ACCC urges businesses to check their contracts are fair

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

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

This supplements the existing law on unfair contract terms for consumers. The ACCC, Australian Securities and Investments Commission and state and territory Offices of Fair Trading are responsible for enforcing it.

“This new law is a positive step for small businesses that are presented with standard-form contracts,” ACCC Deputy Chair Dr Michael Schaper said.

“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 employs fewer 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.

“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,” Dr Schaper said.

Small businesses that are offered a standard-form contract that includes a term they think is unfair should visit the ACCC website to find out about protection under the law. Information is also available on the ACCC website to assist big business.

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