Standard Form Contracts - a question of fairness

In a win for small businesses, the Federal Court of Australia has recently ordered Multimedia International Services Pty Ltd to pay penalties of $230,000 for breaches of the Australian Consumer Law and to comply with an enforceable undertaking to the Australian Competition and Consumer Commission.

Multimedia International Services Pty Ltd, which trades as The Community Network (TCN), sells advertising space on large digital television screens. TCN was found to have engaged in unconscionable conduct in its dealings with one small business and misleading and deceptive conduct in relation to its standard form contract, which required customers to provide 12 months’ cancellation notice to avoid the automatic rollover provisions of the contract. In fairness, it was found that TCN’s conduct only related to certain employees and a small number of its extensive customer base and TCN had demonstrated contrition and had provided refunds to affected small businesses, including some who had not complained to the ACCC. Nevertheless, the Court imposed a substantial penalty on TCN for breaches of the Australian Consumer Law.

"...the Federal Court of Australia has recently ordered Multimedia International Services Pty Ltd to pay penalties of $230,000 for breaches of the Australian Consumer Law ..."

This decision offers several important lessons for media organisations:

1. Organisations that use a standard form contract should be careful to notify customers of particularly onerous clauses.
2. Organisations negotiating a standard form contract should be prepared to challenge and seek amendment of onerous provisions.
3. The ACCC is prepared to respond to and investigate complaints by consumers and small businesses.
4. The Australian Consumer Law provides broad protection in relation to unconscionable conduct and representations made in the course of business.
5. Organisations must be aware of their obligations under the Australian Consumer Law.

Please contact w%B2%AE%A8%AF%B2%98v%B0%B8%98kor w%BC%AE%A6%AE%AF%E6P%84%B8%A3%BA%D8Cif you have any questions regarding the application of the Australian Consumer Law or require assistance with negotiating a contract.