The Government has committed to extend the consumer unfair contract term protections to small businesses and has released for public consultation the exposure draft legislation to give effect to the extension by changes to the ASIC Act and Competition and Consumer Act 2010.
The changes extend the unfair contract protections to standard form small business contracts and allow unfair terms to be struck out.
Under the new protections introduced to Parliament today, a contract will be a small business contract if at least one party has fewer than 20 employees, and
- the upfront price payable under the contract does not exceed $100,000; or
- the contract has a duration of more than 12 months and the upfront price payable under the contract does not exceed $250,000.
Insurance contracts are effectively excluded from the operation of the unfair contract term provisions in the ASIC Act and by the Insurance Contracts Act 1984 (Cth) (IC Act). Despite this, the legislation can affect other insurance related contracts such as those between:
- insurers, brokers, agents and their suppliers and others they contract with outside the insurance contract;
- insurance brokers and their clients; and
- premium funders and borrowers.
To request a full summary of the issues email us a request at [email protected]