I can’t begin to recall the number of times I’ve heard contracting parties (or their advisors) discussing “problem” clauses and someone says, “Let’s just put it in anyway. It’ll give us something to argue!” By any measure, it’s a lazy approach to drafting. It’s all very well to have the argument, but if you lose, you’ll end up with egg on your face … as well as costs orders against you; and potentially negligence claims – to say nothing of the damage you might have done to your commercial relationships whilst you have that argument. And now it’s got a whole lot worse…
That’s because New Zealand (in August 2022) and Australia (from November 2023) have amended their Fair Trading and Consumer Protection laws to prohibit the inclusion of unfair terms in standard-form, small business (or small trade) contracts.
And the consequences for ignoring the prohibition? In New Zealand, $600,000 per contravention. In Australia, $50 million per contravention, or three times the value of the benefit derived from the unfair term, or 30% of adjusted turnover during the offence period. And there are fines for the individuals who were involved in their inclusion, as well.
Is that the argument you really want?
#FairTradingMatters.
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