Small Business Win
Do you run a small business with less than 20 total employees? If so, you may be protected from new federal unfair contract legislation taking effect later this year.
Protecting Small Business
Your business will be protected if you enter into standard form contracts involving an upfront payment of less than $300,000.00 or an overall payment of less than $1M for contracts lasting longer than 12 months.
A contract term will be unfair under the new legislation if the term:
causes a significant imbalance of rights and obligations between the parties;
is unnecessary for the advantaged party to protect its interests;
causes significant detriment, financial or otherwise, to you.
ASIC have hinted that the following situations may trigger protection under the new legislation:
excessive fees or interest rates;
automatic rollover extensions of the contract without termination rights; and
allowing the other party to vary the contract without prior agreement.
If a term is held by a court to be unfair under this new legislation, the court will have the power to vary the contract in a way which removes or negates the effects of the unfair term.
The legislation will take effect from 12 November 2016.