Media release

Standardised consumer laws - a catch for small business

01 July 2010

While recently announced changes to consumer protection and fair trading regimes will provide increased protection against predatory pricing and misuse of market power, small business operators need to be aware of the changes made to the definition of “consumer” in the new laws.

Under the new Australian consumer laws, a consumer contract for the supply of goods or services will only come into play where a product is wholly or predominantly for personal, domestic or household use or consumption, thereby excluding small businesses.

Small Business Development Corporation Acting Managing Director, Ray Buttsworth, says changes to the definition of “consumer” will see many small business operators unable to access these improved protections under the single national law.

“From today, the introduction of new unfair contract terms will impact on businesses that use standard form agreements through the course of their day-to-day business transactions,” Mr Buttsworth said.

Under the new laws, a contract term will be deemed ‘unfair’ when it:

• causes a significant imbalance in the parties’ rights and obligations arising under the contract, and
• is not reasonably necessary to protect the legitimate interests of the supplier, and
• causes financial or non-financial detriment to a party.

Where a dispute arises, only a court can determine whether a term of a standard form consumer contract is unfair or not.

Small business operators concerned about these changes should contact the Small Business Development Corporation on 131 BIZ (131249).

Media contact: Di Graham (08) 9220 0218 or 0409 089 159.

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