Unfair Contract Terms Fairly Dealt With
Continuing our commitment to advising and guiding those involved in the franchise industry, MST Lawyers has prepared articles about the introduction of unfair contract terms law for small business. This piece reports on the latest case judgment. Australian Competition and Consumer Commission (ACCC) v Servcorp Limited  FCA 1044 (Servcorp) showcases that the enforcement and compliance of these new laws is a priority for the ACCC and further develops our understanding of what the courts are classifying as unfair contract terms.
Recently the Supreme Court of Victoria had to determine in Delahunt v Swim Loops Pty Ltd  VSC 269 whether the Franchisees should be granted an injunction to allow them to regain possession and operation of the business while proceedings were before the Court. The Franchisee argued that the Franchisor had terminated their Franchise Agreement in addition to being evicted from the franchise premises.
The Court granted the injunction allowing Mr and Mrs Delahunt back into the business to continue to operate it subject to a resolution of other issues.
When selling a business in Victoria for less than $450,000, a disclosure statement must be provided to the purchaser. In May 2018, the Victorian Parliament increased the threshold purchase price of a business from $350,000 to $450,000, below which a disclosure statement must be provided by the vendor. Commonly known as a “section 52 statement”, the disclosure statement contains a summary of the recent trading and financial performance of the business to be sold.
The recent decision of the NSW Court of Appeal in BB Australia Pty Ltd v Danset Pty Ltd  NSWCA 101 found that while there had been a clear breach of the franchise agreement, the franchisor had failed to show that they had incurred a loss or that a fiduciary duty had been breached, and thus, was unable to recoup damages. This finding demonstrates how the circumstances of a case can affect the remedies available for any breach.