Experts talk competition and contract law

17 February 2016

Two nationally respected experts were the inaugural speakers at a series of quarterly forums being held by Light Rail Business Link.

Dr Michael Schaper, Deputy Chair of the Australian Competition and Consumer Commission and Mark Brennan, Australian Small Business Commissioner shared their knowledge and insights on competition law, contracts and how to build successful partnerships.

Approximately 150 small business owners and staff made up the avid audience for these entertaining and educational presentations.

Dr Schaper discussed some of the ways businesses can fall foul of competition law, in particular if they enter into collusive tendering or cartels.

A key issue raised by both speakers was the risk posed by unfair contracts or non-binding agreements.

Coming into force in November 2016 is the Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill 2015, which will help protect small businesses who feel they cannot negotiate a contract and have to accept the terms. Under the new legislation, businesses will have legal avenues to have unfair terms struck out of a contract if they can show they cause a significant imbalance in the parties’ rights and obligations, they are not needed to protect the interests of the other party and cause detriment.

However, this additional protection should not prevent small businesses from spending more time and investment reviewing contracts and seeking legal advice. Dr Schaper pointed out that 30% of small businesses spend less than nine minutes reviewing contracts before agreeing to them.

Mr Brennan continued this theme and warned businesses to make sure they know who they are signing a contract with. In large government infrastructure projects they can assume their agreement is underwritten by the government, but the reality is their contract is usually with another business who is either delivering the project or is a sub-contractor.

Other sources of advice and assistance small businesses can utilise include local industry associations and, from March, the Small Business and Family Enterprise Ombudsman.

Mr Brennan strongly recommended that any business entering into a contract ensure it has a dispute resolution clause they are happy with. This could call for any dispute to be referred to the new Ombudsman.