On 15 April 2015, the Minister for Small Business, the Hon. Bruce Billson MP, announced confirmation from the Council of Australian Governments (COAG) to proceed with legislation that will extend unfair contract term protections to "business-to-business" or "B2B" dealings.
The proposed amendments are intended to provide a more equal playing field for small businesses, who are often in a similar position to consumers when it comes to bargaining power and legal expertise in the context of standard form contracts. The new legislation also responds to reports by the Small Business Commissioner regarding misuse of market power in contracting of telephone and internet services, office or commercial leasing equipment, and retail outlet leases in B2B dealings.
The new protections will only apply to enterprises with fewer than 20 employees in relation to transactions under $100,000 (or for multi-year contracts totalling less than $250,000). Importantly, courts will have the power to declare void a term within a contract that is found to be an unfair term. Examples of unfair terms that are currently likely to breach the Australian Consumer Law (ACL) include a unilateral variation of the upfront price for goods or services without invoking a right of termination, or a unilateral determination on what constitutes breach of contract.
Under current consumer protection legislation, B2B dealings are already regulated to the extent that they (a) are caught by provisions of general application to trade and commerce (not limited to dealings with consumers), (b) fall within the definition of "consumer" through the nature of the dealings, or (c) are affected by provisions that cover the supply chain, even though the business may not deal directly with the end-user consumer. To assist with this new tier of regulation, the Commonwealth Government has committed $1.4 million to the Australian Competition and Consumer Commission (ACCC) to ensure that businesses comply with the new law.
A copy of the Minister's press release is available here.
For more information, please contact Anne-Marie Allgrove, Toby Patten or Jarrod Bayliss-McCulloch.