Changes to Unfair Contract Term Laws Announced

Public news

Amendments will be designed to strengthen the current laws surrounding unfair contract terms (UCTs), subject to the outcomes of a Regulation Impact Statement (RIS) process.

The government has also confirmed that as part of this process, it will examine whether it is appropriate to extend any enhanced protections for small business to consumers and insurance contracts.

The government has recognised the existing UCT legislation has improved the protections to small business in certain sectors, but it does not provide a strong deterrent for businesses to not use UCTs. A lack of penalties or deterrents for the use of UCTs has been identified as a significant issue by MTA members.

Introducing civil penalties and an increase in the types of contracts covered would be a positive step toward balancing the relationship between Franchisors / Insurance companies and franchise automotive businesses including automotive repairers, new car, motorcycle, agricultural machinery, heavy vehicle dealerships and collision repairers.

To determine which options will be implemented, the RIS will be issued shortly so that industry can provide feedback. The options will include:

  • Making UCTs illegal and attaching civil penalties to breaches;
  • Redefining small business for the purposes of the protections as a business that employs fewer than 100 persons at the time the contract was entered into or had an annual turnover less than $10 million;
  • Broadening the coverage of small business contracts by removing the value threshold;
  • Further clarifying the definition for a standard form contract;
  • Extending the UCT protections to government contracts; and
  • Considering exempting ‘minimum standards’ prescribed by state and territory laws

Once the consultation paper is released, the MTA will be facilitating a Working Group meeting to obtain member’s feedback for our submission. Following the outcomes of the RIS process, the Government, if re-elected, will introduce amendments to strengthen the existing laws.

If you would like to discuss this further, please click here to contact our Industry Policy Specialist, Nathan Robinson.