The issue of unfair contracts is currently under consideration
by the NSW State Government.
In April 2012, the NSW State Government through Fair Trading NSW
Issues Paper which included a review of the Motor Vehicles
Dealers Act 1974 (Act) and in particular a review of the dealer and
manufacturer/distributor relationship. There have been calls from
the Motor Vehicle Industry Advisory Council (MVIAC) to introduce a
prohibition on unfair contracts into the Act.
Dealers have argued that a prohibition on unfair contracts is in
fact not enough and that the concept of unfairness should be
extended to include a prohibition on unfair conduct. It is expected
that the NSW State Government will issue a Bill at some stage
during the first quarter of 2013 setting out the proposed changes
to the Act.
It is likely that the changes will include better protection for
dealers by introducing general prohibitions on unfair contracts and
unfair conduct but also in relation to specific issues that affect
the dealer and manufacturer/distributor relationship.
The proposed reforms suggested by dealers and the MVIAC may
level the playing field somewhat and address to some extent the
perceived lack of bargaining power that motor vehicle dealers may
have when they enter into dealer agreements.
In the meantime, if individual dealers perceive that their
dealer agreements have unfair provisions they should discuss these
provisions with the manufacturer/distributor. Dealer agreements are
often described as standard form agreements and are mostly
However, until motor vehicle dealers are better protected
through legislation, individual dealers should raise any perceived
unfair provisions in the dealer agreement in writing with the
manufacturer/distributor and request changes to be made to their
dealer agreements. Importantly, this will put the discussion
"on the record" and dealers cannot then be accused of
failing to act at the commencement of a commercial
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