Legislation passed through the Senate this week means that with effect from 12 November 2016, small businesses, categorised as businesses with less than 20 employees, will have new rights and obligations in respect of inclusions in their own and others' standard terms of business  which may be considered to be unfair under the Australian Competition and Consumer Act. Previously these protections were available only to consumers and not to small business.

Malcolm Turnbull's announcement on Tuesday that the government backed the majority of the recommendations of the Murray Inquiry, including these in relation to unfair contracts, reflected the passage of the relevant Bill through Parliament.

Primarily, a clause in a standard contract which is considered unfair can be struck out - void, in legal language - and therefore ineffective. Clauses such as an automatic renewal provision or which affect or limit a party's remedies under the contract have in the past been found to be unfair in some circumstances.

The contracts to which the new provisions will apply will be capped at $300,000 or $1,000,000 where the contract is for more than one year (for example an ongoing services agreement). A B2B contract between two small businesses will be caught by the provisions .

All businesses providing goods and services to small businesses (including small businesses themselves) will need to review their standard terms for potentially unfair provisions or risk having provisions which they may have previously relied on being considered ineffective.

The change will be effective from 12 November 2016 - potentially affecting standard form contracts entered into at any time from that date. Counsel on Demand will provide further detailed analysis of the changes in future legal updates.