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Unfair contracts update

We’ve all been in the position: you are entering into an agreement with a business that is far larger than your own and they provide you with a contract that is too thick to jump over, which contains draconic conditions and which you have no real ability to negotiate.

If you find yourself in that position, we have some good news for you …

If you are the bigger party in the scenario, then we have a word of warning for you…

New laws came into effect on 12 November 2016.

The new amendments to the Australian Consumer Law will apply to an independent contractor/consultancy agreement if:

  • it is a standard-form business-to-business contract entered into, varied or renewed on or after 12 November 2016;
  • at least one of the parties is a ‘small business’ (i.e. employs fewer than 20 people, including casual employees employed on a regular and systematic basis); and
  • the upfront price payable under the contract is no more than $300,000 (if the contract is for less than 12 months) or $1,000,000 (if the contract is for more than 12 months).

Under the new rules, if a particular term in a standard-form contract is found to be unfair by a court or tribunal, then that clause will be void and neither party will be able to enforce it.

The onus will be on the party who prepared the contract to prove its terms are not unfair.

If you are a contractor stuck in an unfavourable agreement, or if you are negotiating a contract with a smaller contractor, it pays to be aware of the new rules.

Fishburn Watson O’Brien solicitors John Watson and Jay Clowes routinely practice in the area of commercial contracts and disputes. If you have any questions in relation to a contract, or need assistance with an ongoing dispute, don’t hesitate to contact them on (02) 6650 7000.

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