Friday, 31 August 2018 12:09

ACCC chief advocates changes to ‘unfair’ business contracts Featured

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ACCC chair Rod Sims is advocating for changes to business-to-business “unfair” contract terms in standard form contracts, saying there is a strong case to both strengthen the law and introduce penalties for breaking it.

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 regime has two significant flaws: first, unfair contract terms are not illegal, and second, the ACCC cannot seek penalties when the court has declared an unfair contract term void, nor can we issue infringement notices for contract terms that are likely to be unfair."

“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."

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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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