ACCC: New law protects small business from unfair contract terms

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New law protects small business from unfair contract terms
17 November 2015

 

Has another business offered you a standard form contract? Or do you offer standard form contracts to other businesses? If so, you need to be aware of the new law that protects small businesses from unfair contract terms.

Many businesses offer standard form contracts on a ‘take it or leave it’ basis where there is little or no opportunity to negotiate the terms.

This new law will apply to standard form contracts entered into or renewed on or after 12 November 2016 where:

at least one of the businesses employs less than 20 people, and
the price of the contract is no more than $300 000, or $1 million if the contract is for more than 12 months.

The ACCC, Australian Securities and Investments Commission, and state and territory offices of fair trading will enforce this law, and if the court finds a term unfair, that particular term will be void and treated as if it never existed.

Examples of terms that may be unfair are ones that:
allow one business, but not the other, to change or cancel the contract, or to limit or avoid their obligations
penalise one business, but not the other, for breaching the contract.

So if you offer standard form contracts, start reviewing your terms and conditions to make sure you’re doing the right thing.

Or, if you’re a small business and you’ve been given a standard form contract which you think includes an unfair term, find out what your protections are under the new law.

For more information
Read our online guidance at www.accc.gov.au/uct
Watch our animated videos on the ACCC YouTube channel – one is about the rights of businesses that receive standard form contracts and the other is about the obligations of businesses that offer them.
Read our media release.
Call the ACCC small business helpline on 1300 302 021 if you have any queries.

 

Small Business team
Australian Competition and Consumer Commission (ACCC)

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