A new law to protect small businesses from Unfair contract terms in Australia: a comparison with EU Law and some remarks related with the possibility of extending the protection even at European level

The Australian Consumer Law (ACL) came into force on 1 January 2011. It is contained in Schedule 2 of the Competition and Consumer Act 2010. The introduction of the ACL represents the most significant reform to the consumer law framework in Australia since 1974. The ACL has replaced a number of national, state and territory consumer law provisions. The ACL regulated misleading and deceptive conduct, unconscionable conduct, unfair contract terms, consumer guarantees, product safety, unsolicited sales, enforcement and redress powers. Unfair contract term protections in the Australian Consumer Law (ACL) have applied to standard form business-to-consumer contracts since 1 July 2010. Unfair contract terms have been before the subject of regulation in specific States. However only with the ACL consumers have the same protection across Australia. The regulation of Unfair contract terms at national level was considered the most significant change introduced by the ACL. No such regime existed under the Trade Practices 1974. A consumer contract is defined by the ACL as a “contract for: a supply of goods or services: or (b) a sale or grant of an interest in land: to an individual whose acquisition of the goods, services acquired wholly o predominantly for personal, domestic or household use or consumption” (see section 23 (3). Recently the Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Act 2015, passed 12 November 2015, extended the protection to small businesses. Now the law will also apply to a standard form business-to-business contract entered into or renewed on or after 12 November 2016, where: (a) at least one of the parties is a ‘small business’ (i.e. employs less than 20 people, including casual employees employed on a regular and systematic basis); (b) the upfront price payable under the contract is no more than $ 300.000 or $1 million if the contract is for more than 12 months; (c) it is for the supply of goods or services or the sale or grant of an interest in land. In protecting business against Unfair terms, Australian legislator has chosen to adopt a definition that incorporates both an employee-based business size threshold and a transaction value threshold. Although some European member States protect also business against Unfair contract terms (8), at European Union level the protection is accorded only to the consumer. Indeed, the Council Directive 93/13/EEC of 5 April 1993 on unfair terms is referred only to contract BtoC. The Directive adopted the principle of minimum harmonization (indeed art. 8 states: “Member States may adopt or retain the most stringent provisions compatible with the Treaty in the area covered by this Directive, to ensure a maximum degree of protection for the consumer”). The unfair contract terms both in ACL and in the Council Directive 93/13/EEC are not binding but the contract continues to bind the parties if it is capable of operating without the unfair term (9). In this paper, after having highlighted the main differences between the two systems, the author, in order to understand if the disciplines protect different interests, considers the Australian’s choice to limit the protection of business and the opportunity to extend the protection to small businesses also at European Union level.