ACCC taking tougher stance against unfair contract terms for small business

The Australian Competition and Consumer Commission, through its chairman Rod Sims, has expressed its intention to take a tougher stance against unfair contract terms that affect small businesses.

In a recent address to the National Press Club, Sims called on the Federal Government to make such contract terms between big and small businesses illegal and subject to harsh penalties.

And the Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, has thrown her support behind the Commission’s tougher stance.

“It’s hard to believe that in 2020 it is still not illegal for a big business to impose unfair contract terms on a small business,” Carnell said. “Small businesses has been waiting for changes to level the playing field for too long.

“In November 2016, Treasury legislation amendment (Small Business and Unfair Contract Terms) Act 2015 took effect, that legislation was reviewed in 2018 and here we are, another two years on and small businesses continue to be adversely impacted by big businesses with legal impunity,” Carnell added.

“It’s clear that change is long overdue. My office has been advocating for unfair contract terms legislation to be strengthened for a considerable time now, most recently in our COVID-19 Recovery Plan and our comprehensive submission to Treasury’s Review of Unfair Contract Term Protections for Small Business, in March this year.”

The ASBFEO has recommended that:

  • Unfair Contract Terms be made illegal.
  • Significant penalties and infringement notices to apply to breaches.
  • Enforcement capabilities of regulators enhanced to determine if terms are unfair.
  • Legislation extended to cover all contracts valued up to $5 million.
  • Definition of a small business be changed to those with less than $10 million turnover.

“Currently where a standard form contract contains an unfair contract term, the only way for a small business to take action is through the court system. And even if the term is proven to be unfair, there is no penalty to the big business,” Carnell said.

The ASBFEO noted that Phase I of the Access to Justice Inquiry found small businesses are unlikely to take action when faced with an unfair contract term in their standard form contract.

“Understandably, they are reluctant to damage commercial relationships and lack the resources and time to pursue litigation,” Carnell said. “By making unfair contract terms illegal, the Australian Competition and Consumer Commission (ACCC) would be able to penalise big businesses. The sooner unfair contract terms between big businesses and small businesses is made both illegal and subject to big-stick penalties, the better.”

No comments | be the first to comment

Comment Manually

Read more


FREE NEWS BRIEFS Get breaking news delivered