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Unfair contract terms regime: warning to businesses in Australia

September 08, 2016

Contacts

Senior Associates Sarah Lee

Consumer law Unfair contract terms

Last month, the Australian Competition and Consumer Commission (ACCC) issued a statement expressing concern that many sectors remained unprepared for the upcoming extension of the unfair contract term (UCT) regime to small businesses.

Currently, many small businesses entering into contracts with larger businesses have no option but to accept all of the terms of their standard form contracts. But from 12 November 2016, small businesses in Australia will be afforded the protections of the UCT regime, with the new law extending the regime to certain business-to-business standard form contracts.

Contracts covered under the new law include those 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.

In the lead up to the new law, the ACCC engaged with the retail leasing industry to review their standard form contracts. Of concern were terms that placed no limits on landlords seeking to recover their own costs from lessees in a variety of circumstances. Some leases also included terms allowing the landlord to unilaterally vary shopping centre rules such as trading hours. As a result of ACCC's early engagement, most landlords agreed to amend their contract terms.

Click here for the full ACCC media release.

What does this mean for New Zealand?

New Zealand may follow Australia's lead and extend our UCT regime to protect small businesses as well as consumers. We will ensure we keep you up to date with any future developments in this area.

Contributors nicole.ashby@simpsongrierson.com