Renegotiation in the Real World: A Study of Australian Small to Medium-Sized Enterprises, Contract Variation, and the Law

Abstract

The small to medium-sized enterprise (SME) sector is the largest and most productive in Australia. Like all established market-based economies, ours is characterised by the use of contracts as a mechanism for exchange. Contracts often require variation in response to variables such as under-pricing, resource availability, changes in scope, and rising product costs, so SMEs (and larger businesses) will frequently encounter the process of renegotiation. The rules applicable to contract renegotiation seldom receive attention in academic writing. Moreover, the attitudes toward, understandings of, and experiences with the doctrine of renegotiation among Australian SMEs are scarcely researched. This article expounds the law of renegotiation before reporting on selected findings from a largescale empirical study designed to fill these knowledge gaps, among others, in the literature. The results provide invaluable insight into how this critically important sector perceives and deals with contract law and the doctrine of renegotiation and underscores potential areas for improvement.