What clauses can you legally use to lock your customers
Wouldn't it be great to lock in your customers to a 12
month contract which:
- Automatically renews every 12 months without needing
to tell the customer that the contract is coming to an
- Contains an early termination / exit clause where
the customer has to pay 92.5% of the remaining payments
to end the contract early
- Where the customer needs your permission to share
the benefits with someone else
- Where you have 28 days to remedy a breach of
contract but the customer has only 14 days
The 'phone words' contract used by 1300 Australia
contained all these clauses ... until last Friday when the
consumer and small business watchdog, the ACCC, ‘persuaded’
1300 Australia to remove these clauses from their contracts.
The ACCC used the Australian Consumer Law (the ACL) to
force 1300 Australia to remove these clauses. The ACL makes
unfair clauses in a contract void, which means they are
treated as if they were never in the contract in the first
If you are a business which has standard contracts with
unfair clauses, you may have a rude awakening when you find
that your early termination clause is not legally
enforceable. It's worth reviewing and replacing the unfair
contract clause with a fair clause.
For more information click on my article
Australia to remove unfair contract terms from its phone
word agreements. At the end of the article is
a marketing analysis by Michael Field which explains why
1300 Australia inserted those clauses.
If your Uber Eats meal arrives spoilt or not at all, who
Is it the customer who orders, is it the restaurant which
cooks, or is it the courier who delivers the meal? Who pays
if the meal arrives spoilt or not at all?
Let us start with the customer. They order a meal from a
restaurant using their Uber Eats app. They pay with their
debit card or credit card. They wait 20 minutes for the meal
to arrive. If it does not arrive, or is cold when it should
be hot, or is spoilt, they complain to Uber Eats. Uber Eats
will credit the cost of the meal. The customer is not out of
Let's look at the courier. They pick up the meal from the
restaurant, and promise to deliver it in 20 minutes. They
place it into their insulated delivery bag. If they do not
keep it properly packed, it will go cold, or be spoilt. If
they can't find the delivery address, it will not be
delivered. There's a good argument that the courier should
bear the cost.
Finally, the restaurant. They cook the meal. They pack it
carefully to keep hot. The courier collects the meal as soon
as it is ready. There's a good argument that if the meal is
handed over to the courier good to eat, that the restaurant
should be entitled to keep what they are paid for the meal.
Until now, the reality has been different.
Because Uber Eats controls the delivery and also collects
the payment from customers, it decided to use its terms and
conditions to exempt itself from liability for meals
arriving spoilt or not at all. The terms provided that if
the customer asked for a refund, then Uber Eats would take
it from the payment to the restaurant, and keep its delivery
The consumer watchdog, the ACCC has branded this an
unfair term and has force Uber Eats to take responsibility
to refund the payment to the customer if the meal arrives
spoilt or not at all.
To read my case note on the ACCC's action click on
ACCC forces Uber Eats to change its liability exclusion
Is a company director
personally liable if they order goods or services without
the money to pay?
Your business is failing. The unpaid invoices are piling
Should you have one last throw of the dice, and make one
last order from a supplier without having the money to pay,
hoping to sell the items for a profit and keep the business
It's tempting ... particularly if you operate your
business through a company, which is a separate legal entity
which shields its directors from personal liability by
limiting liability to the assets of the company.
But how effective is the shield of limited liability?
The Corporations Act removes the shield of limited
liability when a company director incurs debts if their
company is unable to pay its debts as they fall due - what
the Act calls 'insolvency'. A liquidator is able to recover
those debts from the company director personally.
In a recent decision of the NSW Supreme Court, the
directors of a company were ordered to personally pay
$115,000 to the liquidator of their company to pay for debts
The liquidator's task of proving that the company was
insolvent was made easy by the fact that the directors did
not produce company financial records, and so the liquidator
was entitled to the presumption of insolvency extending back
for a period of 7 years.
If your business is failing, don't keep trading. And get
some professional advice on going into administration or
liquidation to avoid becoming personally exposed to debts.
For my case note click
Is a company director personally
liable if they fail to keep financial records?
Do criminal records
It seems unfair that a person who has 'done the crime and
served the time' will have their criminal conviction held
against them forever.
We are talking about all kinds of convictions: with
fines, community orders, and with imprisonment of up to 30
months. Not included are fines received in the mail for
traffic offences and other minor offences (they are not
The Federal Parliament agreed it was unfair and so in
1989 amended the Crimes Act to introduce a 'spent
convictions' scheme. It was particularly concerned that
offences committed by young offenders (such as malicious
damage, minor assaults, drug offences) should not be held
against them forever if they were not repeat offenders.
The way it works is that if a person is convicted, and
has no more convictions recorded for 10 years, then the
conviction will ‘disappear’. It will not appear on a Police
Clearance Certificate, which is a prerequisite for many
government jobs, licences and security clearances. There are
exceptions: sexual offences and offences against minors
(under the age of 18 years) are never ‘spent’.
