Terms and Conditions of Trade - are they really allowed to be so biased toward the supplier?

Question

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".

Answer 1

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.

Answer 2

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.