Unfair contract terms: TCP Code raises, and lowers, the stakes

The TCP Code and the Australian Consumer Law both deal with unfair contract terms in standard form consumer contracts. In one way, the Code raises the stakes for telcos that include unfair terms in their standard contracts. But in other ways, it creates loopholes.

How the ACL deals with unfair terms

The ACL doesn't directly ban unfair terms. Instead of a direct ban, it discourages them in two ways: First, it makes them void. Second, if a court rules a particular term to be unfair, a trader that attempts to enforce it can be restrained by a court and/or ordered to compensate a customer that is affected. But it doesn't say, 'Traders must not include unfair terms in their contracts.'

The TCP Code does say that

Clause 4.5.3 of the Code is a direct ban on unfair terms SFOAs with non-business customers:

Unfair Terms: A Supplier will not include terms which would be Unfair in its Standard Form Customer Contracts under the law.

So the presence of unfair terms in an SFOA is a direct and immediate breach of the TCP Code, whether or not a court has declared a term to be unfair.

But the rule does not apply to all standard form telco contracts

This is probably (another) drafting mistake in the TCP Code, but clause 4.5.3 only applies to some standard form telco contracts, and not to others.

'Standard Form Customer Contract' is defined as an SFOA under the Telco Act. So any telco that doesn't use an SFOA is not covered by the 'no unfair terms' rule in the Code. It's hard to discern any logical reason for that, and we assume that the author simply didn't appreciate the effect of what they were writing. While most customers are covered by an SFOA, many are not.

And the rule doesn't apply to B2B contracts

The 2007 version of the TCP Code also contained an anti-unfair terms rule, that applied to residential and small business telco customers. As we explained in another article, the 2012 Code update (possibly accidentally) deleted the protection for small business, so that only non-business customers who are contracted under SFOAs have unfair contract terms protection under the 2012 TCP Code.


About Peter Moon

A telco lawyer with a truckload of experience
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