business-contracts

How to Ensure Your Business Contracts are Fair

Posted on Posted in Business, Legal Advice

When you run a small business you will come across any number of standard business contracts that are essential to the day to day running of your small business. Most commercial lawyers that would find on a lawyer’s list know that in general, many of these are actually unfair to the small business because they are not drafted in favour of the larger companies that offer them.

Many standard form contracts have not been at all fair to the small business. Up until now, there was not much you could do about it, except try to have a clause put in that covered your liability, but the other party didn’t have to agree to it, so it was either sign up or lose the deal.  However, that has just changed, so you don’t have to suffer under any unfair contracts any more.

However, just so that things don’t swing the other way and become unfair to those who  offer the contract, unfair terms must be examined in a court of law to ensure they are truly unfair and will cause the small business undue financial or other kind of hardship if not removed.  It must also be proven that removing them will not adversely affect the other company.

This particular law was passed in November 2016, even though there was another similar law in place since 2010. This particular law was passed to protect the interests of small business where standard contracts are concerned. This applies to both new contracts and renewed ones. If any contract is varied after the 12th November 2016, the law also applies to that.

Many very large businesses took part in the review and a number of issues were identified that particularly affected small business. Note: these companies were not chosen due to the number of complaints against their contracts, but due to their size and/or because of the diversity from the rest of the group they represented.

Standard contracts in the following industries were affected: –

  • Advertising
  • Franchising
  • Advertising
  • Telecommunications
  • Independent contracting
  • Retail leasing
  • Agriculture
  • Waste management

What to do if your standard contract is unfair: –

  • You can now ask the contracting company to take out a clause you deem to be unfair. If they refuse you can contact the relevant authorities to voice your complaint and ask that the contract be amended.
  • Contact your local consumer protection agency.
  • Contact the ACCC’s small business hotline to lodge a complaint.
  • Contact the ASIC helpline
  • Seek help from your commercial lawyers.

Since many small business have had to struggle against the unfair contracts of others, this news bring welcome relief that many will gladly accept.  Even the larger companies were happy to identify the issues so that their smaller cousins could have some respite and so more likelihood in succeeding against the many seemingly overwhelming odds that many experience.