The Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Act 2015 (Cth) (the Act) comes into effect on 12 November 2016. The purpose of the Act is to protect small business and effectively extends existing unfair contract term protections which are available under the Australian Consumer Law and Australian Securities and Investments Act 2001 (Cth) to small businesses entering into standard form contracts. The new law will apply to any new contract entered into on or after 12 November 2016 as well as any renewal or variation of an existing contract which occurs on or about 12 November 2016.
The Australian Competition & Consumer Commission has conducted a review of terms in standard form contracts within a select number of industries including advertising, telecommunications, retail leasing, independent contracting, franchising, waste management and agriculture and produced a report which outlines terms which may be problematic under the Act.
The report has identified potentially problematic terms which are common across all industries such as:
- Terms that allow one part to change key aspects of a contract at any time.
- Terms that unreasonably limit the larger businesses liability to the smaller business.
- Unreasonable termination clauses.
While the report is only a guide to what terms might be considered unfair and it will be the Courts that ultimately decide what is unfair, the Report seeks to assist those in small business by identifying potential unfair terms and providing examples and suggestions as to how those terms might be amended so as to not contravene the Act.
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