SMEs warned about signing new deals as unfair contract provisions gets green light

Small businesses across Australia are being warned to be careful when signing new contracts within the next 12 months as businesses of all sizes prepare for the introduction of laws to protect smaller firms from unfair contract provisions.

Amended legislation to extend unfair contract term protections to small businesses was passed by the parliament in October and the legislation received Royal Assent yesterday.

This means the protections will come into effect in 12 months time from the date of Royal Assent, on November 12, 2016.

The legislation, which was an election commitment of the Abbott government, applies to small businesses that employ less than 20 people.

Amendments put forward by the Greens in the Senate mean that small businesses negotiating a contract that does not exceed $300,000 in value – or $1 million for contracts longer than 12 months will be covered by the legislation.

The bill will render unfair terms in standard form contracts with small business void and are intended to create a more level playing field between smaller and larger operators.

However, Peter Strong, executive director of the Council of Small Business of Australia, told SmartCompany this morning there are concerns that some larger firms will attempt to sign off on contracts with small firms before the legislation is introduced to avoid the new provisions.

Strong says this would be particularly worrying if the contracts that are signed cover multiple years.

“Don’t let them force you into a long-term contract,” Strong says to small business owners.

Strong says the Australian Competition and Consumer Commission will be monitoring the implementation of the new protections.

“If you feel you are being unfairly coerced, contact the ACCC,” he says.