Protections for small businesses from unfair contract terms

Protections for small businesses from unfair contract terms

Protections for small businesses from unfair contract terms


Starting from 12 November 2016 existing unfair contract term protections given to consumers will extend to standard form small business contracts.

This change in protection has been long awaited by small businesses as it gives them the potential to significantly enhance their ability to provide services to big businesses. Previously small businesses had little options but to sign unfair contracts when dealing with large businesses. ASIC recognised this shortcoming in the system and sought to rectify the issue by implementing welcomed changes.

Due to this change businesses should review their standard form small business contracts assuring any terms which could be considered unfair are removed to ensure compliance before 12 November.

A small business contract is a contract involving financial products or services where at least one of the parties is a small business. In a broad aspect a standard form contract is one that has been prepared by one party and is not subject to negotiation, offered on a ‘take it or leave it basis’.

The new protections apply to terms of a contract varied on or after 12 November 2016. It will only apply to that varied term and not the contract. Automatically renewed contracts on or after 12 November protections will apply from the renew date.

Businesses should note there are exclusions to the protections, one of which being individually negotiated contracts. Insurance contracts regulated under the Insurance Contracts Act 1984 and the constitutions of companies, managed investment schemes or other kinds of bodies are additionally excluded.

The responsible Minister has power to specify additional law deemed enforceable to the unfair contract terms law. Contracts subjected to this law will be exempt from the unfair contract terms law.

The experienced team of solicitors at Irish Bentley Lawyers are able to assist in contract issues as well as a wide variety of commercial law matters

Our team can assist and advise when entering into contracts ensuring conformity with the relevant law. Our solicitors can aid in the drafting, reviewing and disputing of contracts. We are experienced in the protection of rights for individuals, start-ups and established businesses.

At Irish Bentley Lawyers our team can provide legal knowledge, advice and protection during any stage of your matter.

If you require assistance in any of contract or commercial area, please call our office on (07) 3229 4060 for more information.

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