As if the "unfair contracts" provisions in the
Australian Consumer Law weren't exciting enough, they're
being extended to small business dealings.
The existing laws apply to standard form consumer contracts -
gym memberships, phone contracts, vehicle rental forms etc - the
ones where you can't charm your way into a better deal or, to
put it another way, the ones you don't read before clicking
Unfair terms are those which are not 'reasonably
necessary' to protect the legitimate interests of a party,
which would cause detriment to the other party and which would
cause a significant imbalance in the rights and obligations of the
parties under the contract. You've seen these terms before;
like how your gym used to require you to move to the Moon if you
wanted to cancel your membership.
The provisions will be extended to standard form contracts that
do not exceed an upfront price of $300,000 or, if the duration of
the contract is greater than 12 months, $1,000,000, where at least
one of the parties to the contract is a small business (fewer than
20 employees). The idea behind extending the protections to small
business is that, like consumers, they have no real bargaining
power when negotiating with big business.
From the perspective of business, this is just another headache.
How are you supposed to know when you're dealing with a
"small business", and what you're supposed to do
differently when you are? It'd be very unfortunate if the
effect of this law was to discourage big businesses from dealing
with small ones, to avoid the risk altogether.
The changes come into effect on 12 November 2016 so you have
plenty of time to have a think about how you're going to
We're fans of this new law just as much as we were fans of
the old one.
We do not disclaim anything about this article. We're
quite proud of it really.
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Do not depart from the contract terms, or encourage the other party to do so, unless you plan to alter the contract.
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