1 /5 Sarah Halliday: If a business rigidly denies refunds or credits in cases of illness — even when supported by a valid medical certificate — such conduct may breach the obligation of good faith in contractual performance, as articulated by the Federal Court of Australia in Paciocco v Australia and New Zealand Banking Group Limited [2015] FCAFC 50. In that decision, the Court held that contractual parties must act honestly and with fidelity to the bargain, must not undermine the substance of the agreement, and must act reasonably and fairly, taking into account the interests of both parties and the contract’s objectives.
Applying a blanket “no exceptions” policy where a customer is unable to attend due to verified medical reasons — circumstances entirely beyond their control — may also amount to unconscionable conduct under Sections 20 and 21 of the Australian Consumer Law (ACL). Additionally, such a policy may constitute an unfair contract term within the meaning of Sections 23 and 24 of the ACL, especially where it causes a significant imbalance in rights and obligations, is not reasonably necessary to protect the business’s legitimate interests, and results in consumer detriment.
A reasonable consumer would expect that a service provider — particularly one operating in a health or fitness context — would apply its policies with basic fairness and flexibility where illness is involved and substantiated.
Policies that fail to reasonably accommodate medical absence, particularly when supported by a doctor’s certificate, should be reviewed in light of these consumer protections. I am currently assessing whether this business’s approach may contravene the ACL’s provisions relating to unfair contract terms, unconscionable conduct, and the duty to act in good faith