New laws extending unfair contract laws to small business via changes to the the Australian Consumer Law (ACL) and the Australian Securities and Investment Commission Act 2001 (Cth) (ASIC Act) have recently passed through both houses of the Federal Parliament.
The new unfair contract laws will however only apply to:
- small business with less than 20 employees including full and part-time employees and casuals employed on a regular and systematic basis.
- “small business contracts” being contracts where the upfront price is less than $300,000.00 in a one off transaction or where the price is less than $1m for contracts that last longer than one year
- standard form contracts.
If the new unfair contracts law is found to apply to a contract, then the contract will be unenforceable and treated as if it does not exist. The rest of the contract however will continue to be binding assuming that it can operate without the unfair term.
The contracts that are affected include contracts for the supply of good or services; contracts for the sale/grant of an interest in land including leases; and financial products and services. All standard form contracts across the ambit of all relevant industries will be affected by this legislation be it building and construction; banking and finance; retail and wholesale suppliers; franchising; transport; IT; telecommunications; and real estate services to name a few.
All businesses, including large and small, will need to review their standard contracts which might be used with a small business with less than 20 employees within the contract amount thresholds set out above.
Please contact Hendersons Legal if you need specific advice about your standard form contracts and their enforceability when these new provisions become law. We can help prepare business contracts and employment contracts, and if required, we can represent you as experienced litigation lawyers in Melbourne too.
This content is intended as commentary and should not be construed as legal advice.
For more information call David Henderson on 03 9629 2211.
