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Telcos in the gun under fair-trading proposals

Stephen Bell | April 23, 2013
Changes in contract law could see telcos and some computer suppliers forced to change the terms of their retail contracts

The ACCC's case studies include one criticising an online service that had a 49-page list of terms and conditions of use with the vital question of the account-holder's culpability for a third party's unauthorised use of the service buried in the middle. A judge held that it would be "quite irrational" for the provider to assume the customer had read and understood the relevant clause and that therefore the provision was ineffective.

On the question of unilateral contract variation "a particularly topical example for NZ, where uncapped data is provided, is the ability to cancel or suspend services for 'excessive or unusual use'," Wigley says. "Telstra had such a clause in its Australian contracts. As a result of ACCC's review, Telstra amended the clause to provide a definition of 'excessive or unusual use', and also provided greater transparency about when Telstra's rights would be exercised."

Where business-to-business contracts are concerned, the parties, at the supplier's instigation, often agree to contract out of the provisions of the Fair Trading Act. The criteria for deciding whether this was "reasonable" will be considerably tightened under the new legislation.

In particular, if the contract would have contravened FTA terms such as those prohibiting unsubstantiated claims about the service were it not for the contracting-out, the terms of the contract may still be held not to be "reasonable" in spite of the contracting out, the Select Committee reviewing the Reform Bill suggests.


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