Planning a holiday? Bachcare T&Cs declared unfair

In this article, we discuss the High Court’s recent ruling that certain terms in Bachcare’s terms and conditions are unfair - a decision that marks a rare example of the Commerce Commission (the Commission) applying for and obtaining declarations under the Fair Trading Act (FTA) for unfair contract terms.

The FTA prohibits parties from enforcing terms in consumer and small business contracts, where the courts have declared the terms to be unfair.

For a contract term to be declared to be unfair, it must be a term in a standard form consumer contract, or a standard form trade contract. Standard form contracts are usually pre-prepared by one party, offered on a “take it or leave it” basis, with limited (if any) scope for negotiation, and are generic rather than individualised for the counterparty. Common examples of standard form contracts are phone plans, gym memberships and terms and conditions for hotels/accommodation providers. Put simply, for standard form small trade contracts to qualify, the trading relationship must not exceed $250,000 (including GST, if any) annually, or $1 million where the contract relates to supply of grocery products to one of the regulated grocery retailers (Foodstuffs and Woolworths).

There is no outright prohibition on including contractual terms on the basis that they are unfair. Instead, the Commerce Commission brings proceedings on behalf of affected parties seeking a declaration that the terms are unfair and therefore unenforceable.

Once proceedings are brought, the courts will make a factual assessment of the current and potential future impact of the relevant contractual term, and can only declare it to be unfair where the term:

would cause a significant imbalance in the parties’ rights and obligations arising under the contract;
is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; and
would cause detriment (whether financial or otherwise) to a party if it were applied, enforced, or relied on.

In addition to the above three-limb test, when assessing a term’s fairness the courts may also take into account any matters it thinks relevant, but must take into account:

the extent to which the term is transparent; and
the contract as a whole.

Section 46M of the FTA provides some examples of terms that may be considered unfair, such as:

a term permitting one party (but not another party) to terminate, vary, assign or renew the contract;
a term that permits, or has the effect of permitting, one party (but not another party) to vary the terms of the contract; and
a term that permits, or has the effect of permitting, one party (but not another party) to avoid or limit performance of the contract.

It is important to note that contract terms that relate to the upfront price payable under the contract (ie the purchase price of a product) cannot be declared to be unfair. Likewise, terms that define the subject matter of the contract or are required or expressly permitted by any other statute are also excluded from being declared unfair.

Bachcare

Bachcare is a digital platform that facilitates short term accommodation booking, typically for holiday homes - similar to companies such as AirBnB and Booking.com. It does not provide the accommodation services itself. Instead, it operates a platform that allows providers to pay Bachcare a membership fee in exchange for listing their properties on its website, which customers can then book through the platform. When booking accommodation, customers are obliged to accept Bachcare’s standard terms and conditions.

The Commission’s decision to file proceedings against Bachcare in 2023 followed an investigation into Bachcare’s terms and conditions, which was prompted by a number of customer complaints to the Commission.

The disputed terms and conditions were active between October 2019 and April 2025, and mainly concerned customers’ rights regarding cancellations and property unavailability. Under these terms, customers were often unable to recoup material refunds (or in some cases, any refunds) if their booking was cancelled, even if the cancellation was by Bachcare or the accommodation provider. This extended to cases where Bachcare’s terms and conditions prevented customers from cancelling and obtaining refunds for bookings during Cyclone Hale and Cyclone Gabrielle in early 2023, when travel to certain locations was unsafe or impossible. Compounding the issue, the cancellation policy was not referred to on any of the pages customers would navigate through on Bachcare’s website before confirming and paying for their booking.

In assessing the terms under the FTA, the High Court identified five overarching themes which it considered established a significant imbalance, being:

insufficient distinction between early and late cancellations;
creation of a potential windfall for Bachcare and the property owner if a property was rebooked following cancellation;
limited/no refund rights for no-fault cancellations (ie the Cyclones identified above);
exclusion of any liability for Bachcare and the property owner for consequential loss following cancellation by Bachcare or the property owner; and
lack of transparency regarding the location and wording of relevant terms.

Regarding the other two limbs of the unfair contract terms assessment, the High Court was satisfied that the terms were not reasonably necessary to protect Bachcare and the property owners’ legitimate interests, and there was clearly detriment to customers through financial loss via lost deposits and inability to obtain refunds.

In April 2025, the Commission and Bachcare agreed to resolve the proceedings, with Bachcare admitting the relevant terms and conditions were unfair for the purposes of the FTA. The hearing took place in June, with a results judgment published shortly after, and the full reasons released this week.

Bachcare has now removed the relevant terms and conditions from its contracts, and has agreed that any future bookings which remain subject to the previous terms will now be subject to their amended terms and conditions.

Reflections

The Bachcare decision marks only the third time that the Commission has pursued declarations regarding unfair contract terms in court - with the other cases brought against ACE Marketing and Home Direct, each a mobile trader of consumer goods on credit, in 2021 and 2019 respectively. Apart from these cases, the Commission has otherwise taken a lower level of enforcement action to date in this space, as seen in its recent investigation into Vector’s standard form contracts where a compliance advice letter was provided.

That said, the Bachcare case also signals the Commission’s ongoing commitment to regulation of digital platforms - an area in which competition and consumer law enforcement is becoming increasingly relevant and necessary. We expect the Commission will continue to closely monitor digital platforms’ conduct to ensure compliance with the relevant laws.