The federal government has recently announced that the federal, state and territory Ministers responsible for consumer protection have agreed to expand the scope and nature of protections against unfair contract terms in business contracts. These include:
Implications for businesses
The implications of the changes for businesses will be significant. If these changes or similar are enacted (which seems likely given that the federal opposition supported the review) the range of contracts caught will be expanded very substantially. It is estimated that 99% of businesses will qualify for protection under the regime. While there is an intention to ‘clarify’ what is a standard form contract for these purposes, it is likely that there will still be substantial scope for dispute, for example, as to whether there was a sufficient opportunity to negotiate terms to take the contract outside of the standard form contract definition. In order to ensure compliance and avoid the risk larger businesses will need to review their contracting practices to:
The Treasury will now develop exposure draft legislation for further consultation. A timeline for this process has not been announced.
This article provides general comments only. It does not purport to be legal advice. Before acting on the basis of any material contained in this article, we recommend that you seek professional advice.
Paul Dugan, Principal in our Disputes Team
Direct Telephone: +61 8 8210 2266
The author would like to thank Nicole Mead for her assistance in preparing this article.