28 April 2015
Media Release - #2015038, 2015

Draft legislation released – unfair contract terms

The Government has today released draft legislation to extend unfair contract term protections to small businesses. 

In August 2013, the Abbott Government announced this important reform to give businesses a fair go. The protections will give businesses access to a level playing field to grow, invest and create jobs.

Consumers have been protected from unfair contract terms since 2010. It is time that small businesses, which often face the same vulnerabilities as consumers, receive strong protections when contending with “take it or leave it” contracts.

Under the new protections, a court will be able to strike out a term of a small business contract that is considered unfair. For example, a term that allows a big business to unilaterally change the price or key terms during the course of the contract could be considered unfair.

The protections will apply to businesses that employ less than 20 persons for transactions under $100,000, or $250,000 for contracts that last longer than 12 months.

These changes will support small businesses in their day to day transactions, but still encourage operators to conduct their own due diligence on large contracts fundamental to the success of their business.

Businesses that offer contracts in these circumstances will be required to comply with the new law.

The Government has provided $1.4 million to the Australian Competition and Consumer Commission (ACCC) to support implementation of the new law, including conducting an information campaign.

The draft legislation builds on extensive consultation undertaken in mid-2014, and follows confirmation that the Commonwealth has the necessary support from state and territory governments to implement this important policy reform.

The draft legislation and explanatory materials are available on the Treasury website for a consultation period ending 12 May 2015.

Treasury officials will also hold targeted consultations following the end of the public consultation process.

With this legislation, the Government is restoring time and resources back to small business to invest in their business success rather than navigating a costly and time consuming maze of red tape.

It is part of our strategy to ensure Australia is the best place to start and grow a business.