Greater protection will be provided to small business against
unfair contract terms as a result of new legislation, the Treasury
Legislation Amendment (Small Business and Unfair Contract Terms)
Act 2015, which comes into force on 12 November 2016.
Under current legislation, there are various protections for
consumer contracts. This new Act extends protections to small
The changes mean that any contracts made on or after 12 November
2016 and existing contracts that are renewed after this date will
be affected. A small business contract is one where the contract is
for the supply of goods or services, or a sale or grant of an
interest in land where:
at the time the contract is entered into, at least one party to
the contract is a business that employs less than twenty (20)
either of the following applies:
the upfront price payable under the contract does not exceed
the contract is for a period of more than twelve (12) months
and the upfront price payable under the contract does not exceed
The types of standard form contracts which are potentially
covered include supply contracts for goods and contracts for supply
of services such as IT, financial, accounting and cleaning
services. They could also include franchise agreements, financial
product contracts and telephone / internet contracts.
If your business regularly provides standard contracts to your
customers, you should review them as soon as possible before 12
November 2016. If not, it could result in a claim by one of your
customers alleging that a contract term is unfair and causing
costly court proceedings.
We can assist you to ensure your current contracts are compliant
with the new legislation and avoid possible ongoing expensive
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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Franchisors should minimise the risk to their brands by helping their franchisees understand and meet their obligations.
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