Know your rights: unfair contract terms & small business

Summary: Are you a small business? Do you receive standard form contracts? If so, you should be aware that the Australian government has introduced a law to protect small businesses against unfair contract terms.

Published: 16 November 2015

Ahhh, running your own business - being your own boss! But running a small business can be difficult. There’s people to manage, finances to balance, and that's on top of doing your job.

It's never easy. It means a lot of finding clients, building contacts, and knocking on doors. And that can mean a lot of contracts; contracts with new clients, contracts with suppliers, contracts for services such as internet or phone plans.

Sometimes it can feel that everyone you deal with, has a contract to be signed. But sometimes contracts can be confusing and can leave a small business in a very difficult position. Because of this, the Australian government has introduced a law to protect small businesses against unfair contract terms.

The protections apply for small businesses that employ less than 20 employees, and receive contracts valued up to $300,000 or up to $1 million for contracts longer than one year.

So if you have been presented with a standard form contract on a ‘take it or leave it’ basis and it includes an unfair term, that term can be declared void, which means it cannot be relied upon.

Examples of terms that may be unfair include terms that allow the other business but not you to change or cancel the contract, allow the other business but not you to limit or avoid their obligations, penalise you but not the other business for breaking the contract.

This law applies to contracts that are entered into or renewed on or after 12 November 2016. If you think you've been presented with a standard form contract that includes an unfair term, visit the ACCC website to find out what your protections are under the law.

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