Amendments to Small Business Protections under the Trade Practices Act

Recent TPA Amendments

The recent amendments to the TPA have widened the scope of the application of this provision by increasing the transactional threshold from $3 million to $10 million, thereby protecting a greater range of transactions entered into by small businesses. Although the section is meant to protect small businesses, it arguably still may be enforced by medium and even larger corporations provided they are not publicly listed. This increased threshold will extend the application of the section to significantly more business transactions.

What constitutes unconscionable conduct?



Section 51 AC currently provides the court with a number of procedural factors to be considered when determining whether a corporation has engaged in unconscionable conduct. These factors include:

the bargaining position of the party; undue influence or pressure on the small business consumer; and whether the parties have acted in good faith.

These factors relate to whether the dealings between the parties have been fair and open throughout the course of dealings, particularly in relation to the level of disclosure between the parties.

The TPA amendments also include a new factor to be considered by the court when determining whether a party has engaged in unconscionable conduct. This new factor considers whether a party has a contractual right to unilaterally vary a term of the contract. This replicates a factor under the Fair Trading Act which allows the court, in determining whether a consumer contract contains an unfair term, to consider other factors particularly where a term has the object or effect of permitting the corporation and not the consumer to vary that term.

If you have any questions, please do not hesitate to contact Tal Williams on (02) 9458 7241 or Andrew Seaton on (02) 9458 7632.

Amendments to Small Business Protections under the Trade Practices Act - To learn more about this author, visit Meredith Dorham's Website.

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