The NSW Opposition has introduced a Private Member's Bill
which, if enacted, would increase the powers of small businesses in
respect to their dealings with banks, franchisors and other large
corporates, along the lines of current consumer protections
available to individuals in respect to unfair contracts. The
proposed legislation could significantly increase the regulatory
burden for banks and other large businesses in their dealings with
small business operators.
The NSW Goverment proposed to create a Small Business
Commissioner in July 2011 and the public consultation period in
respect to the proposal closed on 23 August 2012. The NSW
Opposition has now introduced a Private Member's Bill entitled
the Small Business Commissioner and Small Business Protection
Bill 2012 setting out its proposed regime.
The stated objects of the Bill are broadly as follows:
To create and empower the position of Small Business
Commissioner as an independent statutory office.
To ensure that small businesses are treated fairly in their
dealings with other businesses and Government agencies through
enforceable codes of practice.
To enable small business to obtain relief under the
Contracts Review Act 1980 in respect to unjust
The foreshadowed Act, including the proposed amendments to the
Contracts Review Act 1980, would apply to all contracts in
force at the time the Act commences operation.
Obviously, given that the Bill has been tabled by the
Opposition, it is unlikely that it will have the Government's
support in its current form. However, the Bill may be an indication
of the Government's legislation to come.
What is a "Small Business"?
The Bill defines a "Small Business" as a
business enterprise, whether operated by a natural person, sole
trader, partnership, corporation or other entity with:
no more than 20 full-time equivalent employees; or
an annual income or expenditure of between $10,000 and $5
but does not include a Government
The Small Business Commissioner
Interestingly, the NSW Government appointed former ACCC
Associate Commissioner Yasmin King to the post of Small Business
Commissioner in July 2011, notwithstanding the fact that
legislation providing for the powers and obligations of the role
was not yet enacted.
The Bill proposes a number of functions for the Commissioner,
To be an advocate for small business generally
To handle complaints made by small businesses regarding their
dealings with other businesses and Government agencies
To refer cases to other bodies
To assist small businesses in their dealings with other
businesses or Government agencies
To disseminate information to small businesses
To administer codes of practice
To advise and report to the Minister on matters affecting small
Codes of Practice
The Bill provides for regulations to prescribe codes of practice
with respect to the fair treatment of small businesses in their
commercial dealings with other businesses, and that any such code
may, without limitation, provide for good faith obligations in
The Bill empowers the Supreme Court, on application by the
Commissioner, to grant injunctions in circumstances involving
actual or potential contravention of a code of practice. Such
injunctions may be granted on an interim basis without the
requirement of any undertaking as to damages or costs.
Extension of Contracts Review Act 1980 to Small
The Bill proposes to extend the operation of the Contracts
Review Act 1980 to small businesses and provides that an
operator of a small business may apply to the Consumer, Trader and
Tenancy Tribunal (CTTT) or the Supreme Court of
NSW for an order in relation to any contract that the operator
considers to be harsh, oppressive, unconscionable or unjust. The
Contracts Review Act 1980 would be amended
Remedies available to the Court and CTTT would include powers
refuse to enforce any or all of the provisions of a
declare a contract void (in whole or in part) or vary any
provision of a contract
make orders with respect to consequential matters including
orders for the payment of money to a party to the contract and
orders for the supply of services.
The Government's proposed legislation is yet to be released.
However, if the Opposition's Bill is any guide, it can be
the Small Business Commissioner will be empowered to broadly
represent the interests of small businesses; and
a regime will be introduced to protect the interests of small
businesses in their dealings with big business and Government along
the lines of current consumer protections available to individuals
in respect to unfair contracts.
At this stage, watch this space.
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