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 published an 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 non-negotiable.
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 relationship.
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