Builder amends unfair contracts

Local builder 101 Residential has amended its standard home building contract in response to the consumer watchdog’s concerns that it contained unfair terms and made false or misleading representations.

101 Residential is part of the Scott Park Group, which includes residential building and other home building trade businesses in Western Australia, including the Redink Homes and B1 Homes brands.

The Australian Competition and Consumer Commission found non-disparagement clauses contained in 101 Residential’s building contract between October 2014 and August this year allowed the business to prohibit customers from publishing any unapproved information about the company, including online reviews.

The non-disparagement clauses also permitted 101 Residential to remove any published information, suspend work on the customer’s construction site and ultimately terminate a customer’s building contract.

101 Residential has accepted that the non-disparagement clauses may be unfair and has cooperated in providing the ACCC with a court enforceable undertaking.

This undertaking provides that the company will not enforce non-disparagement clauses in existing building contracts and will not use them in any future contracts, must publish a corrective notice on its website and issue a corrective consumer letter to all affected clients.

Refunds will be provided to customers who lost their deposits when deciding not to proceed with 101 Residential due to the non-disparagement clauses.

The company will also need to establish and implement a program.  

ACCC deputy chair Michael Schaper said this case would serve as a warning to all businesses to review their standard form contracts to ensure they did not contain unfair terms.

“Online reviews help people make informed purchasing decisions,” Dr Schaper said.

“Consumers should be free to have their say about their experience with a business and must not face penalties for doing so.”

Last month another Perth-based home builder Aveling Homes was ordered by the federal court to pay $380,000 in response to the ACCC’s claims that it had manipulated its online reviews.