Carpet and curtain businesses generally use standard form consumer contracts - that is, contracts prepared by the business and offered on a 'take it or leave it' basis.
Under the Australian Consumer Law (ACL), a term in a standard form contract may be declared unfair if it:
- would cause a significant imbalance in the parties' rights and obligations
- is not reasonably necessary to protect the business
- would cause detriment (financial or otherwise) to a consumer.
The ACL bans businesses from proposing, using, or relying on unfair contract terms in standard form contracts with consumers and small businesses. Penalties can be as high as:
- $50 million for businesses
- $2.5 million for individuals.
All businesses, including those in the carpet and curtain industry, should ensure their contracts comply with laws about unfair contract terms.
We have worked with carpet and curtain businesses to remove or modify unfair consumer contract terms, including terms that:
- contradict or do not allow the consumer to exercise their rights under the consumer guarantees (for example, stating that the colour and weave of the product may vary from the sample, and not allowing the consumer to dispute this variation)
- limit the performance obligations of the business (for example, allowing the business to supply goods or services in a longer period than stated in the contract without liability and denying the consumer the option to cancel the contract without penalty)
- require the consumer to pay in full before the contract is complete (for example, stating that the balance of the payment is to be made when the business tells the consumer the goods are available for installation).
Contracts that include such terms are not automatically considered unfair. We do not decide whether a term is unfair, as only a court or tribunal can decide this.
Consumers may take action at the Victorian Civil and Administrative Tribunal (VCAT), or in a court, if they believe a term is unfair. If a court or tribunal finds a contract term to be unfair, it is considered void and treated as though it never existed. If the contract can operate without the unfair term, it will still be binding.
We continue to work with businesses to ensure their contracts comply with the law. If a business refuses to modify its contracts, we may take further action, such as applying to VCAT for a ruling.