New protection for small businesses against unfair contract terms

It’s official after months of debate in both the House of Representatives and the Senate the Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill 2015 has passed both Houses. But what does this actually mean when it comes to everyday business?

Current Legislation
Currently Schedule 2 of the Competition and Consumer Act (2010) “ACL” and the Australian Securities and Investments Commission Act (2001) “ASIC Act” contain mirroring terms that provide consumer protections against unfair contract terms in standard form contracts. The ACL grants protections in relation to the supply and sale of goods and the ASIC Act protections in relation to the supply of financial services.

Scope of the Act
The purpose of this Act is to extend these consumer protections against unfair contract terms to small businesses. These amendments will come into force 13 November 2016 and make unfair terms in a standard form small business contract void and unenforceable. In small business to small business transactions these amendments will affect small businesses on both sides
of the contract as either the buyer or seller of goods or services.

For businesses that do not fall within the definition of small business, additional care will need to be taken in standard terms and conditions used. Especially in the context that these amendments were enacted largely to counteract the perceived power imbalance most small businesses face in he commercial context.

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