The Assistant Treasurer has announced that the Government will agree to the amendments to the Small Business and Unfair Contract Terms Bill made by the Senate (Background).

UPDATE: The Bill received Royal Assent on 12 November 2015. The unfair terms prohibition will only apply to contracts entered into or renewed, or terms of existing contracts that are varied, on or after 12 November 2016.

The changes mean that the unfair contract provisions will apply to standard form contracts where at least one of the parties employs less than 20 people, and where the upfront price of the contract does not exceed $300,000 (or $1 million for contracts longer than 12 months).

There will be a 12 month transition period.

The Bill will amend both the ASIC Act and the Australian Consumer Law: the ASIC Act’s requirements apply to financial services and products and the ACL applies to the supply of goods or services other than financial services or products and the sale or grant of an interest in land.

Agreements such as credit contracts, retail leases, supply agreements and franchise agreements will be affected.