Small Business Seeks Around $1.5 Million Compensation Under New Unfair Contract Terms Laws After 13-Year Retail Partnership Ends

By Julius Ewudo, ASEAN Region Representative

A Melbourne-based sleepwear supplier, Young Spirit Clothing is facing significant challenges after the sudden termination of its 13-year partnership with Myer. The small business is now urging authorities to enforce the new Unfair Contract Terms (UCT) laws, designed to protect businesses like theirs from being exploited by large corporations. With mediation scheduled through the Victoria Small Business Commission (VSBC), Young Spirit seeks public support in their fight for survival.

Over a Decade of Loyalty Cut Short

For more than 13 years, Young Spirit Clothing supplied sleepwear to Myer’s house brands, including SOHO, Chloe & Lola, Reserve, and PJ Club, generating $3.5 to $4 million in sales annually. During the pandemic, this number surged to $5 million, as Young Spirit went above and beyond to help Myer navigate supply chain challenges and ensure shelves were stocked. Despite this long-standing relationship, Myer abruptly ended the partnership in July 2023 without warning, putting the livelihoods of six full-time employees at serious risk. “We stood by Myer during the hard times, but when it suited them, they cut us off without hesitation,” said Linda from Young Spirit.

Misleading Justifications for Termination

In its communication, Myer justified the contract termination by stating it was reducing its reliance on Chinese production. However, Young Spirit discovered that Myer was still sourcing from the same Chinese factories, only through different suppliers.

“We’ve seen over 85 per cent of Myer’s pyjamas for the 2024 season are still made in China. This isn’t about moving away from Chinese production—it’s about squeezing out smaller suppliers like us,” explained Linda.

This raises questions about Myer’s true motives, suggesting that the retailer is more focused on consolidating its supplier base and strengthening market dominance rather than addressing supply chain issues.

Struggling Under Unfair Terms

Throughout the partnership, Young Spirit dealt with harsh contract terms, including extended payment periods and significant rebates, with no guaranteed minimum orders. Despite these disadvantages, they remained committed to the partnership. The sudden termination without notice violated the spirit of the UCT laws, which aim to stop large companies from taking advantage of smaller ones.

Now, Young Spirit is entering mediation with Myer, but the odds are daunting. “We’re a small business with limited resources. Myer has far greater legal and financial resources, and we need public support to ensure the mediation is fair,” said Linda.

A Call for Fairness and Accountability

Despite filing a Whistleblower complaint and engaging in discussions with Myer executives earlier this year, Young Spirit’s efforts to reach a resolution have been dismissed. The company is now relying on the mediation process to seek justice and accountability.

“We’re not just fighting for ourselves, but for all small businesses being taken advantage of by large corporations. We need the media and public to stand with us as we face this David vs. Goliath battle,” added Linda.