McCullough Robertson Attorneys report that the long-awaited laws protecting small businesses from unfair terms have taken effect across Australia. As of 12 November 2016, any terms that are unfair in new or renewed contracts could be deemed void and unenforceable. While they are yet to see how the courts and tribunals will interpret this new legislation, the ACCC released a report last week providing a breakdown of some common worrying terms identified in the advertising, telecommunications, retail leasing, independent contracting, franchising, waste management and agriculture industries.
The report provides practical guidance on how businesses can comply with these new laws including practical examples of the kinds of changes the ACCC recommends businesses make.
The new Australian legislation covers standard-form small business contracts. More specifically:
1. contracts for the supply of goods, services, financial services or financial products or a sale or grant of an interest in land,
2. that are entered into or renewed on or after 12 November 2016 (including variations and automatic or periodic rollovers),
3. where at least one of the parties is a business that employs less that 20 people (including casual staff employed on a regular or systematic basis) where the contract is considered to be a standard form contract, i.e., it has been prepared by one party to the contract and is not subject to negotiation between the parties (offered on a take-it or leave-it basis), and
4. the upfront price payable under the contract does not exceed $300,000 (or $1 million if the contract is for more than 12 months).
The consequences of not updating your contracts could be significant. If a limitation or exclusion of liability clause is found to be void, this means rather than capping or excluding liability, your contract could leave you with unlimited liability.
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