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Change on the way

COMMENT: Although 12 months away, new unfair contracts law will be a welcome boost for operators.

The recent news that Coles, one of the nation’s largest supermarkets, has written to suppliers to demand they cut costs rather than request price rises comes as no surprise. Inflation is the ‘word of the year’. It’s the genie the Federal Government wants to slay and it’s the pressure point for every small business around the country.

Coles is firing a shot across the bows of its suppliers, warning it won’t play ball with any that seek to opportunistically increase their retail price. In correspondence with suppliers obtained by The Australian newspaper in October, Coles said every business should “turn its mind” to reducing costs.

If only the people carting goods between suppliers and their big supermarket customers had it that easy.  As usual, the road transport operator is caught in the middle.

A contract the National Road Transport Association (NatRoad) has seen required the operator to find a five per cent “productivity” saving each year during the term of the contract. The operator’s tenure could be ended, without cause, on a month’s notice but the contract is for a five-year term.

It’s just one example of an onerous and one-sided contract that unfairly puts the weights on operators to deliver on their freight task regardless of circumstances beyond their control. If an operator’s costs rise, they have little or no option but to absorb them.

We’ve seen contracts where the price falls each year over the life of the contract, with the operator required to take a price hit each year in the name of productivity.

For far too long, it’s been a case of “like it or lump it” if a small business didn’t like the unfair terms of a contract with a big customer. Not anymore.

Bill revived

By the time you read this, new national unfair contracts legislation will have become law. It’s something that NatRoad constantly lobbied for over the years. The draft legislation made it into Parliament right before the Federal Election, but too late to pass. Thankfully, the draft Bill was revived in the life of the new Parliament.

There was a lot to like about the Bill. It strengthens the remedies and enforcement of the current regime by prohibiting the proposal of, use of, application of, or reliance on, unfair contract terms in a standard form consumer or small business contract.

It creates new civil penalties for breaches and it allows a court to make orders to void, vary or refuse to enforce part or all of a contract.

And it expands the class of contracts covered by the unfair contract terms provisions.

RELATED ARTICLE: NatRoad optimistic about HV law reform 

Most importantly the changes will introduce a financial penalty and increase the number of small business contracts to which these laws apply.

There were legal remedies available – but they cost an arm and a leg to access as courts needed to impose an order.

The legislative wheels turn slowly and all these changes will take 12 months to come into force. This is to enable industry to make any necessary changes, including examining contracts that might be used once the legislation is in force.

But change is coming and we believe it will make a difference.  

*WARREN CLARK is CEO of the National Road Transport Association (NatRoad).

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