AMCA Responds to Review of Unfair Contract Term Protections for Small Business

Published: 21 December 2018

The AMCA welcomed the opportunity recently to provide feedback regarding the Commonwealth Government's review into the effectiveness of unfair contract term protections for small business under the Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Act 2015.

It is our view that the legislative intent of the unfair contract term protections regime—namely, to redress imbalances in negotiating power—is arguably more crucial for subcontractors operating in the building and construction industry that perhaps any other sector. Nevertheless, to the best of our knowledge, these companies are currently not making use of the protections contained in the Act.

Several factors may be attributable, including:

  • A general lack of awareness about the regime and its applicability;
  • Headcount and contract value thresholds that are inappropriate for building and construction projects;
  • The absence of specific examples relating to subcontracts in the building and construction industry;
  • The unique usage of standard form contracts within the building and construction industry; and
  • The hierarchical contractual arrangements that arise from competitive tendering processes in the building and construction industry.

We therefore encourage Treasury and the ACCC to explore avenues for making the legislation more accessible to these businesses by expanding the thresholds, increasing awareness and developing example contract clauses that might be deemed unfair under the Act.

Download the full AMCA submission here.