Phone Contracts to be Revamped

By: Minter Ellison

Provided by World Services Group


Phone Contracts to be Revamped

   Published June 28, 2005 - Australia

A new telecommunications industry code will result in the review of contracts used by telecommunications service providers for the supply of telecommunications services to consumers and small business.

Service providers have until early November to comply with the new Code. The Code's intention is to:

-identify and prohibit the use of ‘unfair’ terms in contracts; and
-ensure contracts are presented in ‘plain English’.

A failure to comply with the Code may result in a compliance direction from the ACA or fines of up to A$250,000.

Application of the Code
The Code applies to contracts entered into with:

-consumers who acquire those goods and services for personal or domestic use; and
-businesses and non-profit organisations who:
(a) do not have a genuine and reasonable opportunity to negotiate the terms of a contract with a carriage service provider; and
(b) have an estimated annual spend with the service provider of less than A$20,000.

What are ‘unfair terms’?
The general rule in the Code is that a term in a consumer contract will be regarded as ‘unfair’ if it causes a ‘significant imbalance’ in the respective rights and obligations of the parties, to the ‘detriment of the consumer’. There are also specifically identified terms that are considered to be ‘unfair’.

‘Plain English’ requirements
Following the introduction of the Code, contracts will need to:

-use words in their plain and ordinary meaning
-avoid complex or technical terms as far as reasonably practicable
-avoid clauses or paragraphs that are excessive in length
-bring important terms to the consumer’s attention in a reasonable way
-be organised in a clear and logical manner with subject headings and, where necessary, include an index or table of contents for ease of reference
-avoid excessive cross-referencing or the incorporation of terms from other documents that are not provided with the contract.

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