In Australia, many people worry about overbearing terms, especially with powerful rivals such as big public companies. Today, let's take a look at the Federal Court's ruling on July 17, 2018, imposing a fine of one hundred and fifty thousand Australian dollars on the overlord clause in the Servcorp contract.
What is the overlord clause?
The overlord clause is an unfair clause, or unbalanced clause, that violates Australia's Consumer Protection Act and contract Law. Section 23 of the Australian Consumer Protection Act states that these provisions shall not enter into force if there are provisions in contract law that are unfair; section 24 of the same law explains in detail the legal definition of injustice, and article 25 illustrates which provisions are considered unfair.
About Servcorp
Servcorp, a giant multinational company founded in 1978 and listed on the Australian stock market ASX in 1999, now operates office leasing, virtual offices and IT services in 23 countries, 54 cities, more than 160 regions.
Case history
The Australian Competition and Consumer Protection Association, (ACCC), sued Servcorp in 2017, alleging that the contract between Servcorp Parramatta and Servcorp Melbourne, a subsidiary of Servcorp, contained 11 unbalanced terms, violating Australia's consumer protection law. The federal court examined the case in detail.
Section 23 of the Australian Consumer Protection Act provides that these provisions shall not enter into force if there are provisions in contract law that are unfair; section 24 of the same law explains in detail the legal definition of injustice, and article 25 provides examples of which provisions are deemed unfair. According to these provisions, the Federal Court examined the fairness of these provisions in the Servcorp contract on an article-by-article basis.
Clause 4 of the Servcorp contract is an automatic renewal clause. If the customer fails to notify Servcorp of the termination of the lease within the prescribed time, the contract is automatically renewed (most of the lease is twelve months), according to the original terms of time. In addition, Servcorp has no obligation to notify customers that the expiration of the time will be automatically renewed; Servcorp shall be free to increase the rent at will and the customer shall not object to the renewal. The court found that this could cause some customers who inadvertently missed notice of the termination of the contract to be locked into the contract again, causing significant losses. The court ruled that the provision seriously undermined the reciprocity of rights and obligations between the parties.
Article 5 of the terms of the Servcorp contract requires that the customer shall be insured against everything in the rental, and that Servcorp shall not be liable for any loss, theft or destruction of anything in the house, in any event; On the contrary, Servcorp also has the right to sue its clients (for example, what was originally found in the house: lost, stolen, or damaged, such as lamps, office appliances, etc.). This article is a typical example of article 25, subparagraph K, of the Consumer Protection Act, in which one party does not pay any liability at all, regardless of the circumstances, and the responsibility rests with the other. The court held that the article also seriously undermined the reciprocity of rights and obligations between the two sides. If Servcorp relies on this to sue the customer, then the customer may suffer a serious loss.
Article 9 of the terms of the Servcorp contract provides that Servcorp is free to prescribe the price at which the Services are to be provided. This article gives Servcorp free pricing on a unilateral basis and does not require any notice from the customer, nor does it require Servcorp to price fairly or negotiate with the customer prior to pricing. Once again, the court held that this seriously undermined the reciprocity of rights and obligations between the two parties.
The court examined each of the problematic clauses of the Servcorp contract in detail and concluded that:
- These provisions seriously result in unequal rights and obligations between the two parties; and
- These provisions are not intended to protect the legitimate rights and interests of Servcorp; and
- These terms, if enforced by the Servcorp, will cause serious economic or non-economic losses to the customer.
Finally, the court ruled that Servcorp's contract contained unfair terms, fined Servcorp one hundred and fifty thousand Australian dollars and asked Servcorp to set up training programs at its own expense to popularize the Australian Consumer Protection Act for all employees.
[逻]conclusion
In China, many consumers or small and medium-sized businesses have been bullied by large businesses under the pretext of "the terms of the contract". They can only beat their teeth and swallow their blood into their stomachs, so as to admit their misfortune. In Australia, however, consumer protection and contract law have detailed provisions on overlord clauses to avoid a similar situation.
If you think you are experiencing something similar to the above case, you need legal advice by calling 61 2 8084 8341 and booking time to the Weber law firm's office in downtown Sydney at Level 6, 1 Castlereagh St, Sydney 2000. Talk to the lawyer in detail. For the first time, the first half hour is free.
Disclaimer: this article is written by WB Legal attorneys, copyright and all rights reserved by WB Legal Group Weibo Group. This article is not a legal opinion; the firm and its lawyers are not liable for any loss caused by reliance on the content of this article. Please contact the law firm for formal legal advice.
