Companies synonymous with the sharing economy, such as Uber and Airbnb, are being hailed (and strategically marketed) as a win-win for the average consumer by creating a more competitive market, resulting in a better service for a decreased price. Players like Uber and Airbnb have created a market where the average home or car owner can provide a service to users of the platform. It is inevitable that interactions between two parties will sometimes lead to a dispute. Whether the parties involved are the home/car owner and a client or the company operating the platform, they’re likely to encounter significant issues if they intend to resolve a dispute. Below, we set out what can lead to these problems.

International Companies and National Law 

A vast amount of innovation occurs in the US due to the existing culture, infrastructure and presence of innovators and investors. A number of tech startups that go global were first set up in the US and then looked to countries with low company tax rates so that they could continue to grow. The result? Ireland is now home to Guinness, leprechauns and Airbnb. Online service platforms don’t typically need a presence in every country they operate. Rather, their terms and conditions require users to agree that the laws of the country the business is incorporated in will govern their dispute. Although Uber and Airbnb may have some internal procedures to resolve small disputes, once an aggrieved individual has exhausted these options, they are left with only one option – pursuing their claim in Ireland.

Standard Term Contracts

I don’t know anyone that has actually read the Apple terms before updating their phone, and I suspect very few people read the full terms and conditions of their phone plan either (myself included). The reason why people don’t bother (besides laziness) is that failure to accept the terms means that you don’t get to use the service. 

For example, Mike Oze-Igiehon had his contract with Uber terminated after a passenger alleged he almost fell asleep twice while driving. Mr Oze-Igiehon has since commenced action against Uber for the termination of his contract and is seeking damages for lost income and interest accrued on a car loan a partner of Uber allegedly offered him. Uber’s defence to Mr Oze-Igihon’s claim is that they have the right to deactivate or restrict an Uber driver from accessing their app at any time – at their sole discretion.

Uber’s ability to exercise its sole discretion to amend its terms at any time is a seemingly prominent feature of the contract provided to its drivers. The Sydney Morning Herald’s recent review of an Uber Contract found that Uber has the right to change their ride fee, amend the terms of the agreement or deactivate a driver’s account at anytime they choose. Also, if you want to seek an alternative method of dispute resolution (i.e. other than going through the expensive process of court proceedings), you’ll need to travel to the Netherlands for arbitration. While these terms aren’t aren’t uncommon in legal agreements, they do highlight the power imbalance between the $60 Billion behemoth that is the Uber platform and its average driver.

There is some small relief for Uber drivers if the standard contract terms are deemed to be too unfair then they may have recourse in Australian courts, but again, this would be costly. Given Uber’s relative bargaining position, it appears only regulated by what it believes the market will accept regarding the fare charged, the standard of driver allowed and the bad publicity when the system doesn’t work.

Key Takeaways

There are certainly a huge number of benefits for consumers and service providers that have taken advantage of the disruption caused by sharing platforms such as Uber and Airbnb. But users and workers are likely to experience downsides as a byproduct of an outdated national approach to regulating international companies. If you’re considering using a service of this type, just remember it can be better, cheaper and more convenient – unless you find yourself in a dispute!

***

What do you think? Tag us on Twitter @legalvision_au and let us know or get in touch with LegalVision’s dispute resolution lawyers on 1300 544 755.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.
Thomas Richman

Get a Free Quote Now

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

  • We will be in touch shortly with a quote. By submitting this form, you agree to receive emails from LegalVision and can unsubscribe at any time. See our full Privacy Policy.
  • This field is for validation purposes and should be left unchanged.

Our Awards

  •  Top 20 Startups in Australia - 2018 LinkedIn Startups List Top 20 Startups in Australia - 2018 LinkedIn Startups List
  • NewLaw Firm of the Year – 2019 Australian Law Awards NewLaw Firm of the Year – 2019 Australian Law Awards
  • Law Firm of the Year Finalist – 2018 Australasian Law Awards Law Firm of the Year Finalist – 2018 Australasian Law Awards
  • AFR Fast 100 List – 2018 Australian Financial Review AFR Fast 100 List – 2018 Australian Financial Review
  • NewLaw Firm of the Year – 2017 Australian Law Awards NewLaw Firm of the Year – 2017 Australian Law Awards
  • Most Innovative Law Firm - 2019 Australasian Lawyer Most Innovative Law Firm - 2019 Australasian Lawyer

Privacy Policy Snapshot

We collect and store information about you. Let us explain why we do this.

What information do you collect?

We collect a range of data about you, including your contact details, legal issues and data on how you use our website.

How do you collect information?

We collect information over the phone, by email and through our website.

What do you do with this information?

We store and use your information to deliver you better legal services. This mostly involves communicating with you, marketing to you and occasionally sharing your information with our partners.

How do I contact you?

You can always see what data you’ve stored with us.

Questions, comments or complaints? Reach out on 1300 544 755 or email us at info@legalvision.com.au

View Privacy Policy