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Important New Legislation Affecting NSW Motor Dealers and Vehicle Manufacturers…

New legislation

On 27 November 2013, the New South Wales Parliament passed the Motor Dealers and Repairers Act 2013 (NSW). The Act consolidates the Motor Dealers Act 1974 (NSW) and theMotor Vehicle Repairs Act 1980 (NSW) into one cohesive piece of legislation.

The legislation introduces new provisions regulating the relationships between NSW motor dealers and motor vehicle manufacturers.

Broadly, Part 6 of the Act which deals with unfair contracts and unjust conduct affecting motor dealers has the following impact:

  1. creates new rights for dealers in relation to ‘unfair contracts’ or ‘conduct of a manufacturer that is unjust’;
  2. establishes a new dispute resolution system to address ‘unfair contracts’ or‘conduct of a manufacturer that is unjust’, including a process that enables requests for mediation to be made to the NSW Small Business Commissioner; and
  3. gives dealers and their motor industry group  the ability to make an application for remedies to the NSW Civil and Administrative Tribunal (NCAT) if mediation is unsuccessful.

A term of a supply contract, or such a contract in its entirety, will be deemed in effect “unfair” if:

  • it creates a significant imbalance in the parties’ rights and obligations under the contract;
  • it is not reasonably necessary to protect the legitimate interests of the party gaining the benefit of the term; and
  • it would cause detriment (financial or otherwise) to a party if it were relied on.

Moreover, the conduct of a manufacturer will be considered “unjust” if it either occurs in connection with a supply contract and is dishonest or unfair, or is authorised by an unfair term of a supply contract.

The Act confers remedial powers on the NSW Small Business Commissioner to:

  • investigate and compel a party, such as a distributor, to provide documents or information; and
  • facilitate mediation.

Failing this, the aggrieved dealers, their representative body, or the Commissioner (on behalf of motor vehicle dealers), may make application to the NCAT for a declaration that a term of a supply contract or a class of supply contracts is unfair, or that that conduct of a manufacturer is unjust.

The NCAT may take into account a range of considerations including the contextual circumstances relating to the relevant contract, and whether there existed a material inequality in bargaining powers between the contracting parties.

The NCAT may use its statutory powers in circumstances where it declares unfairness to:

  • void a contract either in whole or in part;
  • vary the relevant terms, in whole or in part, that it considers unfair;
  • make a direction to a contracting party to take or refrain from taking specific actions whether or not permitted by the contract; and/or
  • make an order for compensation.

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