Small businesses protection against unfair contract laws

Unfair contract laws to protect small businesses were introduced in 2016.  We are pleased to report that as of Thursday 9^th November, they have substantially tightened.

One of the main changes is that fines can now be imposed against those enforcing unfair contract terms on small businesses.  Those fines are up to $2,500,000 for individuals and $50,000,000 for corporations.  Previously there were no fines.  Now these laws have some teeth!

Furthermore, a person who breaches the new rules can be disqualified from being a director for up to 6 years.

Following are some examples of unfair contract laws (where it gives one party but not the other):-

• Vary the terms of a contract.
• Terminate a contract.
• Renew or not renew a contract.
• Apply penalties to the other party for a breach of contract.
• Vary the price payable without the other party having the right to terminate the contract.
• Vary the characteristics of the contracted goods or services.
• Restrict one party’s right to the sue the other party.
• Another important change is the definition of a small business has been increased from 20 to 100 full and part time employees.

The somewhat recent small business protection now really has some teeth.  Moreover, it will act as a deterrent against those who have unfairly acted against small businesses in the past.

Please contact us if you would like a referral for a unfair contract matter to a qualified lawyer.

You can also read more at posts by ACCC and ASIC

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