Small businesses are becoming increasingly vulnerable to unfair
terms in standard form contracts. The Government has got closer to
addressing this vulnerability by extending the unfair contract
protection to include small business contracts. But what is a small
business? And what types of clauses are void?
What is a small business?
For a contract to be deemed a small business contract,
it must meet three requirements;
The contract must be for a supply of goods or services, or a
sale or grant of an interest in land; and
At the time the contract is entered into, at least one party
must employ fewer than 20 employees (including full-time, part-time
and casual employees); and
The contract has a duration of less than 12 months and the
upfront price payable under the contract does not exceed $300,000;
The contract has a duration of more than 12 months and the
upfront price payable under the contract does not exceed
If the contract meets these criteria, the protection will apply.
However, where an industry specific law is regarded to be
enforceable and equivalent, the application of the unfair contract
term protections for small businesses may be exempt.
When will the laws apply?
This protection will come into effect by 12 months after Bill
has been given Royal Assent. Contracts that are entered into or
renewed, or terms of existing contracts that are varied on or after
the date the legislation comes into effect, will be required to
comply with the new protections.
The proposed changes have been passed by the Senate, and it is
hoped they will be enacted in the current session.
We suggest that it may be appropriate for you to consider your
own terms and conditions to see whether any of the following are
Clauses found to be void under the existing laws
Here is an example of some of the clauses that have already been
found to be void as being unfair:
We may change or update this website and the terms
and conditions at any time without providing you with prior
You may not cancel, or otherwise terminate the
Agreement or revoke any authority given under it after we certify
that the Installation of the services has
We may at any time, without notice and at our
absolute discretion, suspend or disconnect your access to part or
all of the service, or delete or deny you access to your data if we
have reasonable cause to do so.You acknowledge that you enter into
this agreement entirely as a result of your own enquiries and that
you do not rely on any statement, representation or promise by us
or on our behalf not expressly set out in this
To the fullest extent permitted by law, [the
company] disclaims all representations and warranties, express or
implied, including but not limited to implied warranties of
merchantability and fitness for a particular purpose and
You understand, acknowledge and agree that you are
assuming the entire risk as to the quality, accuracy, performance,
timeliness, adequacy, completeness, correctness, authenticity,
security and validity of any and all features and functions of [the
product], the Website and Content.
Some of the above may seem somewhat severe and may be in need of
further explanation. We are more than happy to provide that to
In view of these changes, there is significant merit in
considering whether or not your standard terms and conditions need
to be reviewed and updated so as to protect you from prosecution
both from the Australian Competition and Consumer Commission or the
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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