Currently, Australian Consumer Law protects consumers against unfair contract terms in standard form contracts.
The government has committed to extend these protections to include Australian small businesses. This arose from public consultation in 2014 that indicated small businesses lack the time, expertise, and bargaining power to negotiate contract terms, while having no legislated protections against unfairness.
The draft bill of the Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill 2015 extends existing legislation to small businesses that:
- employ less than 20 staff, and
- enter contracts with a value of no more than $100,000 ($250,000 for contracts longer than 12 months).
In our submissions to the government (August 2014 and May 2015) about this proposal and the draft bill, we welcomed the extension of the unfair contract term protections to small businesses. In our experience, the considerations that underpin unfair contract term protections for individual consumers are equally relevant when considering small business contracts.
We find that most small business consumers who contact us:
- have not negotiated any of the terms of their telecommunications services
- use similar telecommunications services to consumers, if not the same
- face similar contractual issues with their telecommunications services as do individual consumers, including potentially unfair contract terms
- do not have the resources to seek legal advice or deal with these types of issues through other forums, other than directly with their provider or through the TIO.