Small businesses entering into standard form contracts, with a value of up to $300,000 (or up to $1 million if the contract is for more than 12 months) that are one-sided and cause a significant imbalance between parties, are seeing a light at the tunnel with the new Unfair Contract Terms regime. If a term is found to be unfair, it will now be void and unenforceable.
There are several options for addressing unfair contract terms in proposed contract: Here are some steps you can take:
- It is important to read and understand the contract you are entering into (not all will be deemed standard form contracts too!) The most common clauses where a significant imbalance in the rights and obligations of the parties may arise include: Indemnity; Fees; Suspensions; Interest; and Guarantees.
- Seek legal advice as soon as possible. A lawyer can help you understand your rights and options and can advise you on the best course of action.
- Negotiate with the other party to have terms revised or removed, where you believe there is an imbalance. It may be helpful to seek legal advice before negotiating to ensure that you are negotiating from a position of strength.
- If there is unwillingness to cooperate, revise and/or remove unfair terms, you may need consider an alternative provider.
Australian Consumer Law to the Australian Competition and Consumer Commission is responsible for enforcing the unfair contract terms provisions of the Act and can provide assistance and advice to small businesses who have been affected by unfair contract terms – you can also report individuals and companies to them!
Constructive Legal Solutions is here to assist with everything relating to unfair contract terms and making sure your business is protected. Call 1300 632 247 or send your enquiry to [email protected] for tailored advice.