Federal Court Declares Internet Service Provider Consumer Contract Terms Unfair

The Australian Competition and Consumer Commission (ACCC) has announced in a media release posted on its website (30 July 2013) that the Federal Court has declared that a number of clauses in the standard form consumer contracts used by internet service provider ByteCard Pty. Limited’s (ByteCard also known as Netspeed Internet Communications) were unfair and as a result void.

The result follows action by the ACCC against ByteCard providing internet connectivity, domain registration, hosting and web design. The ACCC Chairman Rod Sims said of the decision:

“This is the first time the ACCC has commenced legal proceedings based exclusively on the new unfair contract terms provisions of the Australian Consumer Law,”

This was a matter brought to the ACCC’s attention by the Australian Communications Consumer Action Network.

The Federal Court declared, by consent, that clauses 1.7, 4.1, 4.2 and 6.5 of ByteCard’s standard terms and conditions were unfair contract terms.

 The unfair contract terms had the following effect:

• enabled ByteCard to unilaterally vary the price under an existing contract without providing the customer with a right to terminate the contract;

• required the consumer to indemnify ByteCard in any circumstance, even where the contract has not been breached and the liability, loss or damage may have been caused by ByteCard’s breach of the contract; and

• enabled ByteCard to unilaterally terminate the contract at any time with or without cause or reason.

The reasons for the terms being considered unfair are stated in the media release as being that they:

• created a significant imbalance in the parties’ rights and obligations;

• were not reasonably necessary to protect ByteCard’s legitimate interests; and

• if applied or relied upon by ByteCard, would cause detriment to a customer.

ByteCard has also been ordered to pay a contribution to the ACCC’s costs.

Commenting on the outcome the ACCC Chairman Rod Sims is quoted as saying: 

“This is a positive outcome for consumers and acts as a warning to businesses. The ACCC won’t hesitate to take action against businesses who continue to include unfair terms in their standard form consumer contracts, . . . The Court’s declarations in this matter is a timely reminder for all businesses to review their consumer contracts to ensure that potential unfair contract terms are removed or amended.”

Source:

• Court declares consumer contract terms unfair (ACC Media Release 30/07/2013)

• INTERNET PROVIDER 'OFFERED UNFAIR CONTRACTS' (Yahoo 7)

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