From today, new rules come into force that are designed to protect small businesses from unfair contracts. Here Antonia Mochan from Freelance Australia sets out what the new rules say and what you should look for to make sure you are being treated fairly.
New rules come into force today that apply to standard form contracts. That’s any contract where you don’t really get a say in the content. We’ve all been there:
You: “I’d like to include a clause on payment milestones”
Client: “Sorry, that’s our standard contract, I can’t make any changes.”
The rule are for any contract for the supply of goods or services (plus land sales and leases, which is probably not quite so professionally relevant) where:
- At least one of the parties is a small business (less than 20 employees); and
- The upfront price is no more than $300,000 (or $1m if the contract is for more than 12 months). There are some details around what constitutes an upfront price that could be useful to check on if you are getting a commission, percentage etc.
So what would be considered unfair?
The main focus of the law seems to be the need for balance between the two sides. So a contract in which one part could do any (or, god forbid, all) of the following, but not the other, would be considered unfair:
- Avoid or limit their obligations under the contract
- Terminate the contract
- Impose penalties for breaching or terminating the contract
- Vary the terms of the contract
Are there any exclusions or exemptions?
As in most legal situations, there are a number of exclusions and exemptions. For freelancers the important things to note that are not covered by the new rules are:
- Contracts signed before 12 November 2016
- Terms that define the main subject of the contract
- Terms setting the upfront price
- Any contract terms that that are required or allowed by a federal or state law (e.g. franchising)
What do I do if I think a term is unfair?
According to the rules, only a court or tribunal can rule that a term is unfair. However, the ACCC suggests that if you think a term of a contract you are about to enter falls foul of the new rules, ask for it to be changed. Faced with the reality of the new rules, most companies will want to comply and it might just be that they had not updated their contract to take these new rules into account.
Thanks to the ACCC and The Recruiters’ Casebook for information about the new rules. Please note that we provide this information to bring it to your notice: we’re not lawyers and if you have any concerns, you should check with a lawyer, your local agency or the ACCC.
Will these new rules help you? Let us know how in the comments!