Two Federal Government inquiries tabled their reports shortly
prior to Christmas. Included in the recommendations were matters
likely to attract the interest of many businesses.
The Federal Parliamentary Joint Committee on Corporations and
Financial Services entitled "opportunity not opportunism:
improving conduct in Australian franchising" (the
Franchising Report) made a series of recommendations
relevant to the franchise sector. However the recommendation
"to explicitly incorporate, in its simplest form, the existing
and widely accepted implied duty of parties to a franchise
agreement to act in good faith"1 as a deterrent to
alleged opportunistic conduct in franchising has the capacity to
have wider implications for business.
Around the same time the Senate Standing Committee on Economics
delivered its report on the need, scope and content of a definition
of unconscionable conduct for the purposes of Part IVA of the
Trade Practices Act 1974 (the Unconscionable
Conduct Report). Although the report fell short of
recommending dramatic changes to the Trade practices Act, the
report did observe that the unconscionable conduct provisions were
not operating effectively and improvements were required.
The Franchise Council of Australia, the Shopping Centre Council
and the Australian Competition and Consumer Commission all
counselled against the inclusion of an explicit good faith
obligation into the Trade Practices Act, so it will be interesting
to see how the Government reacts to the Franchising Report,
particularly as in the Unconscionable Conduct Report the committee
specifically declined to recommend the insertion of a definition of
good faith into the Act, commenting that the introduction of a
definition of good faith "would only add
uncertainty."2 The official Government responses
are expected in the first quarter of 2009, although the matters do
not appear to have any particular priority.
The broader business community would be justifiably concerned if
any form of statutory good faith obligation was to be considered.
Apart from the direct negative impact on the franchise sector, it
would be a very short step from the franchise sector to retail
leasing, the oil industry, the grocery sector and indeed any
industry where any allegations of "opportunistic conduct"
could be made.
1 Recommendation 8.
2 Paragraph 5.43
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