Laws2111 Lecture12a 2011

Recent Case demonstrating contra proferentem: Campbell v Bank of Queensland Ltd [2011] QSC 122

  • Campbell signed a general indemnity form regulating all future fax/email withdrawals from his line of credit with the Bank. $35k with withdrawn via forged signatures, and the Bank attempted to rely on that general indemnity to avoid having to reimburse Campbell.
  • Argument over whether ‘signed in accordance with the Customer’s current authorities held by the Bank and in a form satisfactory to the Bank’ was sufficient to allow the bank to be protected if it was only APPARENTLY signed in accordance with the authorities to the degree that the bank was satisified that it was. However as Darlington was applied, this was interpreted contra proferentem against the bank to require it ACTUALLY be signed in accordance with the authorities (specifically Campbell or his sister) and exclude forgeries of any other party.

Unfair Contract Terms (ss 23-28)

  • section 64 ONLY prohibits the exclusion of the guarantees in the ACL – doesn’t prevent general exclusion of liability clauses
  • Big concern is consumers signing long standard form contracts without actually reading any of them – wanted some general protection from unfair terms
  • Aim: Protect consumers who have no bargaining power and can’t negotiate their own terms
  • Applies To: Standard Form Contracts only (but all contracts assumed to be standard form unless the corporation can rebut that presumption – probably requires more than allowing them to changed a few words)
  • Level of Protection: Sever/void the unfair term. What IS an unfair term is left to the courts discretion, but a ‘grey list’ of likely unfair terms is provided to assist.
  • Which Terms: Only the non-essential (cannot apply to the upfront price, or the subject matter of the contract (eg. the quantity, or the product itself))
  • Who is Protected: Only individuals (consumers and potentially sole traders)
  • Enforcement: By consumers, or possibly by regulators acting on consumers behalf (as opposed to the ACCC acting independently/proactively)
  • No express ‘good faith’ obligation

Australian Approach to Unfair Terms

1. Must be a standard form contract (question of fact - onus on business to prove it isn’t a standard form contract – if they succeed, term is not unfair)
2. There must be a significant imbalance in rights/obligations of the parties (onus on consumer to establish – if they fail, term is not unfair)
3. The term must be detrimental to the consumer (if relied upon – detriment need not have actually occurred, as long as it WOULD occur) (onus on consumer to establish – if they fail, term is not unfair)
4. Not ‘reasonably necessary’ to protect the legitimate interests of the business (onus on business to prove it IS necessary – if they succeed, term is not unfair)
5. Then factor in degree of transparency and contract as a whole, as well as comparing term to the indicative list to determine if it is actually unfair (not requirements, merely indicators)

Examples of Unfair Terms

(a) one party avoids or limits performance
(b) permit one party to terminate contract
(c) penalises one party (but not another party for breach or termination
(d) permits one party to vary terms
(e) permits one party to renew or not renew contract
(f) permits one party to vary the upfront price without the right of other to terminate;
(g) permits one party unilaterally to vary characteristics of goods/services/interest in land
(h) permits one party unilaterally to determine whether contract breached or to interpret meaning;
(i) limits one party’s vicarious liability for its agents;
(j) permits one party to assign contract to the detriment of other without consent
(k) limits one party’s right to sue another party;
(l) limits evidence one party can adduce
(m) imposes evidential burden on one party
(n) prescribed by regulations