The NSW Opposition has introduced a Private Member’s Bill which, if enacted, would increase the powers of small businesses in respect to their dealings with banks, franchisors and other large corporates, along the lines of current consumer protections available to individuals in respect to unfair contracts. The proposed legislation could significantly increase the regulatory burden for banks and other large businesses in their dealings with small business operators.
The NSW Goverment proposed to create a Small Business Commissioner in July 2011 and the public consultation period in respect to the proposal closed on 23 August 2012. The NSW Opposition has now introduced a Private Member’s Bill entitled the Small Business Commissioner and Small Business Protection Bill 2012 setting out its proposed regime.
The stated objects of the Bill are broadly as follows:
To create and empower the position of Small Business Commissioner as an independent statutory office.
To ensure that small businesses are treated fairly in their dealings with other businesses and Government agencies through enforceable codes of practice.
To enable small business to obtain relief under the Contracts Review Act 1980 in respect to unjust contracts.
The foreshadowed Act, including the proposed amendments to the Contracts Review Act 1980, would apply to all contracts in force at the time the Act commences operation.
Obviously, given that the Bill has been tabled by the Opposition, it is unlikely that it will have the Government’s support in its current form. However, the Bill may be an indication of the Government’s legislation to come.
What is a “Small Business”?
The Bill defines a “Small Business” as a business enterprise, whether operated by a natural person, sole trader, partnership, corporation or other entity with:
no more than 20 full-time equivalent employees; or
an annual income or expenditure of between $10,000 and $5 million,
but does not include a Government agency.
The Small Business Commissioner
Interestingly, the NSW Government appointed former ACCC Associate Commissioner Yasmin King to the post of Small Business Commissioner in July 2011, notwithstanding the fact that legislation providing for the powers and obligations of the role was not yet enacted.
The Bill proposes a number of functions for the Commissioner, including:
To be an advocate for small business generally
To handle complaints made by small businesses regarding their dealings with other businesses and Government agencies
To refer cases to other bodies
To assist small businesses in their dealings with other businesses or Government agencies
To disseminate information to small businesses
To administer codes of practice
To advise and report to the Minister on matters affecting small businesses
Codes of Practice
The Bill provides for regulations to prescribe codes of practice with respect to the fair treatment of small businesses in their commercial dealings with other businesses, and that any such code may, without limitation, provide for good faith obligations in commercial dealings.
The Bill empowers the Supreme Court, on application by the Commissioner, to grant injunctions in circumstances involving actual or potential contravention of a code of practice. Such injunctions may be granted on an interim basis without the requirement of any undertaking as to damages or costs.
Extension of Contracts Review Act 1980 to Small Business
The Bill proposes to extend the operation of the Contracts Review Act 1980 to small businesses and provides that an operator of a small business may apply to the Consumer, Trader and Tenancy Tribunal (CTTT) or the Supreme Court of NSW for an order in relation to any contract that the operator considers to be harsh, oppressive, unconscionable or unjust. The Contracts Review Act 1980 would be amended accordingly.
Remedies available to the Court and CTTT would include powers to:
refuse to enforce any or all of the provisions of a contract
declare a contract void (in whole or in part) or vary any provision of a contract
make orders with respect to consequential matters including orders for the payment of money to a party to the contract and orders for the supply of services.
The Government’s proposed legislation is yet to be released. However, if the Opposition’s Bill is any guide, it can be expected that:
the Small Business Commissioner will be empowered to broadly represent the interests of small businesses; and
a regime will be introduced to protect the interests of small businesses in their dealings with big business and Government along the lines of current consumer protections available to individuals in respect to unfair contracts.
At this stage, watch this space.
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