Bowen Buchbinder Vilensky

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David vs Goliath – Small Business to Benefit against Unfair Contracts
Friday, December 4th, 2015

By Les Buchbinder, Director, with the assistance of Giuseppe Graneri, Associate at Bowen Buchbinder Vilensky Lawyers

4 December 2015

In light of new laws recently passed, small businesses have more protection against unfair contracts.  Taking effect on 12 November 2016, following a 12 month transition period, the new laws will supplement the existing law on unfair contract terms for consumers.

The new laws apply to standard form contracts between businesses where one of the businesses employs less than 20 people and the contract is worth up to $300,000 in a single year (or $1 million if the contract runs for more than a year).

To fall under the legislation the following must apply:

  • the contract is a standard form contract, meaning (generally) the contract is pre-prepared by one party and provided to the other party on a “take it or leave it”, “one size fits all” basis with no effective opportunity to negotiate its terms;
  • the contract is entered, renewed or varied after commencement of the substantive provisions of the Bill, being 12 months after Royal Assent.  The amendments in the Bill will apply to the contract as renewed or the terms as varied on and from the renewal day or the variation day (as applicable), in relation to conduct that occurs on or after that day; and
  • the contract is a contract for the supply of goods, services, land, financial products or financial services.  In the case of the Australian Consumer Law, a small business contract must be a contract for a supply of goods or services, or a sale or grant of an interest in land.

The Australian Competition and Consumer Commission (ACCC), Australian Securities and Investments Commission and state and territory offices of fair trading will be enforcing the legislation.

As examples, the following contractual terms are likely to be caught by the legislation:

  • enabling one party (but not another) to avoid or limit their obligations under the contract;
  • enabling one party (but not another) to terminate the contract;
  • penalising one party (but not another) for breaching or terminating the contract; and
  • enabling one party (but not another) to vary the terms of the contract.

Small businesses should be aware that it is only the unfair part of a contract that will potentially be struck out, the rest of the contract remains.

If you have a contract that may fall into this category and would like to discuss this further please contact Les Buchbinder at

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