By Ian Hughes,Partner; Tim Scanlan,Senior Associate;
The Treasury Legislation Amendment (Small Business and
Unfair Contract Terms) Bill 2015 was passed through parliament
yesterday. The Bill, yet to receive Royal Assent, will extend the
unfair terms protections for consumers in the Competition and
Consumer Act 2010 and Australian Securities and
Investments Commission Act 2001 to those businesses with less
than 20 employees. The protections relate to the terms of standard
form contracts valued at less than a prescribed threshold.
Prior to passing through parliament, proposed amendments by the
Australian Greens to increase the prescribed thresholds for a
standard form contract to come within the definition of a
"small business contract" were adopted. In accordance
with these amendments, a contract will now be a small business
At the time the contract is entered into, at least one party to
the contract is a business that employs fewer than 20 persons;
Either of the following applies:
The upfront price payable under the contract does not exceed
$300,000 – previously proposed to be $100,000; and
The contract has a duration of more than 12 months and the
upfront price payable under the contract does not exceed $1,000,000
– previously proposed to be $250,000.
The proposed six month transitional period for the legislation
was also extended to 12 months prior to passing through
Once the Bill receives Royal Assent, there will be a 12 month
transitional period for traders dealing with small-businesses to
review their standard term 'take it or leave it' contracts
so as to ensure they do not fall foul of the new small business
Only time will tell the extent of the impact of these reforms.
In the meantime, traders should review the terms of their standard
form contracts to reduce the risk of uncertainty of terms that may
be considered unfair and potential for dispute once the new laws
come into force.
Businesses should ensure that any promotions do not cross a 'fine line' between acceptable and misleading or deceptive.
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