Labor Will Make Unfair Contract Terms Illegal

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A Shorten Labor Government will protect small businesses by making unfair contract terms illegal and punishable with significant fines.

Australia’s current laws aren’t tough enough. While contract terms that unfairly exploit a power imbalance between a big business and a small business can be voided by a court, there’s no punishment for the entity exploiting its market power.

This means there is nothing discouraging the big end of town from pushing smaller, dependent firms to sign onto unfair arrangements.

The Australian Competition and Consumer Commission previously stated that making unfair contract terms illegal “… would act as a better deterrent. In the ACCC’s view, currently there is minimal incentive for businesses to comply with [current unfair contract term] laws.”

Common unfair contract terms include: allowing the contract provider to unilaterally vary all terms, broad and unreasonable powers to protect themselves against loss or damage at the expense of the small business, or an unreasonable ability to cancel or end an agreement.

LABOR’S PLAN:

A Shorten Labor Government will ensure that the top end of town can’t get away with putting dodgy clauses into their contracts by:

  • Making unfair contract terms illegal.
  • Introducing penalties for contracts that contain unfair contract terms.
  • Expanding the definition of small businesses eligible for protection from such contract terms (expanding eligibility for protection from businesses with up to 20 employees to also include businesses with annual turnover of up to $10 million).

These measures will complement Labor’s successfully legislated Small Business Access to Justice reforms which help small businesses take court cases to address anti-competitive conduct, and our Fairer Markets for A Fairer Australia competition reforms.