Unfair Contracts Law must be Strengthened

It is essential the unfair contract terms law be strengthened, according to the National Road Transport Association (NatRoad).

“The transport industry is crying out for reform on the current practice of some customers expecting transport operators to accept substandard and unfair contracts, said Warren Clark NatRoad’s CEO.

“In the NatRoad submission lodged yesterday we have asked Treasury to recommend a strengthening of the law.  We will also be giving evidence to the Senate Rural and Regional Affairs and Transport References Committee on 16 March 2020 where we will outline some of the appalling contract practices in the industry.

“One of the key purposes of the Competition and Consumer Act is to ‘promote fair trading’.  It does this mainly by applying the Australian Consumer law (ACL) including the unfair contract terms (UCT) provisions in business-to- consumer and business-to- small business standard form contracts.   Whilst the UCT laws have been a big help in making transport contracts fairer the law is deficient.  It falls short of introducing a general prohibition against unfair conduct.

“NatRoad wants reform as soon as possible to prohibit unfair contract terms and introduce penalties for breaches of such a prohibition.

“This change would stop the practice of needing to go to court to challenge an unfair contract on each occasion that unfair terms are confronted. To be clear, under the current law, penalties cannot be imposed against a customer for including or relying on an unfair contract term in a small business contract.

“There are lots of poor contract practices and one that came across my desk today is where the transport operator has no rights to terminate the contract, but the customer can terminate a long-term contract simply ‘for convenience’. The customer only needs to give a short notice period to cancel even when the same contract requires the operator to heavily invest in new equipment designed to deliver the contract.

“Our fight against unfair practices is not confined to seeking a change in the Competition and Consumer Act.  We want a crackdown on unfair contract practices by road agencies – they must step up enforcement along the chain of responsibility.  Customers who create, for example, unrealistic time slot requirements should be prosecuted, especially where the contract says that missing a time slot means the operator doesn’t get paid but still must deliver the goods.

“Operators believe that they are targeted for prosecution because it is easier for the authorities to take action.  Prosecuting those up the chain will assist with changing this outlook and also appropriately focus on those who are riding roughshod in an intensely competitive industry.

“The mindset of some customers must change so that safety and fairness are advanced, and the law should be strengthened so that there is an incentive for customers to make changes to their contracts.  We hope the Government will introduce changes to the law as quickly as possible,” concluded Mr Clark.

The submission is attached and can be accessed online.

NatRoad’s submission to the Treasury is attached.