Unfair Contract Terms Fairly Dealt With
Continuing our commitment to advising and guiding those involved in the franchise industry, MST Lawyers has prepared articles about the introduction of unfair contract terms law for small business. This piece reports on the latest case judgment. Australian Competition and Consumer Commission (ACCC) v Servcorp Limited  FCA 1044 (Servcorp) showcases that the enforcement and compliance of these new laws is a priority for the ACCC and further develops our understanding of what the courts are classifying as unfair contract terms.
Recently the Supreme Court of Victoria had to determine in Delahunt v Swim Loops Pty Ltd  VSC 269 whether the Franchisees should be granted an injunction to allow them to regain possession and operation of the business while proceedings were before the Court. The Franchisee argued that the Franchisor had terminated their Franchise Agreement in addition to being evicted from the franchise premises.
The Court granted the injunction allowing Mr and Mrs Delahunt back into the business to continue to operate it subject to a resolution of other issues.
As of May 2018, there were approximately 2,598,541 registered companies in Australia. The majority of these businesses fall into the category of a small business. Accounting for 33% of GDP, small corporate entities are vital to the national economy. However, due to their small scale, it is often the case that these small entities only have one or two shareholders, which can create difficulties when conflict arises between shareholders who have an equal stake in a company.
The recent decision of Justice Logan of the Federal Court in Australia and New Zealand Banking Group Limited v State of Queensland  FCA 464 acts as a reminder to directors and insolvency practitioners of the importance of default notices in retaining contractual rights and enforceable securities. It discusses the operation of section 133 of the Bankruptcy Act 1966 (Cth) (Act) and how it can protect security holders against bankruptcy disclaimers and the doctrine of escheat.