ABOUT THE CONTRIBUTOR

Simone Pentis
Simone Pentis Simone Pentis is the Managing Director, Advantage Partners Lawyers & Corporate Counsel, The Coffee Club Group. Simone is a specialist corporate & commercial lawyer, with a particular focus on franchising, intellectual property and business sales. Simone has advised private individuals, council, public & private companies throughout Australia & overseas, acted for established national & international franchisors. Simone has been involved in the design & establishment of various franchise systems, as well as the management of these companies daily legal issues. Simone has for a number of years held the position of elected committee member of the Franchise Council of Australia’s ('FCA') Qld Chapter Committee & the Chair of their Legal sub-committee. Simone also is an appointed committee member to the Qld Law Society’s specialist Franchising Committee. Simone has in Australia and internationally given and/or organised conferences, presentations and facilitated discussions on various legal, contract, intellectual property, franchising, sponsorship, marketing and business topics, as well as having been invited to repeatedly speak on 4BC radio.

Simone Pentis has written 41 article(s) for us.

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Unfair Contract Terms Regime Now In Play

March 13, 2017 | Simone Pentis

2016 was a big year for the franchising sector, not only was it one year after the implementation of the new Franchising Code, but the unfair contract terms regime also came into effect from 12 November 2016 (“commencement date”).

From the above commencement date this unfair contract terms regime applied to any standard form agreement that was entered into or renewed on or after the above commencement date, or to a term of an existing agreement that was varied on or after that commencement date.

These standard form agreements would generally include franchisors and/or their franchisees’ standard agreements with their suppliers, franchisors and/or their franchisees’ standard agreements with these parties’ customers, as well as the franchise agreement itself.

While there are some exceptions to when this law will not apply to a standard form agreement, these are limited, and most franchise systems will arguably not be able to rely upon the exemptions.

Ultimately the courts decide whether a term in “unfair” as per these new laws, but potentially problematic terms may include:

  • terms that allowed one party to unilaterally change key terms without the other’s consent at any time;
  • terms that unreasonably limit the liability of the larger business;
  • certain damage and/or compensation terms and/or clauses;
  • certain restraint of trade terms; and/or
  •  unreasonable termination clauses.

Concerns have also been raised as to Operations Manuals, especially when a change of to these Operations Manuals has a material impact on the relevant franchise agreement.

The result of this law is that businesses, if they have not already, should immediately in consultation with their lawyers review their standard form agreements (and potentially any connected documents such as their Operations Manuals) to identify clauses that could become problematic under the new law and then either delete, remove and/or amend these problematic terms or risk allegations their agreement/s include unfair terms and the relevant unfair term becoming void, unenforceable, and to have no effect.

Please note this does not purport to be comprehensive advice relevant to your circumstances. Consequently, specific legal advice for each of your circumstances should be obtained first before taking or not taking any action in respect to this area.