Recently, the High Court of Australia ruled that a 'spent
conviction' could not be taken into account by ASIC as
evidence of dishonest conduct when it was considering
whether an applicant for a credit licence was "a fit and
proper person to engage in credit activities".
For more information,
click on my case note The High Court
rules that a criminal record is not forever
Will your terms and
conditions stand up in court?
Standard form contracts come with terms and conditions -
the fine print (T&Cs) which are carefully drafted to protect
the business by removing rights customers have.
The business has the upper hand. Even if they wanted to
or knew what to ask for, customers don’t negotiate changes
to the standard T&Cs. They are ‘take it or leave it’.
Enter the consumer watchdog - the ACCC. Term by term, the
ACCC is using its powers to remove unfair contract terms
from standard form contracts. It is removing unfair contract
terms for the benefit not only of customers, but also small
businesses (which employ to 20 people and where the contract
price is $300,000 upfront or $1 million over more than 12
What examples are there of unfair terms which the ACCC
has had removed?
- Price increases without notice and without the right
to terminate the contract
- Automatic rollovers at the end of the term unless (6
months) notice is given not to renew or a termination
fee is payable
- 'No responsibility' terms where the provider is not
liable for any loss
- 'No refund' terms where the order cannot be
delivered or the customer cancels
If your terms and conditions contain these terms, they
should be removed and re-drafted because they will not stand
up in court.
For a more detailed analysis, click on my article Focus
on unfair contract terms: Variation and Liability Clauses
you a small business and unhappy with a 'take it or leave it
contract' from a large supplier?
The rule is that when you tick the box: I accept the
terms and conditions - you cannot complain later, no matter
how unfair the terms are.
But no longer - This year, small businesses joined
consumers in being able to challenge unfair terms in
standard form contracts, by virtue of an amendment to the
Australian Consumer Law. And the Government watchdog - the
Australian Competition & Consumer Commission (ACCC) is
leading the way in cracking down on unfair terms in small
Here are some examples of unfair terms which are void i.e.
are no longer enforceable:
- Automatic Renewal - The Contract is automatically
renewed for the same term unless a 60 days notice of
cancellation is given before the current period ends.
- Unilateral Variation - The Contract allows the
supplier to increase prices to pass on any increases in
costs, without being limited to unavoidable increases
such as tax increases.
- Limited Liability - The Contract provides that the
supplier is not liable if it fails to provide the
services or goods at the agreed times or cancels its
services or deliveries.
- Early Termination Payments - The Contract requires
payment of all that is owing and what is payable to the
end of the term, even if the Contract is terminated
According to the ACCC, unfair terms in Contracts are
prevalent in these industries: Advertising;
Telecommunications; Retail Leasing; Independent Contracting;
Franchising; Waste Management and Agriculture.
Suppliers need to urgently review their Terms and
Conditions to remove unfair terms, otherwise the ACCC will
crack down on them.
Last week, the ACCC successfully had JJ Richards Waste
Management remove eight unfair terms from their standard
form contract. For my case note
The Federal Court declares eight
standard form contract clauses to be void because they are
unfair to small businesses
It's not unfair to dismiss an
employee who has been under-performing
To be successful, a mushroom farm must deliver quality
produce to its customers.
Mushroom pickers are trained to take the mature
mushrooms, and to discard spotted and diseased mushrooms and
wet mushrooms. They are paid a piece rate per box, The
payment is higher for boxes of A-grade mushrooms than
Two pickers, husband and wife, decided to take short
cuts. They filled their boxes half way with "rubbish
mushrooms" and topped the boxes with A-grade mushrooms. The
employer did not have the ability to check each box, and so
they were sold to the customer as A-grade mushrooms.
The customer re-packaged the mushrooms into trays for
sale, and discovered the "rubbish mushrooms". They returned
the boxes on three separate occasions, and asked for a
refund as they had paid for A-grade mushrooms. Each time,
the boxes returned had the picker numbers of the husband and
wife. Each time, the husband and wife were given a warning.
The customer was a large customer, and on the third time,
they sent a letter to advise they would cease business if
this happened again. This was the trigger which led to the
pickers being dismissed, not with notice, but summarily
The FairWork Commission decided this was not an unfair
dismissal because there was good reason. To read my case
click - Fair Work uses common sense to
find an employer had just cause to summarily dismiss an
Sleaze has no place in the
88% of sexual harassment complaints made to the
Australian Human Rights Commission are workplace related.
Unwanted and uninvited 'sharing' of sexual explicit
photos and sexy texts and making comments of a sexual
nature, are two forms of sexual harassment.
In a recent decision by the Fair Work Commission, a Cabin
Crew Supervisor on an unnamed airline was accused of sexual
harassment which was primarily directed to female flight
attendants. It took these forms -
- By mobile phone The employee showed sexually
explicit photos and sexy text messages from a crew
member with whom he was having a sexual relationship, to
other flight crew members on several occasions.
