Promise check: Make unfair contract terms illegal so small businesses can negotiate fairer agreements with large partners

Promise check: Make unfair contract terms illegal so small businesses can negotiate fairer agreements with large partners

At the 2022 election, Labor promised to make unfair contract terms illegal so small businesses can negotiate fairer agreements with large partners. Here's how that promise is tracking.

Businessman refusing money, Australian dollars, that come with contract document

As part of its election pitch to small businesses, Labor committed to introducing legislation that would make unfair contract terms between businesses illegal.

A contract is any agreement made between two or more parties that is legally binding.

There are some current protections in place to prevent small businesses from "unfair contracts" as determined by a court.

According to the Australian Competition and Consumer Commission, to be unfair a contract term must "cause a significant imbalance in the parties’ rights and obligations under the contract, not be reasonably necessary to protect the legitimate interests of the party advantaged by the term, and cause detriment (financial or otherwise) to a small business if it were to be applied or relied upon".

In its election policy platform, Labor argued these protections were not sufficient.

"Currently, if a term in a contract signed by a small business is found to be unfair by a court or tribunal, the clause will be void and the small business will no longer be required to comply with it," the document reads.

"But there are no rules against including unfair terms in the first place, and no penalties when they're discovered.

"Under the rules as they stand, the Australian Competition and Consumer Commission can't issue civil pecuniary penalties against businesses imposing unfair contract terms, and too few small businesses are protected by the rules."

In order to strengthen protections, Labor pledged to "make unfair contract terms illegal so small businesses can negotiate fairer agreements with large partners".

It would do this by giving the ACCC powers to issue civil penalties.

"It will also mean that a contract term which is judged to be unfair will effectively be banned from that point on and will be void anywhere it's been used," it added.

According to the policy "small businesses" would be defined as those with fewer than 100 employees or less than $10 million in turnover.

Assessing the promise

This promise will be considered delivered if in its first term of government Labor makes unfair contracts for small businesses illegal and allows the ACCC to issue civil penalties.

Here's how the promise is tracking:

19 May 2023

Share

19 May 2023

Share

More Promises

Toddler girl playing with wooden blocks

Promise check: Increase child care subsidy rates

Before the election, Labor promised to increase child care subsidies for all families earning up to $530,000, as well as extend the increased subsidies to outside school hours care. Here's how the promise is tracking.

A fist in front of a blurry figure

Promise check: Legislate 10 days of paid family and domestic violence leave

At the 2022 election, Labor promised to legislate 10 days of paid family and domestic violence leave. Here's how the promise is tracking.

Indigenous flag in front of parliament

Promise check: Hold a referendum to constitutionally enshrine a Voice to Parliament in the first term

At the 2022 election, Labor promised to hold a referendum to constitutionally enshrine a Voice to Parliament in its first term. Here's how the promise is tracking.

Pharmacist holding medicine box and capsule pack in pharmacy drugstore.

Promise check: Reduce the maximum charge for PBS scripts by $12.50 from January 2023

At the 2022 election, Labor promised to reduce the maximum charge for PBS scripts by $12.50 from January 2023. Here's how that promise is tracking.

Load more +
aboriginal flag
torres strait flag

Acknowledgement of Country

RMIT University acknowledges the people of the Woi wurrung and Boon wurrung language groups of the eastern Kulin Nation on whose unceded lands we conduct the business of the University. RMIT University respectfully acknowledges their Ancestors and Elders, past and present. RMIT also acknowledges the Traditional Custodians and their Ancestors of the lands and waters across Australia where we conduct our business - Artwork 'Sentient' by Hollie Johnson, Gunaikurnai and Monero Ngarigo.

More information