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 our startup lawyers on 1300 544 755.

Thomas Richman

Next Steps

If you would like further information on any of the topics mentioned in this article, please get in touch using the form on this page.