Unfair Contracts With Independent Contractors

Introduction of the Issue

Gators Pty Ltd was contracted on June 7 to provide gate entry services to a concert by Lil’ Z for a sum of $100,000 on September 7. However, petrol prices skyrocketed; increasing transportation costs and labor shortages doubled the wage rates for Gator’s staff hiring. Gator’s manager, Gus, calls Mike to cancel the contract due to increased costs but finding no other alternatives, Mike offers an extra $50,000 to Gator for the services. After the service is offered, Mike only pays $100,000 and refuses to add the promised $50,000. Gus can convince the court that Mike must pay the promised $50,000 based on the Independent Contractors Act 2006 recognized in law.

Law

The Independent Contractors Act 2006 ensures that independent contractors are not entangled in unfair contracts. It allows the contractor to place a request with the court for a review of the contract terms.¹ In its decision, the court may change the terms of the contract or set it aside entirely. Mostly, this law allows the case to proceed before a court due to harsh or unfair terms. Rise and fall clauses also protect contractors from the impact of inflation in building materials and labor. Waltons Stores (Interstate) Ltd v Maher provides that a court action may be taken based on a promise under the equitable estoppel doctrine.²

Application

Gator’s contract with Mike was a special kind because it involved paying for labor wages. However, the case study does not mention the inclusion of the rise and fall clause, where contracting parties would have accounted for changes in prices between the date of the contract and the implementation date. For example, the labor price index would have helped the parties determine how many changes to expect in hiring Gator’s staff. Ideally, the contract was not thoroughly completed because the cost drivers for Gator, as an independent contractor, were unidentified. Therefore, Gator can sue under the Independent Contractors Act 2006 to have the rise and fall clause included, automatically adjusting the price of the contract without discussions. The act gives the court power to alter parts of the entire contract to protect an independent contractor from losses.

Considering that Gator had already provided the services, Gus might pursue only the promised $50,000. This case would be presented as equitable estoppel because it was not written in the original contract and was never put into any written form. In this case, Gator must prove that the case meets the elements of equitable estoppel, including the existence of a promise, detriment caused due to reliance on the promise, and unconscionable conduct on Mike’s side. The case would fulfill all the elements of promissory estoppel and become enforceable in court. Firstly, Gator and Mike were in a legal contract when the promise was made. Secondly, the promise was believable because Mike seemed to have understood the increased costs for the service delivery. Consequently, Gator relied on the promise to hire staff and transport the tools he needed at higher costs than foreseen in June. Finally, Gator suffered detriments because his costs for the service exceeded the June projections.

Conclusion

Gator will convince the court that Mike should pay the $50,000 because the promise of an extra payment enabled Gator to complete the contract by offering services to Liz. Otherwise, Gator Pty Ltd.’s business will suffer a financial loss. The company can sue to enforce promissory estoppel because it would have withdrawn the contract in time if such a promise were not made. Alternatively, the court may act on the independent contractors’ protection law and change the contract terms, making it possible to determine a different extra amount to cover the services.

Bibliography

Independent Contractors Act 2006.

Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387.

Footnotes

1. Independent Contractors Act 2006.
2. Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387.