Big Rights for Small Business

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If there is one significant highlight to the Coalition’s first budget yesterday, it is the extension of rights for small businesses.

What benefits has small businesses received in the budget?

Small enterprises will now have the same rights as consumers in respect of unfair contracts, against big businesses.

In general terms, the Government intends to introduce new legislation which will make unfair terms in standard contracts with small businesses void.

What has caused consumer laws to extend to small enterprises?

The extension of consumer laws to small businesses has come from a long standing public debate in relation to big businesses and the respective standard contracts which may impose challenging and onerous obligations on small businesses.

What are unfair terms?

The Australian Competition and Consumer Commission regards terms of the following nature to be unfair:

  1. Terms that will cause a significant imbalance between the rights of the parties;
  2. Terms that are not reasonably necessary to protect the legitimate interests of the parties;
  3. Terms that would cause a detriment (financial or non-financial) if the business tried to enforce the term; and
  4. Terms lacking transparency.

What to expect from these changes?

In essence, if you have a small business who deals with a big business under a standard contract, the legislative changes, once introduced, will allow your business more flexibility in relation to varying a standard contract.

I will follow up a release with a subsequent blog once the legislation has been finalised by Government. In the interim, I encourage all small and medium sized business owners to acknowledge the new rights and seek the review of any standard contract to be entered into with a bigger business.

If you have any questions, please do not hesitate to contact me.

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