Sims says the business-to-business unfair contract term law is an extremely valuable law that works to protect small businesses against terms that just should not be found in contracts – but “it does not go far enough, and its limitations really tie our hands as a regulator”.
Sims told the Council of Small Business Organisations Australia National Small Business Summit 2018 on Friday that Australian Consumer Law allows a potentially unfair contract term to be challenged in a court so it can be declared void, but it does not prohibit such a term being included in a contract in the first place.
He pointed out that companies could include potential unfair contract terms in their contracts and when, and only when, challenged by the ACCC, could companies remove them from their standard contracts. “There is little the ACCC can do to hold them to account for prior conduct. Neither can the ACCC issue infringement notices for unfair contract terms,” he said.
“The law simply isn’t strong enough. Unfair contract terms should be illegal. As it stands, no real incentive exists for businesses to ensure their standard contracts do not contain such terms, which really means they have incentive to include them and see if they can get away with it.
"This is out of step with other provisions in the Competition and Consumer Act 2010, and Australian small businesses are the ones paying the price."