SMEs to get protection from unfair contract rules

JOHN DURIE
November 5, 2016
The Australian
The big banks face a new legal test next week when the unfair contract provisions that protect consumers are extended to small business, threatening to void one-sided big business contracts.
Changes to the Australian Consumer Law and to the ASIC Act come into effect on November 12 after a year in which the ACCC and the big law firms have warned big business of the impending changes.
The banks are prime candidates given they issue standard- form contracts that give themselves all the rights and leave nothing but scraps for the businesses or consumers on the other side.
The law was originally introduced by then assistant treasurer Chis Bowen back in 2009 to give consumers increased rights in dealing with companies. He then planned to extend it to small business, but this was later canned by his successor Craig Emmerson. It was later revived by former minister Bruce Billson.
Some lawyers argue the measure will have more benefit to small business than the amendments to section 46 will ever have. Section 46 aims stop abuse of market power and will be amended later this year under government plans to reform competition law.
The unfair contracts provisions apply to standard-form contracts that result in imbalance of rights by giving one side the right to alter the terms and which are often written in a take it or leave it form.
On these grounds it would be considered unfair and voided.
The likely targets start with the big banks that have been through similar provisions with consumers and so should have the arguments ready, but it is certain they will be tested.
Big phone companies like Telstra and supermarkets and other retailers will also be tested in their dealings with suppliers, builders and farm suppliers. The law only applies to contracts made or changed after November 12. But after a year of warnings, the ACCC is ready to pounce.