Unfair Contracts Policy
Every newsagent in Australia is subject to a number of standard-form contracts across each of their major product and service categories.
On occasion minor variations are made to these contracts where industry suppliers deem it appropriate, however the overwhelming majority of key contractual terms are presented to newsagents on a take-it-or-leave-it basis.
Counterparties to these contracts include major newspaper publisher such as News Ltd or Fairfax Holdings Ltd, major magazine publisher/distributor Australian Consolidated Press, various public and private State lottery corporations, in addition to major global greeting card companies such as Hallmark Cards and John Sands.
Standard-form or take-it-or-leave-it contracts afford parties to the agreement little opportunity to negotiate the terms involved, and are often presented in circumstances where a significant imbalance in the bargaining power of the respective parties exists.
Standard-form contracts are used by parties irrespective of the legal status or nature of the party to whom the contract is presented and it is invidious to suggest that the same term, which may be considered unfair in relation to a contract entered by a natural person, would not be similarly unfair in relation to a business, where neither of them is in a position to negotiate the term.
Newsagents and other small businesses often play the dual role of suppliers of goods or services and as consumer in their own right, and as a result are no less vulnerable to unfair or harsh contractual treatment than individual consumers.
Newsagents in their capacity as suppliers small businesses are often subject to expectations and fair trading obligations similar to those of larger businesses in the provision of goods and services.
In instances where small businesses offer products for resupply, they are exposed to a relatively more rigorous, rigid and less sympathetic set of contractual standards than would ordinary consumers.
As a result, small business proprietors are far less likely to engage in vexatious or opportunistic actions for compensation, nor are they in a position to readily defend against such claims in contrast to larger businesses.
Many of these proprietors lack sufficient time and resources to make fully informed decisions and are often financially at risk from the consequences of poor decisions or 'unfair' conduct through higher levels of debt and/or a high proportion of their net wealth invested in their business.
Consequently, in their role as consumers small businesses stand to lose significantly larger sums than ordinary consumers in the event of adverse obligations arising from unfair standard form contract terms.
The Federation is especially supportive of the unfair contract business-to-business protections offered to small businesses outlined in the draft provisions of the Trade Practices Amendment (Australian Consumer Law) Bill 2009, prior to 24 June 2009, with the addition of a few minor enhancements.
Firstly, the diversity of small business types is such that any definition used to narrow the application of the amendment would risk excluding some small businesses legitimately requiring protection under the draft provisions.
Therefore, the Federation's preference is that it would be better to rely on the bargaining power threshold and a vexatious proceedings provision rather than the use of a definition to narrow the application in respect of business-to-business transactions.
Finally, the Federation is concerned that there may be circumstances where a voided term is amended to have a similar effect and represented on a take-it-or-leave-it basis or that the voiding of a term may render a contract incapable of operating.
The Federation argues that the draft provisions may be able to address such circumstances by including a provision which allows the court to make an order to vary, or set aside part or all of the contract.