With the rise of social media and product review websites, many businesses might be the subject of online comments, good and bad reviews. It is something businesses must contend with and manage effectively in the course of their business operations.

In a recent investigation, the Australian Competition and Consumer Commission (ACCC) stated that consumers are increasingly relying on online reviews when making purchase decisions and businesses must not prevent consumers from seeing genuine, relevant and lawful reviews by their customers through standardised contract terms. According to ACCC, standard form contracts that include a term which prevents consumers from making negative public comment online about goods and services is considered unfair and would be unenforceable. This type of contract term is known as a non-disparagement clause.

There are several factors to consider when deciding whether a contract term is potentially unfair. The fairness of a term must be considered in the context of the contract as a whole. The following questions may help you recognise a potentially unfair contract term:

  • Does the term cause a significant imbalance between your parties’ rights and obligations under the contract?
  • Is the term reasonably necessary to protect the legitimate interests of the business as against the consumer’s rights?
  • How transparent is the term?

The final decision on whether a term is unfair can only be made by a court although the ACCC is seeking enforceable undertakings to remove and amend contract terms that are considered unfair under the Australian Consumer Law such as those that prevent or limit a customer from making public comments about goods and services.

 

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