- By shouting "I hope you are clean” to the
crew member the day after he began his relationship with
her, in the presence of other flight crew members on the
- By whispering to a female flight attendant,
his ‘ratings’ of female passengers as they boarded the
aircraft: “She’s got great tits” and “She’ll be great in
- By propositioning a female work colleague at
the airline’s Christmas Party: “I really want to have a
threesome with you XXX and YYY (her flatmate). Oh,
sorry, I mean a foursome with ZZZ”.
This behaviour caused the work colleagues to feel
humiliated, uncomfortable and awkward. As one said, he was a
Rejecting protests by the employee that his behaviour was
part of the workplace culture where “nothing is really off
limits, it’s pretty out there…” and that “almost every
flight, the talk would turn into a discussion on sex”, the
Commissioner found that the airline had good reason to
dismiss the employee with immediate effect.
For more information
Is sexual harassment a good reason for an airline to dismiss
a flight crew member?
Has another business started
using your name? What can/must you do to stop them?
Sydney Medical Services has provided after-hours
doctors for home visits since 1971 in the Sydney
Metropolitan region. Last year. it had 76,885 home visits.
Imagine its surprise when early this year it noticed
brochures advertising Sydney Medical Services 2020
for after-hours doctors for home visits, and a website which
looked very much like its own website.
A copycat business
was using its name to lure its customers!
How could this
happen? Doesn't registration on the National Names Register
mean that a competitor cannot register a similar name?
Sadly, no. A copycat competitor can register a nearly
identical name, if they are good enough to circumvent the
same name filters the Registry uses.
That is where you
need a good lawyer and marketing consultant who will suggest
variations you can register, and domain name and trade mark
registrations, to protect one of your most important
business assets - your name.
The lawyer will also be able
to obtain a Federal Court order to stop the copycat using
your name. In the case of Sydney Medical Services,
the Federal Court ordered the copycat business to stop using
For more information on business name protection
click - What must a business owner do to
protect against a copycat name?
Is there anything you can do to stop a
law suit by a $2 company from going ahead?
$2 companies are companies with no money. They often
bring speculative law suits claiming tens or even hundreds
of thousands of dollars in compensation for business
opportunities which did not go ahead or which turned out
Defending law suits brought by $2 companies is time
consuming and expensive, especially when they go all the way
to a court hearing which lasts 2 or more days. This applies
of course to all law suits, but the particular problem with
law suits brought by $2 companies is that if the defence is
successful, the $2 company has no money to pay the legal
fees the court orders to be paid by it - they simply go into
liquidation to avoid payment.
Smart lawyers have a way of dealing with $2 companies
bringing speculative law suits. They 'cut them off at the
pass' by bring what is called a 'security for costs' motion.
What a security for costs motion does is to force the $2
company to pay into court the estimated amount of the legal
fees the defence will incur in defending the law suit. And
if the amount ordered is not paid, the law suit is 'stayed'
(i.e. stopped), permanently.
Rules apply as to when you can and cannot succeed in a
security for costs motion. For a case study,
click - Is
there reason to believe that a costs order will not be able
to be paid?
Are you debt collecting? If so, make
sure that you use mild (not undue) harassment and firm (not
coercive) demands to avoid breaching the Australian Consumer
When debt collecting, make sure you don't go over-the-top
when making threats to the debtor to press for payment.
Don't threaten legal sanctions like bankruptcy, visits
from Sheriffs' Officers, seizure of assets, judgments,
unless you have commenced legal proceedings. Don't threaten
public disclosure of the debt to friends or the employer.
Don't add exorbitant additional fees for late payment or
every time you make a demand.
It is important to not unduly harass or coerce a debtor
in these ways when pressing for payment. Otherwise you may
fall foul of the Australian Consumer Law.
See Full Article
ASIC cracks down on
irresponsible lending practices for consumer credit
It’s easy to dismiss the large penalty against The Cash
Store for contravening the consumer credit law as a warning
for payday lenders only.
ASIC does not see it that way. Responding to the case, ASIC
(the Australian Securities and Investments Commission) has
issued this warning to the whole consumer credit industry:
See Full Article
FINKS FOLLY - there is (almost) no
consumer protection for business loans
Fink’s case shows just how hard it is for a small
business owner to challenge a business loan debt using
consumer laws and codes.
See Full Article
JOINT VENTURES FOR BUSINESS:
In this article, we give you a basic
understanding of how partnering can be used to
develop a relationship between businesses.
See Full Article
This article looks at protection strategies for names as
business names, company names, domain names and names and
also logos as trade marks, before and after a similar name
or logo is noticed.
See Full Article
BUYING AND SELLING A BUSINESS:
Practical advice on legal issues
See Full Article