12 November 2016

Small business unfair contract protections enshrined in law

NEW unfair contract term protections for small business commence today, giving small businesses across Australia access to the same protections available to consumers under the Australian Consumer Law, Federal Small Business Minister Michael McCormack has announced.

"The extension of the unfair contract term protections provides a 'fair go' for small businesses, giving them extra protection when contending with 'take it or leave it' contracts. The changes ensure small businesses have access to a level playing field to compete, invest and grow,” Mr McCormack said.

It is estimated Australia's more than 2.1 million small businesses enter into an average of eight standard contracts each year.

"Under the new law, a small business will be able to have an unfair term in a standard form contract declared void by a Court if, at the time of agreeing to the contract, it had fewer than 20 employees and the contract did not exceed $300,000 (or $1 million for contracts longer than twelve months).

"A standard form contract is one which has been prepared by one party to the contract and where the other party has little or no opportunity to negotiate the terms.”

Minister McCormack also praised the extension of the protections, which deliver a key election commitment of the Turnbull Government.

"The new protections will ensure small businesses get a fair deal when entering into standard form contracts with larger businesses. For a long time small businesses entering into contracts with larger businesses have had no choice but to accept all the terms of a standard form contract that they are given – and that changes today,” Mr McCormack said.

"During the past twelve months, the Australian Competition and Consumer Commission has worked closely with businesses to help them comply with the new law, and the Government is pleased that many large businesses have reviewed their standard form contracts ahead of the changes commencing.

"The changes are a key part of the Federal Government's strategy to ensure Australia is the best place to start and grow a business.

For more information, visit the ACCC website.