Release of the ACCC's Business-to-Business Unfair Contract Report

Written on the 15 November 2016 by Lana Reed

Are you ready for the business-to-business unfair contract terms law?

The ACCC reported on terms in standard form contracts that might raise concerns under the new business-to-business unfair contract terms law. The law came into effect on Saturday, 12 November.

Over 12 months, the ACCC worked with some of Australia's largest businesses to identify clauses in their existing contracts that could become problematic under the new law.

The majority of these businesses agreed to make positive changes to their contracts, removing some clauses and amending others.

The report provides an industry-by-industry breakdown of potentially concerning terms in seven industries: advertising services, agriculture, franchising, independent contracting, retail leases, telecommunications services  and waste management.

Potentially problematic terms common across all industries included:

• Terms that allowed one party to change key aspects of a contract at any time
• Terms that unreasonably limited the larger businesses liability to the smaller business, and
• Unreasonable termination clauses

While the courts will ultimately decide whether a term in a standard form contract is unfair, the report provides guidance to small business about the kinds of terms that the ACCC thinks could raise concerns. 

From 12 November the ACCC will shift from education to enforcement, where we will investigate unfair terms in standard form contracts. With almost two thirds of small businesses claiming to have experienced unfair terms in agreements they have signed, businesses should continue to review their standard form contracts to ensure they meet the new standard.

The report is available on the ACCC's website.