The development of new laws for contracting with small businesses

The Australian Competition and Consumer Commission (ACCC) introduced new law in late 2016 that effected all contracts where small businesses were trading with large companies.

The aim was to protect small businesses (i.e. under 20 people) in their contractual transactions by identifying and disallowing ‘unfair’ contract terms within standard form agreements commonly insisted upon by larger companies.

ACCC has identified that unfair contractual terms will likely include:

  • Terms that force one party to automatically renew the contract.
  • Terms that allow one party to vary the terms and conditions of the contract, or increase prices, without the consent of the other party.
  • Terms that too broadly limit the liability of the large business.
  • Terms that unreasonably make a small business indemnify a large business.
  • Terms that unreasonably penalise a party for terminating the contract.

Large businesses are encouraged to review their standard form agreements to ensure they comply with the new standards. 

For a small business owner, you should seek legal advice before entering into a contract, particularly where the contract has been prepared by the other party and you have had minimal input into its terms.

No matter what size your business, if you are in doubt as to whether your agreements contain unfair terms, or consider that unfair terms are being enforced against you, speak to the team at Cove Legal on (08) 6381 3026.

This publication is not legal advice. You should seek professional advice before taking any action based on its contents.


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