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National Farmers’ Federation cheers reforms to tackle unfair contract terms

The Australian Consumer Law sees significant reforms in the crackdown on unfair contract terms (UCTs), marking a victory for competition.

The National Farmers’ Federation (NFF) applauds these changes, emphasizing the positive impact on farmers and small businesses, creating a more equitable business environment.

NFF President David Jochinke highlighted the pervasive use of UCTs as evidence of insufficient competition in the economy. He emphasized the groundbreaking nature of the reforms, introducing penalties for businesses employing UCTs, a practice previously devoid of consequences.

“The NFF acknowledges the Australian Government’s work introducing these reforms and supporting fair treatment of farmers and small businesses across the country,” Mr Jochinke said. “While the reforms are a step in the right direction, they’re not the end of the journey. There is still a lot of work the Government must do to promote competition in Australia and ensure a level playing field for farmers and small businesses.”

Under the latest reforms, businesses now face substantial penalties, with amounts reaching up to $50 million or 30% of adjusted turnover during the breach period, whichever is greater. This robust deterrent aims to hold businesses accountable for the use of unfair contract terms.

While commending the government’s efforts in implementing these reforms, Mr. Jochinke acknowledged that this is just the beginning. He urged the government to continue its work in fostering competition and ensuring an equitable playing field for farmers and small businesses.

The changes to UCTs align with a key recommendation from the ACCC’s 2020 Perishable Agricultural Goods Inquiry, reflecting broader calls for reform. The NFF stresses the need for a comprehensive approach, calling on the government to implement further measures, including outlawing Unfair Trading Practices, introducing mandatory codes of conduct for concentrated agricultural supply chains, increasing penalties for anti-competitive conduct, boosting resources for the ACCC, enhancing market price transparency, and conducting a nationwide analysis of entry barriers for new firms. These additional steps, according to the NFF, are crucial to achieving a truly competitive and fair marketplace for Australian farmers.

Recently the Australian Competition and Consumer Commission (ACCC) urged businesses to carefully review and revise their standard form contracts to eliminate or modify any unfair contract terms before new penalties come into effect. 

These changes are part of amendments to the Australian Consumer Law, scheduled to take effect from November 9th. They will prohibit businesses from proposing, utilizing, or depending on unfair contract terms in standard form agreements with consumers and small businesses.

Under the revised regulations, courts will have the authority to impose significant penalties on businesses and individuals found to include unfair terms in their standard form contracts. Previously, courts could only declare specific contract terms as unfair and void. ACCC Deputy Chair Mick Keogh emphasized the importance of these changes, stating, “The changes to the unfair contract terms laws should motivate businesses to take steps to ensure their standard form contracts are fair, including by removing or amending concerning terms.”

Standard form contracts are widely used by businesses as a cost-effective means of engaging with a large number of consumer or small business customers. However, these contracts are typically presented on a ‘take it or leave it’ basis and are often crafted to benefit the party offering them.

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