In November 2015 the Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill (“the Bill”) was passed by the Federal Government. The new law amends the Australian Securities and Investments Commission Act 2001 and the Competition and Consumer Act 2010 to provide greater protection against unfair contract terms for small businesses.
The new law will apply to standard form contracts which are entered into or renewed after 12 November 2016, where the contract is for:
- the supply of goods or services or the sale or grant of an interest in land;
- one of the parties is a small business; and
- the upfront price under the contract is $300,000 or less (or $1 million is the contract is over 12 months).
The definition of small business for the purpose of the Bill is a business which employs less than 20 people).
What is an unfair contract term?
Terms of Contract which may be considered unfair include (although are not limited to):
- terms where only one party is able to vary the terms of the contract;
- terms where only one party is able to sue the other party;
- terms where one party is limited in the evidence it can adduce in legal proceedings;
- only one party has a right to terminate the Contract.
If a Contract term is found to be unfair then the term will be considered void at law, and the contract will continue as if the term were not included.
If you are a small business and think you may be affected by unfair contract terms, or if you are looking at negotiating a contract with another business and would like advice regarding unfair contract terms get in contact with us on (07) 5444 1022 or email allyson@gpla.com.au.