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Extending Unfair Contract Term Protections to Small Business – COAG Consultation Regulation Impact Statement – Consumer Affairs Australia and New Zealand

On 23 May 2014 Consumer Affairs Australia and New Zealand released a Consultation Regulation Impact Statement (RIS) on extending unfair contract term protections for standard form contracts to small businesses. Standard form contracts are often prepared by businesses for transactions that are of low value and repeated with a large number of parties. Previous research has found that standard form contract terms and conditions can disadvantage consumers who do not have the ability to review or negotiate standard form contracts. Consequently, Unfair Contract Terms in standard form consumer contracts are now regulated by provisions in the Australian Consumer Law. The RIS identifies the possibility that small businesses may face similar problems as consumers when engaging in contracts. Small businesses may encounter the same lack of scope for negotiation, or may have a lack of time and access to technical or legal advice. The RIS concludes that the introduction of an Unfair Contract Terms regime for contracts offered to small businesses would result in fairer contract terms and a potentially more efficient distribution of risk. The RIS notes that at present there is limited empirical evidence about the scope of the problem and that the benefits and costs of any options to address the problem are difficult to measure. Public consultation is currently open on the Treasury website. The consultation period closes on 1 August 2014. A COAG Consultation Regulation Impact Statement (RIS) was prepared by Consumer Affairs Australia and New Zealand and has been approved by the OBPR.