Government to Legislate fair play with small business

If you are a business that deals with small businesses, you will soon need to review and, possibly update, your standard form contracts. The unfair contract terms regime that has applied to consumer contracts since 2010 will soon apply to contracts that any business (including a small business) uses with small businesses. The new law is due to begin shortly; this week, on You Legal TV, we help you get prepared by looking at who will be affected and how.

See below for the complete transcript of this episode -

If you run a business in Australia, you may soon need to review your standard form of business-to-business contracts in order to comply with new legislation that will amend both the Australian consumer law and the ASIC Act to extend the unfair contract terms regime to small business contracts. Consultation on the draft legislation closed in May of this year and it is expected to pass with only minor amendments. This week on You Legal TV, we look at who this impact is and what you need to do to prepare.

The changes will affect all businesses that deal with small businesses, even if they are small businesses themselves. For the purposes of the legislation, a small business is an enterprise with less than 20 employees. This makes the legislation somewhat of a double-edged sword. While, as a small business, you may be protected in instances where there is a power imbalance between you and another party, you'll also have to take the time to review the contracts that you use when dealing with other small businesses.

Also, for the unfair terms regime to apply, the questionable transaction must be valued under $100,000 or 250,000 if the contract spans more than a year. If a contract term is found unfair, a court may declare that term invalid. However, the rest of the contract will usually be upheld.

Whether a contract is unfair will depend on several factors, including how clear and easy the entire contract is to read. If you're a business that deals with small businesses in standard form contracts, please consider having your terms reviewed, and when entering into a contract, ensure it is specifically tailored to the business in question.

Whether you require assistance with this preparation or suspect that you may be dealing with an unfair contract once the legislation's rolled out, You Legal is always happy to help, so please get in touch. We look forward to seeing you in our next episode of You Legal TV.

What Should I Do Next?

Contact us if you would like further legal advice on Unfair Contract Terms for Small Businesses. Our lawyers at You Legal will be happy to assist you in any way we can.

* This blog is for general guidance only. Legal advice should be sought before taking action in relation to any specific issues.