Following on from our blog earlier this year, we can report that ByteCard Pty Limited (Bytecard) has been well and truly bitten!

Late last week, the Federal Court declared, by consent, that a number of clauses in ByteCard’s standard form contracts are unfair and therefore void. The declaration voids only the unfair clauses, and not the whole contract, under Part 2.3 of the Australian Consumer Law (ACL).

This was the first time the ACCC has taken action against a company based solely on the new unfair contract terms provisions of the ACL. In this case, the terms were considered unfair as they:

  • created a significant imbalance in the parties’ rights and obligations;
  • were not reasonably necessary to protect ByteCard’s legitimate interests; and
  • if applied or relied upon by ByteCard, would case detriment to a customer.

For its transgressions, the court also ordered ByteCard to pay $10,000 towards the ACCC’s legal costs. Contraventions of Part 2.3 of the ACL are not subject to pecuniary penalties. Although the ACCC did not seek compensatory orders on behalf of the consumers under section 239 of the ACL for any loss or damage caused by the unfair terms, consumers may take their own action to seek damages under section 237 of the ACL.

Rod Sims, Chairman of the ACCC, said that “[t]his is a positive outcome for consumers and acts as a warning to businesses. The ACCC won’t hesitate to take action against businesses who continue to include unfair terms on their standard form consumer contracts”.