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I'm about to have an air conditioning system installed and the supplier has sent me the the invoice for the deposit, along with a contract which seems to me (as a lay person) to be incredibly severe, indemnifying the supplier in almost every conceivable way while giving them no responsibilities whatsoever except for those already enforced by Australian consumer law.

One of the sections is particularly unbelievable to me:

Security and Charge

14.1 In consideration of the Supplier agreeing to supply the Goods, the Client charges all of its rights, title and interest (whether joint or several) in any land, realty or other assets capable of being charged, owned by the Client either now or in the future, to secure the performance by the Client of its obligations under these terms and conditions (including, but not limited to, the payment of any money).

14.2 The Client indemnifies the Supplier from and against all the Supplier’s costs and disbursements including legal costs on a solicitor and own client basis incurred in exercising the Supplier’s rights under this clause.

14.3 The Client irrevocably appoints the Supplier and each director of the Supplier as the Client’s true and lawful attorney/s to perform all necessary acts to give effect to the provisions of this clause 14 including, but not limited to, signing any document on the Client’s behalf.

I have googled some of the text and it appears to be pretty common.

I don't completely understand the use of the word "charge" here, but am I correct in interpreting this to mean that the supplier can claim my assets if I fail to fulfill my responsibilities, and that if I have a dispute with them, I can't have my own legal representation because I've agreed that the supplier will be my attorney, and that - most egregiously - the supplier can write whatever they want and then sign it on my behalf?

I mean, is it even legal (in Australia or elsewhere) to make such an absurd contract? It seems like they may as well have said "you agree that we automatically win any dispute you have with us".

  • Back in the 90s, in the US, I read conditions on a mail-order computer operation that, as far as I could tell, meant that they had to ship something, but it didn't have to be a computer, let alone the desired one. – David Thornley Nov 26 '18 at 17:31
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This contract is unlawful and unenforceable in Australia

Further, by offering it as though it was an enforceable contract the supplier has engaged in deceptive and misleading conduct and exposed themselves of fines of up to 1 million AUD per offence.

The relevant legislation is the Australian Consumer Law - it eliminates unfair contract terms in standard form consumer and small business contracts for the sale of goods and services or for an interest in land. The law is "mirror" legislation in that it is enacted by each state and territory and the Commonwealth and is identical except for administrative matters (e.g. who the regulator is). It doesn't apply to financial and insurance contracts, however, the legislation that governs those contains essentially the same provisions.

For these to apply, the contract must be prepared by the business, contain generic terms, is not negotiated and is presented on a 'take it or leave it' basis. When dealing with say, a telco, these are the normal sorts of contracts. However, when dealing with an air conditioner you probably have scope to negotiate - take out a pen, cross out the terms you don't like, add terms you feel need to be there and give it back. they can accept your counter-offer or make a counter-offer of their own. If they refuse to negotiate then they are breaking the law.

  • Is there any legal analysis of the intuition that the section is "unfair", or is this just decided on a subjective basis? – user6726 Nov 27 '18 at 2:25
  • You buy an air conditioner and they can sell your home to get their money? There isn't a judge in the land that would consider that "fair" - in fact, its probably unconscionable. – Dale M Nov 27 '18 at 2:27
  • So it's based on feeling, rather that specific elements of the law. – user6726 Nov 27 '18 at 2:29
  • @user6726 No, its based on judgement and experience. Also, did you read what constitutes unfair terms in the link? – Dale M Nov 27 '18 at 2:31
  • @DaleM What you are missing is that, at that point, it would not only be the cost of an "air conditioner", but also "legal costs" (clause 14.2), which may or may not include [hefty] attorney fees. Apropos of the website you cite (which is not even legislation), either you skipped the section "Are there contract terms excluded from the laws?" or you make the unsupported assumptions that the supplier's contract (i) does not describe the service at issue, and (ii) does not "set the upfront price payable under the contract". – Iñaki Viggers Nov 27 '18 at 11:37
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Trade - are they really allowed to be so biased toward the supplier?

is it even legal (in Australia or elsewhere) to make such an absurd contract?

Yes, whence it is important to be judicious as to whether or not sign it. Without (me) knowing the specifics of Australian law, two parties are generally allowed to enter a biased contract. At that point, the contract becomes binding.

Legislative provisions might render a contract unenforceable. But these provisions are enacted only for very specific areas such as landlord-tenant or medical matters, whereas that is unlikely the case in less essential business such as trades.

By consenting to that clause, you might be making it more tempting for the supplier to arbitrarily increase your bills or to deliver something below the work you two agreed upon. Contract law is always premised on the covenant of good faith and fair dealing, and therefore you might ultimately prevail if the supplier incurs abuse. However, chances are that it will require you to engage in judicial proceedings, and you might not even recover the totality of your litigation costs.

The supplier's proposition of acting as your "true and lawful attorney" is a non sequitur if the supplier['s company] lacks of credentials to practice law. I would be surprised if that language in trades' contracts is as common as you mention. Furthermore, that proposition is flawed from the standpoint of the supplier's obvious conflict of interest should a dispute arise between you two.

Save yourself that much trouble and get another supplier whose conditions are more equitable.

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    When you appoint someone as your "true and lawful attorney" you are not engaging them for legal advice or the practice of law, you are granting a power of attorney, that is, you are permitting them to take binding action in your name and on your behalf. It was once common for a loan or other credit agreement to appoint the creditor as the debtor's attorney so that the creditor could take action to pay the debt on the debtor's behalf. Many US states now prohibit this because of the potential for abuse. I have no idea about any other country. – David Siegel Nov 26 '18 at 19:14
  • @DavidSiegel Thanks for clarifying. In that case, the OP would need to find out whether Australian law requires that clause to be notarized (as in various jurisdictions) for that granting to be enforceable. – Iñaki Viggers Nov 26 '18 at 19:49
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    Thanks, I was afraid this was the case. So I can either sign a ridiculous contract, or find another supplier (who may use the exact same contact). Unfortunately the supplier options I have aren't great. I don't expect this clause ever to be invoked since I have no risk of failing to pay, but I still don't like it. – Igby Largeman Nov 26 '18 at 21:36
  • This answer is wrong - Australian Consumer Law prohibits unfair consumer and small business contracts like this. – Dale M Nov 27 '18 at 2:06
  • @DaleM In the 2nd website you cite in your answer, the statement that "Contracts can still include these [unfair] terms, as they are not banned [...]" (brackets added) contradicts your blanket assertion. Moreover, the 2nd sentence in my answer is an explicit disclaimer that I am not knowledgeable about Australian law, and then I explain the general character of contracts (whether biased or unbiased). Thus, it is not that my answer is wrong; it's just that you do not read carefully and have the need to disqualify others' answers as you make unsupported/imaginative/sloppy assumptions. – Iñaki Viggers Nov 27 '18 at 11:33

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