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ACCC reviews small business contracts for unfair terms

Standard form contracts with small businesses are now subject to Australian Consumer Law provisions on unfair contract terms. The provisions apply to any new or renewed standard form contract entered into on or after 12 November 2016.

The definition of a small business and the standard form contract to which the laws apply are found in a recent Surry Partners publication available here.

Under the new provision, a term in a standard form contract deemed unfair by a court or tribunal will be void. However, the rest of the contract will continue to be binding to the extent it is capable of operating without the unfair term.

The Australian Competition & Consumer Commission (ACCC) recently released a report to coincide with the introduction of the new provisions.  It examined standard form contracts in the retail leasing, independent contracting, advertising, telecommunications, waste management, franchising and agriculture industries.

The report provides a breakdown of the common terms of concern in each industry, and also serves as general guidance to businesses generally about the kind of terms that may be considered unfair.

Of the contracts reviewed (including businesses such as Facebook, Optus, Australia Post and Bakers Delight), the most commonly occurring unfair terms include:

  • unreasonable termination clauses which allowed the contract provider to end an agreement early or as it suits them;
  • terms that allowed one party to unilaterally vary the agreement at any time;
  • terms that placed an unreasonable limitation of liability on the smaller business and appeared to unreasonably limit the larger business’ liability; and
  • terms allowing the unrestricted access to property.

The ACCC has now altered their stance from education to investigating unfair terms in small business contracts. If you have any concerns as to whether a term in your contract is unfair, please contact Surry Partners Lawyers.

The report is available on the ACCC’s website.

Angus Ferguson

Solicitor

(02) 9318 6415

angus.ferguson@surrypartners.com.au