The Gatherer June 2016

SUPPORTING INDUSTRY GROWTH THROUGH CURTIN IGNITION

mechanisms, such as the Franchising Code of Conduct, go some way to addressing the concerns of small businesses by providing for disclosure mechanisms and good faith conduct. However, the current mechanisms are not as broad as the general prohibition on unfair contract terms and are thus not likely to be “equivalent”. Therefore, the new legislation applies to franchising agreements. Small business contracts that are the constitution of a company, management investment scheme or other kind of body will also be exempt from the new provisions. When will the legislation commence? The legislation will come into effect on 12 November 2016. The unfair contract terms will apply to small business standard contracts entered into after that date. However, the provisions will also apply: (a) if the contract is renewed after that date; or (b) if a term of a contract is varied after that date, to the varied term. The impact There is quite some uncertainty as to when the legislation will apply in any given circumstance. The drafting of the legislation means that businesses may not know whether the regime applies without enquiring into the head count of their potential small business counter-party. The definition of “upfront price” may also cause uncertainty where the structure of the payments make it difficult to determine the exact amount.

These uncertainties may dissuade businesses from reviewing and revising their standard form contracts. However, there is one very good reason for businesses to do so. In its media release announcing the extension, the Government stated that it has provided $1.4 million to the Australian Competition and Consumer Commission to ensure business compliance. Further, the ACCC has indicated in its Compliance and Enforcement Policy that the unfair contract terms regime under the ACL will be a specific area of focus in the coming year. Businesses should review their standard form contracts to, at the least, temper the most egregious provisions particularly in circumstances agreements, businesses may look to start negotiating their terms to avoid the application of the regime (though proper records of such negotiations should be maintained). Either way, the Government may well achieve its stated goal of addressing the imbalance of risk allocation in these type of agreements. where they are rarely, if ever, relied on. Alternatively for some

are not to be counted for this purpose unless they are employed by the business on a regular and systematic basis; and either: –– The upfront price payable under the contract is less than $300,000; or –– If the contract has a term of more than 12 months, the upfront price payable is less than $1,000,000. Small business In determining whether a business employs less than 20 people, casual employees are counted if employed on a regular and systematic basis. Upfront price Upfront price is the consideration that is provided for the supply, sale or grant under the contract, and which is disclosed at or before the contract is entered into. The upfront price does not include any amounts that are contingent on the occurrence or non- occurrence of particular events (such as royalties). In determining the upfront price payable where credit is provided, any interest payable is to be disregarded. Exempt contracts A small business contract will not be covered by the new provisions where the contract is subject to a prescribed industry-specific law that have been deemed enforceable and equivalent. No existing industry-specific laws yet been deemed to have sufficient protections in order to be exempt under the new legislation. Current measures in certain industry-specific

Curtin Ignition is an intensive 5½-day education program for aspiring entrepreneurs, academics and corporate innovators to trial and prepare their business ideas for the commercial environment.

Applications open on June 1st and scholarships are available. Sponsored by Wrays, the Program is run by the Curtin Centre for Entrepreneurship and is based on the successful Ignite Program managed and delivered by the University of Cambridge Judge Business School’s Centre for Entrepreneurial Learning (CfEL). Curtin Ignition is suited to founders of early stage, high-growth business ventures, and people with new ideas that have potential to become high-growth, worldwide businesses.

The Program comprises of a blend of keynote and workshop teaching sessions, small group mentoring, panel, clinic and networking sessions. Delegates prepare a 10-minute business plan pitch over the course of the program, which they deliver to an expert panel and receive feedback on the last day of the program. All delegates must have a viable concept for a new business or an established early stage venture. The Program runs from Sunday September 4 through to Friday September 9 at Technology Park Function Centre in Bentley, Perth.

JUDITH MILLER Principal

BINDU HOLAVANAHALLI Lawyer

Would you like to receive a scholarship to the Curtin Ignition Program? Wrays is supporting two potential participants through the Wrays Scholarship. To find out more, contact marketing@wrays.com.au

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