Small businesses set to benefit from contract reform

Federal reforms will come into place from the 12th of November 2016, changing the way contracts are handled to protect small businesses from unfair dealings…
Small businesses can breathe a sigh of relief, with the introduction of federal reforms banning unfair contracts.
The new laws will be implemented from the 12th of November 2016.
This is good news for Australian contractors and suppliers, which employ less than 20 people, because they’ll be protected from unfair terms in standard form contacts.
The reforms will change the way that construction businesses negotiate contracts, when at least one party is a small business and the upfront price payable is no more than $300 000 or $1 million (for contracts longer than 12 months).
This applies to contracts relating to the supply of goods or services, or the sale or grant of an interest in land.
According to the laws, a contract will be considered “unfair, if it exclusively gives one party the power to:
  • Avoid, terminate or limit the performance of a contract
  • Penalise the other party for breaching or terminating the contract
  • Change the terms of the contract (including deciding whether or not to renew it)
  • Vary the price payable or the characteristics of the goods/services, without giving the other party the right to terminate
  • Determine whether the contract has been breached, without consulting the other party
  • Restrict the vicarious liability of one party
  • Assign the contract without the other party’s consent
  • Hinder one party from suing the other
  • Interfere with legal proceedings by imposing the evidential burden on one party, or limiting the evidence they can use in legal proceedings relating to the contract

It’s a good idea to become familiar with the reforms before the 12th of November, whether you’re a small business or not.
This includes checking existing contracts for any unfair terms, since the reforms also apply to contracts which are renewed or changed on or after the 12th of November 2016.
TPM Builders make it a point to operate by ethical guidelines. We support the reforms and look forward to seeing the industry become more of a level playing field.