ARE YOUR CONTRACTS FAIR?

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

Over the next 12 months we will transition to a new law that offers small businesses protections against unfair ‘take it or leave it’ contract terms offered by larger companies. The law will take effect on 12 November 2016.

The Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill supplements the existing law protecting consumers. ACCC Deputy Chair, Dr Michael Schaper, says the new law will redress imbalances disadvantaging small businesses. Courts will be able to declare void unfair terms within standard form contracts.

The law applies to standard form contracts between businesses where one of the businesses 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 more than a year.

Previously, standard form contracts offered little to no opportunity for the responding party to negotiate the terms.

AADA has advocated on behalf of its members throughout the parliamentary process of this Bill and provided a submission to the Senate Economics Legislation Committee. We also provided submissions to the Small Business, Competition and Consumer Policy Division regarding the Treasury consultation paper and the exposure draft legislation.

The amendments to the Bill mean it now may cover more contracts involving franchised new car Dealers. AADA encourages Dealers to familiarise themselves with the Unfair Contract Terms (UCT) protections, particularly when entering contract negotiations involving at least one party that meets the prescribed threshold. A guide to the UCT protections can be found on the Australian Consumer Law website: http://www.consumerlaw.gov.au/content/the_acl/downloads/unfair_contract_terms_guide.PDF.

For further information we highly recommend reading ‘Australian Consumer Law – What Dealers Need to Know and Do’ on the HWL Ebsworth Lawyers website. This article provides a clear overview of the rights and responsibilities for motor vehicle Dealers regarding UCT protections.

While the Bill has AADA’s support, the UCT protections should have been enhanced for business generally by extending the provisions to include contracts between franchisors and franchisees regardless of the definition in the proposed legislation of a small business contract.

AADA will continue to advocate for greater protections for small businesses in contract negotiations. AADA maintains its position that the Unfair Contract Terms Bill should apply to all business-to-business standard form contracts, with the exception of a publicly-listed company that has the capacity and resources to deal with such matters in its own right.

Please note that this article should not be a substitute for legal advice. For legal advice please contact your preferred, qualified legal professional.

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