Unfair Contract Terms – Privacy Act Amendments – Website Terms of Use

25 September 2024

Author: Rod Lindquist - Our People

Many businesses are placing themselves at serious legal and consequential financial risk by failing to properly review these aspects of their day to day business.

The days of setting and forgetting have ceased in these areas.

Unfair Contract Terms

From 9 November 2023 key changes commenced with respect to unfair contract terms (UCT) pursuant to:

• the ASIC Act which regulates financial products and services; and
• the Australian Consumer Law (ACL) regulating UCTs for the supply of all other goods and services.

It applies a broader definition of Standard Term Contracts, entered into from that date, or earlier contracts, varied from that date.

As a general rule, the UCT law applies to a term in a contract if the contract is:

• a consumer contract;
• a 'standard form contract', and
• for a financial product or service.

Financial products & services are capped at A$5M. ACL contracts are not capped.

If a Court finds that a contract breaches the UCT laws it has the power to:

• declare a contract void, or
• vary the contract, or
• refuse to enforce certain provisions of the contract.

In addition, a Court may award compensation to a person who has suffered loss due to the effect of a UCT.

Civil penalties for breach of the UCT regime have been introduced. The maximum penalties under the ACL are;

• For Individuals – A$2.5M
• For Corporations, the greater of A$50M, or 3 times the value of any benefit, or if the value is indeterminate, 30% of the annual turnover.

These are serious consequences, that are simple to de-risk by seeking legal advice.

Privacy Policy

Following the passage of the Privacy Legislation Amendment (Enforcement and Other Measures) Act 2022, the Australian Government is set to table a draft privacy amendment Bill, part of the second tranche of privacy reforms in Australia, this month. Reforms will be introduced to bring our privacy laws into the digital age and closer to global benchmarks, such as the EU Privacy regime.

Accordingly, if you do not have a Privacy Policy you need to move on it now.

For those that have a Privacy Policy in place we suggest you need to carry out a whole of business privacy review and consider these steps:

• Set up fit for purpose governance frameworks and controls.
• Understand the current state of your privacy compliance regime.
• Embed privacy compliance throughout your organisation.
• Ensure a method of compliance of individuals rights to their personal information.
• Become familiar with and adopt the 2023-2030 Australian Cyber Strategy.

It is essential for all organisations to commence on this task now as it will be a likely deluge of work to complete effectively.

Penalties of up to A$50M can be incurred by your business for a serious or repeated interference of the privacy of an individual. Prior to December 2022 these Penalties were capped at A$2.2M, which highlights how seriously privacy issues are now being dealt with.

Website Terms of Use

Every website contains potential risk for its owner combined with duties to its potential users.

An attitude of set and forget will likely lead to issues which could have been avoided by regular review.

Your terms of use are a means to explain the purpose and nature of your website. You can set rules for your website informing users what they are and are not allowed to do. It is a method of limiting your liability and for protecting your intellectual property. It is also a means of obtaining indemnification from users from misuse of breaches of third-party rights by the user. It is also an opportunity to set out a dispute resolution process.

Examples of key clauses are:

• Acceptance of terms of use by the user
• Acceptable use by the user
• Privacy policy in detail or a link to your Privacy Policy
• Jurisdiction definition and Governing Law
• License to use explanation.
• Rights and ownership of Intellectual Property
• Website modifications
• Termination of access
• Limitation of liability
• Disclaimers

Failure to have Website Terms of Use puts your business at risk of users misunderstanding the nature of content or interactive tools, omits protection of your Intellectual Property and leaves you open to potential liability to third parties by acts or omissions of your users.

Summary

These three topics are intrinsically linked, complex and essential to all businesses. They are also fundamental pillars of all businesses which must be addressed and reviewed upon a regular basis.

The Team at Aitken Partners can guide and assist you with these essential tasks.