Select Page

News Articles

Relief from unfair terms in contracts will shortly extend to roughly 95% of small businesses

At Access Law Group, we regularly deal with small businesses, and issues faced by them arising from Agreements with large, sometimes heavy handed organisations. One of those issues is non-negotiable terms and conditions that they have been required to sign up to.

We also regularly deal with large organisations who seek to enforce the terms and conditions in their contracts, and who experience common difficulties through the litigation process.

On 20 October 2015, a new piece of legislation was passed which will affect the validity of certain terms in standard form Business contracts.

For the purposes of this law, an unfair contract term is a term that is not reasonably necessary to protect the interests of a party.

In effect, this law extends the application of unfair contract terms from consumers to small businesses.

What this means is that small businesses, (defined below,) will now be able to seek protection from unfair standard form contract terms, and that large businesses, and other businesses with standard form contracts, need to review their contracts and ensure that they are drafted in legally effective ways.

For the purpose of this legislation, a small business contract is entered into when at least one party of the contract is a business that employs fewer than 20 persons, and either;

  1. The upfront price payable under the contract does not exceed $300,000,00; or
  2. The contract has a duration of more than twelve (12) months, and the amount payable over those twelve (12) months does not exceed $1 million.

It is estimated that this Bill will affect up to 95% of small businesses.  It is an appropriate time for you to review your terms and conditions, and the continuing supply contracts that you have with your suppliers, to ensure that you have a full and proper understanding of the provisions, and how this new law will affect same.

The new law will not come into effect until 20 October 2016, (at the present time).

This enables small business, and larger organisations, to take measures to adapt to the new provisions.

If you would like to discuss how this new law may affect you as a small business, or as a larger organisation that utilises standard form contracts, please contact James Welch, or our team at Access Law Group.