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Log In / Register | May 24, 2018

Unfair Contract Terms Plain Nasty

Associate Professor Frank Zumbo calls on the critics of the inclusion of franchising in new Australian legislation dealing with unfair contract terms to recognise that there would be no compromise of the legitimate protection of any party. The Australian Financial Review piece is attached.

Professor Zumbo concludes that reasonable protection for franchisees is achievable and required.

The imminent enactment of federal laws dealing with unfair contract terms means Australia will join those jurisdictions that have long had such laws.

Not surprisingly, of all the small business associations it is the Franchise Council of Australia that has been loudly throwing tantrums since the original proposal by the Hon Chris Bown MP deliberatley included small business. 

Despite attacks from vested interests, the laws boost confidence in standard contracts and are to be welcomed. Rather than taking a defensive posture, critics from the big end of town should turn the proposals into a positive and take the lead by exploring a co-operative approach to fairer contracts.

While the Australian Small Business Minister, Craig Emerson, has rejected the inclusion of small business in
the new legislation
; small business and fair-minded industry experts across the country seems less than prepared to accept his position.

Is there a way forward on the issue? Of course there is. This involves adding a safe-harbour mechanism to the laws whereby big businesses could have the contract ticked off in advance as not being unfair under the laws.

The mechanism would be voluntary and be administered by the ACCC in the same way as it administers the authorisation procedure under the Trade Practices Act.

Angry franchisees suggest that MP Craig Emerson [Rankin] has concluded that unfair contract terms are a necessary evil; but only in franchising.   Now just how does he justify that contradiction?

Frank Zumbo is Associate Professor at the Australian School of Business at the University of NSW and the attachment is well worth the read.

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Australian Financial Review.pdf72.73 KB
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