Thursday, 22 August 2019 14:53

Unfair contract terms in small business sector under scrutiny by ACCC Featured

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Australia’s competition regulator the ACCC says unfair contract terms are a big focus as it takes action and moves to ensure small businesses are not at a disadvantage because of one-sided ‘take it or leave it’ contracts.

The Australian Competition and Consumer Commission says it continues its focus on supporting small businesses in its Small Business in Focus report released on Thursday which provides an update on key developments in the small business, franchising, and agriculture sectors,

“Unfair contract terms are a big focus for the ACCC, and we want to make sure small businesses are not at a disadvantage because of one-sided ‘take it or leave it’ contracts,” ACCC Deputy Chair Mick Keogh said.

“Already this year, the ACCC has undertaken a number of in-depth investigations and taken action to ensure that small businesses receive the protection of the business-to-business unfair contract terms law, which the Australian Government introduced in 2016.”

The Commission notes in its report that two areas of particular concern have been unfair terms in stevedoring and agriculture contracts.

And the Commission says that following the ACCC’s intervention, three stevedoring companies - DP World Australia, Hutchinson Ports Australia and Victoria International Container Terminal - removed or amended terms in their standard form contracts that it considered were likely to be “unfair” under the Australian Consumer Law. Hutchison made its commitments in a court enforceable undertaking.

The ACCC says it was concerned that contract terms that allowed the stevedore to unilaterally vary terms in the agreements without notice, including fees paid by transport businesses, were potentially unfair.

“We were also concerned about contract terms that limited the liability of the stevedore for loss or damage suffered by the transport business, while not offering the transport business the same protections,” the Commission stresses.

“Stevedoring companies offer standard form contracts to thousands of transport businesses around Australia, and the costs associated with the movement of containers has a direct effect on the running costs of many small businesses,” Keogh said.

According to the ACCC report, earlier this year, a trader in fresh fruits agreed to change a potentially unfair term in its horticulture produce agreements with growers. The term allowed traders to seek a credit from the growers for produce that had been on-sold to and returned by a third party, with the credit amount potentially including the trader’s profit margin.

“We encourage small businesses to review their standard form contracts and if a contract term looks unfair, call it out and seek to have it changed,” Keogh said.

“This year we have also obtained two court outcomes against franchisors for breaches of the Franchising Code and Australian Consumer Law, and will continue to focus on ensuring small businesses have the protection of the law, and by ensuring compliance with industry codes in accordance with our Compliance and Enforcement Policy and Priorities.”

The ACCC has identified potential reforms in a number of agriculture markets such as dairy, beef cattle, and wine grapes, and this has led the Australian Government to implement a number of improvements for farmers, including support for a mandatory dairy code of conduct.

The ACCC has also provided a range of new resources for small businesses including translations of franchising and country of origin information into Cantonese, Mandarin and Hindi.

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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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