Standard form contracts are seen as a feature of efficient business practice. These contracts allow businesses operating beyond the confines of one state to make uniform offerings to vast number of consumers across different locations, whether these are different cities or countries.
Standard form contracts are cost effective and often offered on a take-it or leave-it basis. This is particularly the case when used online. This does not mean a business can simply include a term of their choice and impose it on a consumer, particularly if such a term is unfair or unusual (for example a term allowing the business to change the total price of your order after you have paid a deposit and confirmed an order, and not allowing you the consumer an opportunity to cancel your order).
Last week we discussed the source of regulation against unfair contract terms in standard form contracts. But what are standard form contracts? Does it include any contract used by an online business? Read on.
What is a Standard Form Contract?
The term ‘standard form contract’ does not have a statutory definition. However, there are mandatory factors a court must taking into account when determining if a contract is a standard form contract. These are:
- whether one of the parties has all or most of the bargaining power relating to the transaction;
- whether the contract was prepared by one party before any discussion relating to the transaction occurred between the parties;
- whether another party was, in effect, required either to accept or reject the terms of the contract in the form in which they were presented;
- whether another party was given an effective opportunity to negotiate the terms of the contract;
- whether the terms of the contract take into account the specific characteristics of another party or the particular transaction.
Standard form contracts are very common. Below are some examples of standard form contracts:
- Apple store terms and conditions.
- ASOS terms and conditions.
- eBay User Agreement.
- Jetstar conditions of carriage.
- Optus Standard Forms Agreement (for applicable service type, e.g. personal, mobile post paid service).
- Uber Terms of Service.
There is no reason to be alarmed if your business uses a standard form contract as not every contract of this type will contain an unfair contract term. However, they may which is generally why it is prudent to have your standard form contract drafted and reviewed by a lawyer. Further, think about the fees that you may levy (if any) against a customer for cancellation or change, whether you offer to customers a right to cancel in the event of any fee adjustments. You must also make sure a customer has access to the terms at the times of entering into the contract, otherwise you will risk the terms not applying to that transaction! Stay tuned next week as we discuss what is considered to be an unfair contract term.
There are legislative rules against unfair contract terms in standard form contracts. These are prescribed by the ACL. If you are a business using a Standard Form Contract, you should ensure that such a document protects your rights and limits your liability, but does not contravene rules against unfair contract terms. If you would like assistance with reviewing, amending or drafting a Standard Form Contract, or some advice generally, contract LegalVision on 1300 544 755.