Bruce Billson said unfair contract terms are a real problem for small and family businesses and it is pleasing to see this election commitment being progressed so quickly.
The government plans to introduce civil penalty provisions “outlawing the use of, and reliance on, unfair terms in standard form contracts”.
Small businesses and consumers often lack the resources and bargaining power to effectively review and negotiate terms in standard form contracts. Existing laws haven’t stopped the use of unfair terms, which remain prevalent in standard form contracts.
The government will introduce legislation in the upcoming sitting period to strengthen unfair contract terms protections for small businesses and consumers.
The amendments will introduce civil penalty provisions outlawing the use of, and reliance on, unfair terms in standard form contracts. This will enable a regulator to seek a civil penalty from a court.
Additionally, a larger number of small-business contracts will be afforded protection. This will occur by increasing the small-business eligibility threshold for the protections from less than 20 employees to less than 100 employees, and introducing an annual turnover threshold of less than $10 million as an alternative threshold for determining eligibility.
Mr Billson said he has personally met with many small businesses that have highlighted this very problem.
“We see in many contracts we review, examples of unfair terms. This is an area ripe for change,” Mr Billson said.
“Power imbalances between small business and large enterprises are exacerbated by unfair business practices and unfair contract terms.
“Addressing these issues will aid in rebalancing these relationships and promote economic growth.
“I encourage large enterprises doing business with smaller firms to be a kindly customer – patient and understanding, with good and generous intent, especially around contract terms.
“Small businesses are run by real people who deserve our respect and empathy every day.”
