Small business asked to spill beans on unfair contract experiences

Small businesses are being urged to tell the government about their experiences with unfair contracts.

Following the federal government’s budget announcement to extend to small businesses the same unfair contract term protections offered to individual consumers, the Federal Department of Treasury is calling for public submissions about the topic or for businesses to complete a short survey to share their previous experiences.

Small Business Minister Bruce Billson told SmartCompany the submissions will help to address a current imbalance of market power.

“It reflects the lack of market power that small businesses have in dealing with big business and in contending with these ‘take it or leave it’ leave contracts,” says Billson.

“We are happy to receive any material that businesses large and small would like to share with us, [including] practical examples or experiences they’ve had where unfair contract terms have been exercised to the disadvantage of a small business,” says Billson.

“We would like to know what action steps would help guard against harm and economic hardship where big businesses exercise their market power to their further advantage by including terms and conditions that are not reasonable, compared to what a small business’ interests might be,” he says.

Billson says he has already had an overwhelmingly positive response from small business and has heard examples of unreasonable terms including unilaterally changing or terminating contracts to the detriment of small business economic survival.

“We’ve even had examples where a big business has forced small businesses to buy certain types of equipment and incur the expense of that purchase, only to see the big business able to change their mind and tell small business they don’t actually need that equipment at all,” he says.

“The small business has then had to sell back the equipment at a lower cost than what they paid.”

Billson says the reforms have attracted some criticisms, including that they are not necessary or that they already exist. However, he says these examples disprove these claims.

Submissions will close on August 1.