ACCC urges businesses to check that their contracts are fair

The Australian Competition and Consumer Commission (ACCC) is urging businesses to closely review the standard form contracts they use when dealing with other businesses.

A new law will take effect on 12th November 2016, following a 12-month transition period, that offers small businesses protections against unfair contract terms offered by other (usually larger) firms.

This law supplements the existing law on unfair contract terms for consumers. The ACCC, Australian Securities and Investments Commission (ASIC) and state and territory offices of fair trading are responsible for enforcing the law.

ACCC Deputy Chair Dr Michael Schaper explains “this new law is a positive step for small businesses that are presented with standard form contracts.

“For every business that deals with small businesses, now is the time to check that your contracts are compliant.”

The law applies to standard form contracts between businesses where one of the businesses employs less than 20 people and the contract is worth up to $300,000 in a single year or $1 million if the contract runs for more than a year.

Standard form contracts provide little or no opportunity for the responding party to negotiate the terms – they are offered on a ‘take it or leave it’ basis.

Dr Schaper added “the new protections will help address significant imbalances or disadvantages to small businesses in their dealings with other businesses by allowing the courts to declare void unfair terms within standard form contracts.”

Small businesses offered a standard form contract that includes a term that they think is unfair are urged to visit the ACCC website to find out about protections under the law.

Information is also available on the ACCC website to assist big business.

Click here for more information.

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