Case studies - unfair contract terms

Victoria introduced the first unfair contract terms legislation in Australia on 9 October 2003.

This led to the removal of unfair contract terms from contracts used in several industries. Victoria's laws formed the basis of national unfair contract terms legislation, which came into force on 1 July 2010.

The Australian Consumer Law 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.

The following case studies show how the law was applied in Victoria.

Case Study

AAPT

We brought a case against mobile phone provider AAPT before the Victorian Civil and Administrative Tribunal (VCAT) in late 2004, claiming key terms in AAPT's mobile phone and pre-paid mobile phone contracts were unfair.

VCAT president Justice Stuart Morris agreed that many of the terms were unfair. These included terms that gave the company powers to:

unilaterally vary its contracts
suspend services while continuing to charge consumers
impose immediate termination conditions
change a supplier or its products or vary charges without notice.

In August 2006, Justice Morris dismissed our application for declarations, injunctions and orders on the basis that AAPT had changed its mobile phone contracts in May 2005 and applied the changes retrospectively.

The case was the first of its kind in Australia.

Case Study

World Swimming Championships 2007

We secured fairer ticket conditions for people attending the World Swimming Championships in Melbourne in early 2007.

Before our intervention, the conditions drafted by the Melbourne 2007 World Swimming Championship Corporation allowed it to reschedule a session or change a venue after tickets had been purchased.

Ticket holders were not entitled to a refund if the corporation changed a session time, date or venue. Only in the case of a venue change were consumers allowed to exchange their tickets.

The corporation could also make wholesale changes to the events included in a session after consumers had purchased tickets.

Attendance conditions stated that a consumer could only obtain a refund if:

the ticket was for a session which was cancelled and not rescheduled
the entire championships was cancelled
he/she was entitled to a refund ‘by operation of the law’.

Attendance conditions were changed as a result of our intervention. Consumers were able to obtain refunds if:

there was a change to a session date or venue
the start time of a session was changed by more than two hours from the time advertised when the ticket was purchased
after a session started, it was cancelled for reasons within the corporation’s control
there was a substantial change in the events included in a session.

A number of other changes were also made to the attendance conditions including the narrowing of terms which sought broad exclusions of liability.

Case Study

2006 Formula 1 Foster's Australian Grand Prix

We worked with the Australian Grand Prix Corporation (AGPC) to ensure ticket conditions to the Melbourne 2006 Grand Prix were fair.

Conditions were changed from previous years to ensure:

circumstances under which consumers could obtain refunds were more clearly expressed in the conditions of sale
previously broad exclusions of liability sought by AGPC and its associated entities were narrowed
application of the recreational services waiver was appropriate
terms which allowed AGPC to unilaterally vary significant aspects of the Grand Prix were removed, and
clearer expression of the conditions.

The AGPC worked with Consumer Affairs Victoria in a timely, positive and highly responsive manner at all times.

Case Study

FOXTEL

FOXTEL Digital agreed to amend the terms of its pay television subscription contracts after discussions with us.

We initiated discussions with FOXTEL after receiving more than 230 enquiries and 50 written complaints about the company during the period in which it rolled out its digital service.

A number of the complaints between March 2004 and March 2005 related to billing issues and existing customer contract terms and conditions.

FOXTEL agreed to ensure that its obligations:

to repair, maintain and replace faulty equipment was clearly explained in its contracts
relating to installation and removal of equipment were clear and fair.

FOXTEL implemented one set of revised terms on 1 January 2006. After further discussion with us, more changes were made, effective August 2006 and March 2007.