terms in the waste management industry.
All three companies have agreed to make changes to their price variation and liquidated damages clauses that previously allowed them to unilaterally increase their prices in specified circumstances and impose penalties on customers who wanted to exit their contracts before the end of the contract term.
“Our view was these price variation and liquidated damages clauses in Visy Recycling’s, Cleanaway’s and Suez’s previous contract terms were likely to be unfair within the meaning of the Australian Consumer Law,” ACCC Deputy Chair Mick Keogh said.
“For example, Visy Recycling customers did not have a right to terminate their contracts if they were dissatisfied with price increases, and yet the contract required customers wanting to exit their contract early to pay the average monthly fees for the previous 12 months multiplied by the remaining number of months on the contract.”
“Both Cleanaway’s and Suez’s liquidated damages clause required small business customers to pay 30 percent of the payments remaining over the life of their contract, if they ended their contract early. In our view customers had no of way assessing the justification for price increases which were unilaterally determined by Cleanaway and Suez,” Mr Keogh said.
The ACCC acknowledges Visy Recycling’s, Cleanaway’s and Suez’s co-operation in its investigation into the use of unfair contract terms in standard form contracts in the waste management industry.
When a Court determines a contract term to be unfair, the Court has the power to declare the terms to be void and not enforceable. However, as this is not a contravention of the ACL, the Court cannot impose penalties or make compensation orders.
“As we continue to investigate potentially unfair contract terms being used by large businesses, the ACCC is calling for legislative change to enable the Court to impose penalties and order compensation for customers where large businesses take advantage of unfair terms in dealings with small business and consumers,” Mr Keogh said.
The ACCC continues to investigate potentially unfair contract terms used and included in standard form small business contracts across the waste management industry.
“The ACCC urges all businesses to review their standard form contracts to ensure they do not include unfair contract terms,” Mr Keogh said.
Visy Recycling, Cleanaway and Suez are market leaders in the waste management sector.
In October 2017, the Federal Court declared, by consent, that eight terms in the standard form contract used by JJ Richards & Sons were unfair.
In the last 12 months, the ACCC has also taken action against Mitolo, Servcorp, Ashley & Martin and Equifax and accepted enforceable undertakings from Husqvarna, Wisdom Properties, 101 Residential and Cardtronics in relation to unfair contract terms.