If you are a small business owner and provide a variety of different services to the commercial market, you may have a variety of tried and tested systems in place to look after financial matters. In particular, you may have a certain type of contract that you use, so that you quickly come to an agreement with the customer and move forward with payment. You may have used this type of standard contract form for many years, without thinking too much about it, but is it really valid any more?
Levelling the Playing Field
Regulators are always looking at fairness when it comes to contract interactions in the Australian marketplace. They are aware of cases that are brought in the legal community alleging that certain terms in standard contracts are unfair. Consequently, different laws have been brought into effect fairly recently, that seek to extend additional protections to consumers.
Who Is Affected and What's Happened?
These new laws do not really affect larger companies or situations where a contract value is very high. They do, however, affect the vast majority of day-to-day transactions that small business owners enter into.
As a consequence, it is important to have a good look at the way that all of your contracts are created and be prepared to change some of the terminologies within. In particular, take advice as to whether any of your individual contract terms could be classified as unfair. If you don't take any action, any disputes could fall in favour of the customer instead.
What's Changed Specifically?
Principally, you cannot expect the customer to take your contract "as is" without any attempt to negotiate. You also cannot try and limit some of your own obligations, without allowing the other party to do the same as well, should they wish. How do you treat termination? You cannot allow yourself to do this without also permitting the customer to do the same, in similar circumstances.
Also, you need to be very careful when you stipulate penalties in relation to breach or termination. Any penalties which can be seen as "unreasonable" are unlikely to stand up in court from now on.
As you can imagine, there are a lot of potential repercussions. You want to avoid any contract disputes where all possible, of course, but you certainly don't want to be seen as unfair in the eyes of your prospects and potential customers. Make sure that your contracts are not challenged in a tribunal or court by getting in touch with a commercial lawyer before you issue any more.
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