Labor makes unfair contract terms illegal

The following is a media release from Chris Bowen MP, Madeleine King MP and Andrew Leigh MP.

A Shorten Government will protect small business by making unfair contract terms illegal and punishable with significant fines of up to $10 million.

Australia’s current laws aren’t tough enough. While contracts terms that unfairly exploit a power imbalance between the two parties can be voided by a court, there’s no punishment for the entity exploiting its market power. This means there’s nothing discouraging the big end of town from pushing smaller dependent firms to sign onto unfair arrangements.

The Australian Competition and Consumer Commission has previously stated that making unfair contract terms illegal:

‘… would act as a better deterrent. In the ACCC’s view, currently there is minimal incentive for businesses to comply with [unfair contract term] laws.’

A Shorten Government will ensure that the top end of town can’t get away with putting dodgy clauses into their contracts by:

  • making unfair contract terms illegal;
  • introducing penalties for contracts that contain unfair contract terms; and
  • expanding the definition of small businesses eligible for protection from such contract terms.

These measures will complement Labor’s Access to Justice reforms, which help small businesses take court cases to address anti-competitive conduct.

Australia’s small businesses need smart reforms to ensure that they aren’t pushed around by the big guys.

While the Coalition twiddles their thumbs with a lengthy review, Labor is creating policy to tackle the problem head on.

Fact sheet here.