The new changes to the Australian Consumer Law took effect on Saturday and will see amended rules applied to standard business form contracts entered into, renewed or amended after 12 November 2016.
According to Carroll & O’Dea Lawyers special counsel Ben Robertson, under the new rules, “unfair clauses will no longer be acceptable and caution must be exercised when drafting clauses that provide for: termination for the convenience of one party; variations to the scope of works and contract price, extensions of time to perform works under the contract; delay damages, substitution of materials; limitation of the liability of one party; and indemnities provided by one party to another”.
“These new changes will affect tens of thousands of small businesses across Australia,” said Mr Robertson.
“The changes mean that small businesses will be protected from unfair contracts that, among other things, cause a significant imbalance in the parties’ rights and obligations under a contract.
“In essence, unfair contracts benefit one party over the other.”
The changes affect businesses with fewer than 20 employees and an up-front contract price of $300,000 or less, or $1 million or less for contract terms over 12 months.
“The introduction of these changes will mean much greater protection for small businesses, but are also a reminder for anyone involved in the preparation of standard short-form contracts to make sure that they now comply with the new regulations,” said Mr Robertson.
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