On 12 November 2016 the new laws extending protection against unfair contract terms to small business comes into effect. These laws, which previously just afforded protection for consumers is now being extended to protect small business.
The laws apply to contracts where one or more parties is a small business. This means that it could be with a bigger player (like Coles or Woolworths) or contracts between small businesses. It applies to ‘standard form contracts’ which is basically one that is deemed ‘non-negotiable’ by one side. You either sign it or they move onto someone else.
Who is a ‘small business’?
Small business is defined as a business with less than 20 staff (casual’s aren’t counted unless they are regulars). They can be sole traders, partnerships or proprietary limited companies. The provisions will apply to contracts that are:
The laws will be applicable to any contracts that come into force on or from the 12th November. It does not apply retrospectively. Any contract that is renewed from this date will also be subject to these laws.
What is an unfair contract term?
A contract term is unfair if:
Whether or not a term is unfair depends on consideration of the contract as a whole and whether or not the particular term is transparent and not hidden (e.g. if it’s in plain language and presented clearly to the party affected by the term).
Some examples of contract terms are:
What do I need to do?
Trying to determine whether the contracts you sign (or ask other people to sign) requires specialist legal skills and knowledge. If you regularly do business with small business, now is the time to get your contracts and templates reviewed to make sure that they comply with the new laws. This is exactly what we do! Contact us for a free, no obligation quote today to make sure your contract terms are fair. Call us on 1300 272 878 or email email@example.com for more information.