Lawyers remind operators of changes coming in six months’ time
Cooper Grace Ward Lawyers (CGW) has marked the six months before new unfair-contracts rules come into effect with a warning to transport operators.
CGW partner Terry Batch and special counsel Gillian Bristow note the Competition and Consumer Act 2010 (Cth) and Australian Securities and Investments Commission Act 2001 (Cth) have been amended to extend unfair contract protection laws to small business contracts.
Their intervention follows an earlier legal alert on the risks to logistics players.
In an advisory titled Transport operators – your conditions of carriage may soon be unenforceable against small businesses,
Batch and Bristow warn that under the legislation, courts can declare that a term of a standard form small business contract is void if the term is considered unfair.
From November 12, standard form contracts that are entered into or renewed, or terms of existing contracts that are varied, will be subject to the new provisions.
Under the Act, a standard form contract is one:
- that is prepared before discussions between the parties
- where one party was required to either accept or reject the contract as presented
- where there is no opportunity to negotiate
- where the terms are not specific to one party or to the particular transaction.
“These changes will have significant repercussions for the road transport industry because transport operators routinely rely on ‘standard form contracts’, usually set out in fine print on the reverse of consignment notes,” the lawyers say.
“These conditions usually seek to exclude liability for loss of or damage to goods, regardless of whether the damage was caused by the operator’s negligence.”
A small business contract is one where at least one party employs fewer than 20 people and the upfront price payable under the contract does not exceed either $300,000, or $1,000,000 if its duration is more than 12 months.
A court may declare a term to be unfair if the term would cause a significant imbalance in the parties’ rights and obligations under the contract, is not reasonably necessary to protect the legitimate interests of a party, and would cause financial or other detriment to a party to the contract.
“In determining whether a term is unfair, a court may also take into account various factors including the extent to which the term is expressed in reasonably plain language and is presented clearly and readily to the party affected by it,” the lawyers say.