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ACCC issues proceedings against Europcar for alleged unfair contract terms

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The Australian Competition and Consumer Commission (“ACCC”) has issued proceedings in the Federal Court against Europcar Australia for alleged unfair contract terms contained in its rental agreements which it claims should be declared void.

Unfair contract terms have been a focus of the ACCC in 2014.  An unfair contract term is a term that: 

  • causes a “significant imbalance” in the rights and obligations of the parties to a contract;
  • is not required to legitimately protect the interests of the party which is advantaged by the term;
  • if relied upon would cause detriment to a party.

Where a term of a contract is deemed unfair it can be rendered void.  The balance of the contract often survives.

The allegedly unfair terms in the Europcar case relate to a “Damage Liability Fee” which was payable if the rental vehicle was damaged or stolen.  The other allegedly unfair term made the customer liable if they breached the rental contract and the rental vehicle was damaged or stolen.

Standard form contracts are common place.  However, the stance taken by the ACCC makes it clear that it will take action to void terms where they are grossly unfair to a party.  It is therefore essential that legal advice is obtained when drafting contracts or where a dispute arises and it is alleged the contract is unfair.

The Coalition Government is currently considering, and is likely to approve, an extension of the unfair contract terms provisions to business to business transactions – at the moment these provisions only apply to business to consumer contracts.

For more information about contact terms or any other issues in regards to disputes, please contact our Dispute Resolution & Litigation team by email litigation@mst.com.au or by telephone +61 8540 0200.