A REVIEW into the contract terms of the warehouse agreements bulk handler GrainCorp and grain growers undertaken by the Australian Competition and Consumer Commission has led to the agribusiness making sweeping changes to the contracts.
This included an alteration to a clause whereby GrainCorp's liability to growers was limited to $100,000 even if the loss was caused by GrainCorp negligence, with the figure to rise to $200,000.
GrainCorp, although stopping short of admitting any of the terms contained in its Grain Warehousing Agreement were unfair, agreed to make 19 changes to the agreement to address the ACCC's concerns.
ACCC deputy chair Mick Keogh said the value of grain stored in warehousing by an individual grower could be substantially higher and that the ACCC considered that it was unfair to limit liability to this amount if the loss was caused by Graincorp's negligent acts or omissions.
"We believe the term which limited GrainCorp's liability created a significant imbalance between the rights and obligations of growers and GrainCorp," Mr Keogh said.
"It had the potential to cause significant financial detriment to growers without being reasonably necessary to protect GrainCorp's legitimate interests," he said.
Along with the increase in liability for losses, GrainCorp has also altered the clause so the limitation of liability does not apply for cases of gross negligence, fraud, criminal conduct or wilful misconduct by Graincorp.
A GrainCorp spokesperson said the company was working through the matter with the ACCC.
"The terms of our Grower Warehouse Agreement (GWA) are in line with industry practice and comply with the Australian Consumer Law," the spokesperson said.
"We review and update it every year and, as part of last year's review, we made some changes to address points raised by the ACCC," they said.
However, the spokesperson said GrainCorp felt some of the issues raised by the ACCC were due to incorrect understanding of the storage and handling system.
"We've been working closely with the ACCC to understand its concerns and to provide guidance regarding the grains industry, as we found many of its concerns were based on misconceptions of the industry's storage and handling practices," the spokesperson said.
Mr Keogh said the ACCC was delighted with GrainCorp's response.
"We welcome GrainCorp's agreement to amend some of its contract terms, particularly the limitation of liability term, because the agreed amendment will remove the potential exposure of growers to losses arising from gross negligence and wilful misconduct by Graincorp," he said.
Other issues raised and addressed in changes to the GWA included
- * Providing growers with sufficient time to make necessary arrangements should they not want to continue the arrangement into the new season
- * Removing limitations on GrainCorp's obligations to perform certain services GrainCorp was contracted to provide under the Grain Warehousing Agreement;
- * Removing terms that allowed GrainCorp to deny reasonable requests by growers to inspect grain stored with GrainCorp
- * Removing terms that provided GrainCorp with a broad discretion to vary the goods or services it provided to growers
- * Inserting terms requiring GrainCorp to act in good faith
"GrainCorp's amendments provide better protections for growers and increase the rights of small growers when dealing with a large company," Mr Keogh said.
"The ACCC's action should be a warning to businesses that they risk similar scrutiny if they include similar contract terms in their standard agreements with small businesses," Mr Keogh said.