A Sydney dwelling builder has been criticised for an “unfair” contract clause that threatened authorized motion if clients publicly complained.
This week, Australian Competition and Consumer Commission deputy chair Mick Keogh stated residential dwelling builder Fowler Homes had agreed to stop gagging clients from publishing damaging suggestions.
The clause additionally required clients to compensate Fowler Homes towards any losses suffered from implementing these phrases.
In a authorized enterprise to the competitors watchdog, the family-owned builder pledged to write down to shoppers of about 434 contracts entered into since July 2019 to tell them that the clause wouldn’t be enforced.
The Sydney builder had a non-disparagement clause in its customary contract that prohibited sharing any suggestions with out prior permission.
The ACCC stated this brought about a “significant imbalance” within the events’ rights and obligations.
Agreeing to take away the clause from future contracts, Fowler managing director Frank Gruippaudo stated the corporate had undertaken a proper contract assessment and amended the clause so it didn’t “restrict clients’ rights to openly discuss services”.
Mr Keough stated the corporate ought to have recognized higher after the watchdog took motion towards different builders for comparable contract clauses.
“We are disappointed Fowler Homes continued to use unfair non-disparagement clauses … when the ACCC’s actions against other building companies for similar clauses should have been well known and understood within the industry,” he stated.
He warned companies they’d lower than a yr to assessment their contracts earlier than new laws that included penalties for unfair phrases comes into impact.
“From 10 November 2023, businesses may face penalties if they use unfair contract terms in certain standard form contracts,” he stated.
The Competition and Consumer Act was amended in October to incorporate penalties for unfair contract phrases.
Previously, Australian courts might void unfair components of contracts; nevertheless, there was no authorized provisions to penalise firms.
“The unfair contract terms laws are vital to protect consumers and small businesses against terms in these contracts that take advantage of this imbalance in bargaining power,” ACCC chair Gina Cass-Gottlieb stated when the laws handed.
