Small business has stacked up a significant number of wins over big business in developments Australian commercial law in recent times.Three of the most topical are:
Unconscionable Conduct In Business Transactions
The cut-off for unconscionable conduct actions under s51ac of the Trade Practices Act 1974 (Cth) has been increased. Previously the transaction being complained of had to be worth under $3M but this has been increased to $10M in amendments to the TPA that passed the Senate this month. (The Trade Practices Act Amendment Bill (No 1) 2007).
In some ways this reform might be viewed strictly speaking as assistance for medium business rather than small business, as s51ac provides businesses that are not publicly listed companies with a remedy for unconscionable conduct in business transactions. The increase in the cut-off may also mean that businesses will be willing go to court more often to seek this remedy as the money at stake will be worth litigating over, which in turn may add to the thin base of decided cases in this area since the section was introduced in 1998.
Misuse Of Market Power
The changes to the misuse of market power provisions of the TPA (s46) is part of the same set of amendments and seeks to make a broader category of companies liable for the offence and make it easier for the ACCC to prosecute large market players for these offences. For example, it is no longer necessary for a company to substantially control the market, and be absolutely free from constraint by competitors' and suppliers' conduct, in order for it be considered to have a substantial degree of market power such that its conduct will be constrained by this section of the TPA.
The amendments to s46 are seen by some as controversial developments in a law that is, primarily, a consumer protection statute in which the other restrictive trade practices offences are designed to safeguard robust competition in a market, as this will generally ensure the lowest prices for consumers. For example, the amendments to s46 also specifically include predatory pricing conduct in the types of conduct which may be considered to be a misuse of market power, so ironically, the bad news for consumers from these amendments is that super cheap specials on fresh food lines at the big supermarket chains may be a thing of the past.
Duty To Act In Good Faith
The common law implying a duty to act in good faith in commercial dealings, certainly where the performance of contracts is concerned, if not in the initial negotiations for the contract, continues to develop in Australian courts.
Whilst this law does not directly give a leg up to small business in its dealings with big business, the concepts of fairness and reasonableness that the law entails impose a new commercial morality and stifle the freedom of parties with significant bargaining power from acting capriciously and/or arrogantly in contractual relationships with others, and big business is generally the party with the bargaining power when it deals with small business.
The leader of the Nationals in the Senate, Ron Boswell, has been quoted as saying that the passage of the Trade Practices Act Amendment Bill (No 1) 2007 would represent perhaps the biggest single step forward in legislative protection for small business that he had seen in his 24 years in the Federal Parliament.
When combined with modern legal thinking imposing fairness and reasonable conduct on players in commercial dealings, small business has gone a long way towards levelling the playing field with big business.
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On 12th November 2016, new laws will commence to protect small businesses from unfair terms in standard form contracts.
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