The Australian Government seems determined to make good on its promise to extend unfair contract protections to the small business sector.

In a joint media release with the Prime Minister on 20 March 2015 the Minister for Small Business, the Hon Bruce Billson MP announced that the Government is delivering on its commitment to give small businesses a ‘fair go.’ To achieve this, it is expected that the unfair contract protections currently available to consumers will soon cover the small business sector as well.

In the media release, small businesses are described as ‘the engine room of Australia’s economic future.’ And it states the Government’s intention is to ensure ‘small businesses have access to a level playing field so they can continue to grow, invest and create jobs.’
A focus on protecting small businesses in their contract negotiations is now a top priority.
In the media release, small businesses are compared with consumers who are presented with ‘take it or leave it’ contracts with ‘little scope to negotiate just and fair terms.’ Adding to this, many small businesses do not have the time, resources or legal expertise to contest unfair terms in contracts. As a result, the Australian Small Business Commissioner has noted many cases where misuse of market power in contracting of telephone and internet services; office or commercial leasing equipment; and retail outlet leases has occurred.
According to the Government, new small business protections will enable the courts to declare void a term within a contract that is unfair.

AADA is in full support of extending unfair contract term protections to small business, which it covered comprehensively in its Government submission back in August 2014. In its submission, AADA highlighted the under representation of franchisees as ‘small businesses’ and highlighted the over 70,000 franchising units currently operating in Australia.

AADA also referenced the diversity of dealerships – ranging from small family-owned operations, to larger public companies. Despite the differences in size, even the largest dealerships should be considered as ‘small’ compared to the global manufacturers they represent, which was a major point made in the AADA submission.

Whilst the recent media release from the Hon Bruce Billson MP and Prime Minister is definitely encouraging, the Government is yet to release an Exposure Draft on this topic for comment. Whilst this leaves small businesses in somewhat of a limbo for the time being, the Consumer Policy Division in Treasury has taken a number of calls following the announcement and advised that the matter is in the hands of the Government.

In the meantime, The Minister for Small Business has written to state and territory consumer affairs ministers asking them to agree to the changes and the Government have provided $1.4 million to the Australian Competition and Consumer Commission to ensure businesses comply with the new rules.

So it’s looking like good news for Australian small businesses so far!

AADA will continue to follow and report on this issue as it unfolds.