New laws to protect farmers and agriculture businesses from unfair contract terms

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New laws to protect farmers and agriculture businesses from unfair contract terms

While consumers have had protections from unfair contract terms since 2010, from 12 November 2016 a new law comes into effect Australia-wide that will protect small businesses from unfair contract terms in standard form contracts. The Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Act 2015 (Cth) defines a small business as a business that employs less than 20 people and defines the standard form contract as being worth up to $300,000 in a single year or $1 million if the contract runs for more than one year. Standard form contracts are those where there is minimal genuine negotiation over the terms or are offered on ‘take it or leave it’ basis. This new law is particularly relevant for farmers and agricultural businesses due to the market dominance of the supermarkets.

Importantly, terms of a standard form contract that are excluded from this law are:

-terms that define the main subject matter of the contract;

-terms that set the upfront price payable; and

-terms that are required or expressly permitted by a law of the Commonwealth, or a state or a territory.

Also, the new law will not apply to:

-contracts entered into before 12 November 2016 (unless renewed on or after that date);

-constitutions of companies, managed investment schemes or similar bodies;

-shipping contracts;

-certain insurance contracts; and

-contracts in sectors exempted by the Minister

Over the coming days we will be publishing a discussion of how unfair contract terms are determined and steps that small businesses can take to ensure that they can utilise the benefits of this law.


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