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Protecting Small Business From Unfair Contract Terms – First Court Action

On 12 November 2016, the Australian Consumer Law was amended to protect small businesses from unfair contract terms. This applies to any business employing fewer than 20 people with a monetary limit on the value of the contract in question.

Unfair contracts are typically one sided, have unnecessary/harsh terms and would cause detriment to the small business involved. They are often not open to negotiation.

The ACCC is increasing its investigation and enforcement of this new legal regime and is taking on cases to establish how far the new unfair contract terms legislation will act to protect small businesses in Australia. In many cases, large companies have agreed with the ACCC to amend their standard B2B contracts but an action has now been filed by the ACCC in the Federal Court of Australia against a company which allegedly uses small business contracts containing eight unfair contract terms. These include –
• the right to unilaterally increase prices
• unlawful exclusive contract rights
• automatic contract rollovers
• various rights to levy unfair charges.

Businesses need to carefully review their standard B2B contracts in conjunction with their lawyers. This is a complex area requiring the identification of unfair terms on a contract by contract basis.

The ACCC has issued some guidance about standard form contracts (or existing contracts which are to be reviewed or renewed) and early intervention will help to ensure that important contractual terms are not rendered void and unenforceable.

If we can provide you with more information, please contact Rob Ffrench at Bell Legal Group by phone on (07) 5597 3366, or via email at rffrench@belllegal.com.au

This article is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this article as legal advice. If there are any issues you would like us to advise you on arising from this article, please let us know.