Australian Consumer Law is directed towards promoting fair-trading and ensuring that the rights of the consumers are protected. Consumer law is applicable to both big and small business enterprises. However, there is always a controversy regarding the quantum of protection granted to the small business enterprises. In the present business environment where big business houses are constantly expanding themselves by resorting to inorganic expansions such as takeovers, mergers, amalgamations etc. an important question always comes to the forefront – do small businesses need more protection. The most recent development in this field was granting unfair contract terms protection to small business houses in 2014 by the Commonwealth. The objective of this essay is to discuss the legislative framework applicable to small businesses and the manner in which small businesses perform in the given framework.
Legislations and Case Law Precedents
The legislative framework is mainly composed of two pieces of legislations – The Competition and Consumer Act of 2010 (“Act”) and the Australian Consumer Law contained in Second Schedule of the former legislation. The Act mainly stipulates rules and regulations to prevent anti-competitive conducts by business organisations while dealing with their customers. It ensures that fair and effective competition exists among business organisation in the course of conducting their business activities. The Australian Consumer Law (ACL) provides for rules and regulations that organisations are required to abide by while they are dealing with their customers. In short, it provides for the rights and responsibilities of the customers and the organisation. The ACL is applicable to all business entities irrespective of their size and nature. The Australian Competition and Consumer Commission (ACCC) is the governing body that oversees the application and of the ACL. Situations where financial services are involved, provisions of the Australian Securities and Investment Commission Act 2001 will be applicable in protecting the rights of the consumers. Majority of the legislative provisions contained in the ACL relates to the conduct of business organisations known as “unconscionable conduct”. According to the ACCC, it a conduct that is generally against good conscience and business organisations are required to avoid such conducts at all times. A recent notable case in this regard is the case of ACCC vs. Coles Supermarkets Australia Pty Ltd (2014).
As mentioned earlier, consumer law is applicable to every business entity and it includes small businesses as well. Small businesses are required to practice fair trade policies in order to promote healthy competition within the industry. It has the responsibility of protecting the rights of its consumers and abstains from violating the legislative provisions of the Act. Nevertheless, the importance of small business units in the business fraternity cannot be denied as they contribute significantly to the economy of the country. However, it has been often seen that large business houses resort to effective corporate tactics in order to eliminate competition. Small business units fall prey to such expansion strategies and had to agree to unfair contract terms proposed by bigger business units. In light of the present situation, it had become necessary to provide legislative protection to such small business units so as to enable them to survive and undertake their business activities in a proper manner.
In the month of June 2015, the Treasury Department of the Commonwealth introduced legislative measures that will provide protection to small businesses from unfair contract terms similar to the kind of protection that the consumers enjoy. It has been seen that small business units sometime do not have any power to influence the market and are thrust upon unfair contractual terms while conducting business. The legislative reform came in the form of the Treasury legislation Amendment (Small Business and Unfair Contract Terms) Bill 2015. The bill amends both the ACL and the ASIC Act in order to accommodate the changes made in the legislative structure. The practical implications of the amendments are huge as it changes the definition of “business contracts” with respect to a small business. According to the new definition, a “small business contract” is a contract when any one of the contracting parties employs less than 20 employees and the price payable upfront does not exceed $300,000 for contract whose tenure is less than one year. Under the provisions of the new amendments, unfair contract terms will be treated as void and this effect will extend extra protection to small business units. In essence, a court will be able to strike off a term or terms from a small business contract, it deems such terms to be unfair and unjust to one of the contracting party or parties. In such a situation, if any contracting party tries to enforce such an unfair term, remedies can be sought from the courts and the court will be authorised to award compensation to the aggrieved party or parties. Therefore, it can be seen that the amendments expands the scope of survival for small businesses and provides them with legislative protections under the existing legal framework.
It can be seen from the above discussion that the working of small businesses is very much influenced by the operation of the Australian competition and consumer laws. Both the legislations are applicable to every business organisation irrespective of their nature and size. They are required to comply with the provisions and shall prohibit themselves from engaging in any kind of unfair trade practices. The primary objective of these legislations is to uphold the rights of the consumers. On the other hand, large business houses try to influence the business of small units. Often, to eliminate competition, large business houses offer unfair contractual terms to smaller units and they are left with no option than to agree with them. This situation forced the legislators to pass the amendment bill that ensured protection to small business units under the consumer law. Small businesses received protection that is similar to that received by consumers. This opened up a new avenue for small businesses and helped them to take a step forward towards survival.
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