Small business to get consumerlike protection
On 24 June, the Minister for Small Business, the Hon. Bruce Billson MP, introduced legislation to extend unfair contract term protections for small business.
This legislation will extend the consumer unfair contract terms protections to cover standard form, small business consumerlike contracts that are valued below a prescribed threshold.
Consumers have been protected from unfair contract terms since 2010. Mr Billson has for many years argued that in many cases small businesses have no more market power or ability to vary ‘take it or leave it’ standard form contracts than an individual consumer but lacked the consumer-style protections that provide for unfair terms to be struck out of such contracts.
For many years small businesses have often had no more market power or ability to vary ‘take it or leave it’ standard form contracts than an individual consumer, but lacked the consumer-style protections that provide for unfair terms to be struck out of such contracts.
The Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill 2015 will amend the Australian Consumer Law, which is set out in Schedule 2 of the Competition and Consumer Act 2010, and the Australian Securities and Investments Commission Act 2001 (ASIC Act).
Under the new protections, a court will be able to strike out a term of a small-business contract that it considers unfair.
Unfair contract terms are an issue of significant concern to small business. Examples include the dominant party asserting a right to unilaterally vary terms, rights to termination and legal redress that are not reciprocated the application of arbitrary costs and automatic renewal clauses, pay-out requirements and obligations without reasonable grounds.
Under the new protections, a contract will be a small-business contract if at least one party has fewer than 20 employees and its value is below the prescribed threshold of $100,000, or $250,000 for a multiyear contract.
State and territory governments were actively engaged in the development of this measure and Consumer Affairs Ministers formally agreed to the proposal to amend the Australian Consumer Law in April 2015, as required under the Intergovernmental Agreement for the Australian Consumer Law.
