NatRoad backs unfair contract law changes

But national body looks for greater protections against the powerful

NatRoad backs unfair contract law changes
Contract terms are undergoing greater scrutiny


Draft legislation to improve protections for small businesses against unfair contract terms are on the right track but more needs to be done, the National Road Transport Association (NatRoad) has told federal Treasury.

In its submission commenting on the draft unfair contract terms protections Bill lodged today, NatRoad said the proposed legislation would be a good step forward.

"Prohibiting the use, application and reliance on an unfair term in standard form contracts is something we’ve been seeking for years," CEO Warren Clark said.

"Under current contract law, a large corporation can decide to terminate a contract after 30 days and give its business to someone else. 

"This notice can be given even though the contract term is for five years.

"Termination clauses are so heavily in favour of the big customer that they can make onerous demands on a small operator knowing that it’s easy to walk away and contract someone else. 

"Additionally, currently penalties can’t be imposed against a customer for including or relying on an unfair contract term without a court order, which involves a lot of time and potentially a big legal bill.

"When you combine this ‘unfair term’ reform with the ability of courts to impose a financial penalty for a contravention, the new legislation will finally have some teeth.

"It will help small transport businesses entering into standard agreements with larger, more powerful customers and contractors." 

Read NatRoads warning on the impacts of the power imbalance, here

While NatRoad supports the Bill, it believes more reform is needed to increase protections for small businesses against unfair payment term clauses. 

"We also want to see the need to go to court on all matters relating to unfair contracts modified and for the regulator to be given more power," Clark said. 

NatRoad points out that, at present, an unfair contract term can be considered "fair" in one context even though it was held by a court to be unfair in another contract. 

The proposed new law will say that a term is unfair if a court has already found a similar term used in similar circumstances is unfair.

The draft law would also increase the eligibility of businesses covered by the protections by expanding the coverage from businesses that employ fewer than 20 employees to those which employ fewer than 100 employees. 

It also introduces an annual turnover threshold of less than $10 million instead of using staff size to determine eligibility.


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