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Consumers are also protected by unfair contract provisions legislation

Consumer Law News | May 2016

As mentioned in our article of March 2016, help is on the way via the regulators for protecting small business against “the big boys” and unfair contract provisions.

This policy extends to consumers and is supported by a recent case where the ACCC focused on unfair contract terms provided by Europcar to its consumers.

In the recent case of Australian Competition and Consumer Commission [ACCC] vs CLA Trading Pty Ltd [Europcar] [2016] FCA 377 the Australian Competition and Consumer Commission [ACCC] had brought proceedings against CLA Trading Pty Ltd, trading as Europcar Australia [“Europcar”], claiming that particular terms in Europcar’s standard rental agreements were “unfair” for consumers.

The “unfair” terms referred to by the ACCC in their claim included:

  1. A term requiring consumers to pay Europcar a “Damage Liability Fee” in the event that the rented vehicle is damaged or stolen, or if there is a third party loss, regardless of whether the consumer is at fault; and
  2. A term making consumers fully liable to Europcar if the rented vehicle is damaged or stolen, or if there is a third party loss, where the consumer breaches the rental agreement, no matter how trivial the breach and regardless of whether the breach caused the damage or loss.

Under the Australian Consumer Law, where a standard form contract contains a term that is deemed to be “unfair”, this term will be void and treated as if it had never existed in the contract. A contractual term is considered to be unfair if it would:

  1. Cause a significant imbalance in the rights and obligations of the parties;
  2. Not be reasonably necessary to protect the legitimate interests of the party who is advantaged by the term; and
  3. Cause detriment (either financial or otherwise) to a party if it were to be applied or relied on.

The Court held that these were unfair as they caused significant imbalances in the rights and obligations of the parties and were not necessary to protect Europcar’s legitimate interests.

The Court also found that Europcar’s representations to consumers on their website were misleading in nature as they contradicted the unlimited liability imposed on consumers in Europcar’s rental agreements.

In resolving these proceedings Europcar agreed to the facts and joint submissions to be put to the Court and consented to orders for injunctions, corrective advertising and costs. Europcar have since amended their standard rental agreement to remove the unfair terms and their website to remove the misleading statements.

This decision highlights the importance of fair contractual terms and to avoid simply relying on standard contractual terms to be able to hold consumers liable for breaches, or in the case of rental agreements, to hold consumers liable for loss or damage.

Forum Law is comprised of a small team of qualified professional lawyers located in the inner west area of Leichhardt who can advise and assist you with all aspects of estate planning, business, commercial and property law in a cost effective and timely manner. Our objective is to provide sound and practical advice and assistance in navigating the complexities of the law relating to your personal and business matters. Give us a call for an obligation-free phone chat for up to 30 minutes, or make a time to visit us in Leichhardt on 02 9560 3388.

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