NatRoad hails unfair contract law reform move


Legislation introduced as Canberra plans action on insolvency

NatRoad hails unfair contract law reform move
Michael Sukkar

 

The National Road Transport Association (NatRoad) welcomes a statement by federal assistant treasurer Michael Sukkar that all Australian governments have agreed to strengthen protections for consumers and small businesses from unfair contract terms.

Sukkar notes that evidence gathered through public consultation "indicates that unfair terms remain prevalent in standard form contracts and there is uncertainty around the scope of the existing protections".

"Treasury will develop exposure draft legislation that will provide a further opportunity for stakeholders to comment on the detail of the reforms," he says.

NatRoad believes that, while the current unfair contract laws do help make transport contracts fairer, with the ACCC taking several test cases that relate to transport contracts, the law is deficient.

It falls well short of introducing a general prohibition against unfair conduct, practices that have been fuelled by Covid-19.

"NatRoad has for some time called for the introduction of a general prohibition against unfair practices. The current practice of some customers expecting transport operators to accept substandard and unfair contracts must be addressed," NatRoad CEO Warren Clark says.

Many of NatRoad’s policy positions have been adopted, the organisation observes, with the Commonwealth and state and territory governments having agreed to strengthen existing unfair contract term protections in the Australian Consumer Law, by:

  • Making unfair terms unlawful and giving courts the power to impose a civil penalty
  • Expanding the definition of small business and removing the requirement for a contract to be below a certain threshold
  • Improving clarity on when the protections apply, including on what is a ‘standard form contract’.

"NatRoad looks forward to commenting on draft legislation so that we can contribute further to the development of the law in this area," Clark says.

"The mindset of some customers must change so that safety and fairness are advanced, and the strengthened law will be an incentive for customers to make changes to their contracts which we would urge them to review now."


Read Warren Clark’s views on tackling unfair contracts, here


Meanwhile, the federal government has introduced insolvency reform legislation into the Parliament with a view "to help more small businesses restructure and survive the economic impact of Covid-19.

"As the economy continues to recover, it will be critical that distressed businesses have the necessary flexibility to either restructure or to wind down their operations in an orderly manner," Sukkar and treasurer Josh Frydenberg say in a joint statement.

"As part of these changes, a new debt restructuring process will be introduced for incorporated businesses with liabilities of less than $1 million, drawing on some key features of the Chapter 11 bankruptcy model in the US.

"By moving from a rigid one-size-fits-all "creditor in possession" model to a more flexible "debtor in possession" model, it will allow eligible small businesses to restructure their existing debts while remaining in control of their business.

"For those businesses that are unfortunately unable to survive the economic impacts of the Coronavirus outbreak, a new simplified liquidation pathway will be introduced for small businesses to allow faster and lower-cost liquidation.

"Complementary measures will also be enacted to ensure the insolvency sector can respond effectively both in the short and long term to increased demand and to the needs of small business."

Aimed at coming into effect on January 1, the reforms are expected to cover 76 per cent of businesses subject to insolvencies today, 98 per cent of whom who have less than 20 employees.

 

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