Stress management

Why the new unfair contract laws are good news for soloists

- August 4, 2016 3 MIN READ

Brendan is a persistent fella. He’s a highly skilled IT consultant. Don’t ask me what he actually does. He tried to explain to me once but it was way beyond me.

What I do know about Brendan is that he has a high sense of justice. He gets really angry when a client ‘screws’ him over. Like the time he had one of those ‘standard form’ contracts big businesses usually require you to sign when you do work for them.

He had a nine-month contract to do a high level analysis of software programming that was in trouble. The client was a large Commonwealth government department (‘the Department’ from here on in this piece). They needed him urgently along with his full attention and time. He dropped other work and also stopped looking for additional work so he could service the contract.

Two months into the work, however, a new manager turned up at the Department and told him he was no longer needed. Someone had stuffed up the budget and they couldn’t afford him.

Brendan was furious. The contract they had him sign said the work was for nine months and if he wanted out at any stage, he had to give two months’ notice. However, the Department – they could cancel the contract at any time.

Brendan contacted me for some assistance and we discussed his options. They were not good!

He decided to take on the Department anyway. With the help of a lawyer buddy he prepared an action in the magistrates court.

The magistrate required Brendan and the Department to first conduct an ‘Alternative Dispute Resolution’ process before going to court. This involved an informal discussion with a mediator to try and reach a settlement. What a joke!

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The Department turned up with a solicitor, barrister and two department managers. It was supposed to be ‘informal’. Ha! I went with Brendan for support. Then, an even bigger joke! The Department/s barrister asked what I was doing there and were we trying to intimidate them! Us? Intimidate them?

After this process failed Brendan went to the magistrates court but lost his case. The bigger sting, of course, was that he spent over $15,000 on legal fees.

If this situation had happened after 12 November this year Brendan would not have had all this trouble. From this date, new unfair contract laws start that would have stopped the Department from doing what they did.

The new laws would, for example, make it illegal for the Department to have a contract that let them cancel it at any time unless Brendan, too, could also cancel at any time.

The new laws are about making sure that commercial contracts with small business people have a balance of ‘rights.’ That’s fair!

Here’s a list of what those rights are. If a contract has these illegal clauses, the clauses are ‘void,’ (that is they can be ignored and should be taken out of the contract).

The new laws apply to contracts up to $300,000 in value or $1 million for contracts longer than a year. This makes the new protections available to a huge number of sole operators.

I admire Brendan because he is a fighter who sticks up for his rights. But he shouldn’t have had to go through the wringer he did. The Department had an unfair contract and behaved unfairly.

The new laws won’t stop all bad behaviour from big business toward small business people. What they will do, however, is create a strong measure of fairness. That’s a good thing because it will make business better for solo travellers.