Unfair contract terms legislation – only one week to go….. Examples of where this may apply to your business
Since writing my last article, I have been asked by clients to give examples of contracts that may be impacted by the unfair contract terms legislation.
Remember it applies to standard contracts, which is a contract where the other party has little or no opportunity to negotiate the terms – that is, contracts offered on a ‘take it or leave it’ basis.
For example, if a temporary fence hire business hires fencing to a small business with less than 20 employees, then it is likely the new unfair contract terms legislation will apply to the hire agreement. Why? The hire agreement is likely to be a standard document where the contract terms (other than price, length of hire, name of hirer etc.) are not negotiated.
Another example is a wholesale grocery distributor who starts to supply groceries to a local shop, after the legislation applies. If the local shop owner has less than 20 employees and they are approved as a customer on credit terms, then the legislation will apply to the standard terms and conditions of the terms of credit. But if that same distributor is successful in securing Woolworths as a new customer on credit terms, the unfair contract terms legislation will not apply to the exact same standard contract, as Woolworths has over 20 employees.
What about a lease between a Landlord and business tenant? Generally, most lease terms are negotiated between the parties, rather than the use of a standard document that is not altered. So, the unfair contract terms legislation is unlikely to apply.
What about a franchise agreement? As most franchise agreements are not negotiated and are provided on a ‘take it or leave it’ basis, the unfair contract terms are likely to apply to most franchise agreements.
Will the unfair contract terms apply if you submit a tender to use your earthmoving equipment to construct a drain for the local Council? No – Even if you are a small business with less than 20 employees, the legislation does not apply to local councils except in very limited circumstances.
There are other circumstances too where the legislation will not apply including insurance contracts, constitutions of companies and shipping contracts for the carriage of goods by ship.
Please don’t hesitate to contact Parker Law QLD for advice and remember our special offer – to spend up to one hour reviewing your standard form contracts and providing advice for a set fee of $295.00*.