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About fuel re-selling agreements
Fuel re-selling agreements are contracts between a supplier and a retailer.
- A supplier is a business that supplies petroleum, usually to retailers. They are a participant as the supplier in a fuel re-selling agreement.
- A retailer is a business selling or supplying petroleum to end-users. They are a participant as the retailer in a fuel re-selling agreement.
The Oil Code of Conduct applies to fuel-reselling agreements, except where the supplier:
- reasonably believes the retailer will sell on average less than 30 000 litres of fuel per month over the life of the agreement, and
- gives the retailer a written statement of the grounds for that belief, at least 3 days before entering the agreement.
Fuel re-selling agreements may apply to more than one retail site.
Requirements for agreements
When an agreement is a fuel re-selling agreement
An agreement will be considered a fuel re-selling agreement if it meets the following requirements:
- the supplier grants the retailer the right to conduct a fuel re-selling business
- the business will operate under a system or marketing plan substantially determined, controlled or suggested by the supplier
- the business will be associated with a trademark, commercial symbol or advertising owned, used, licensed or specified by the supplier
- before starting the business, the retailer pays or agrees to pay a fee.
A commission agency agreement that meets these requirements, except the requirement to pay a fee, is considered to be a fuel re-selling agreement.
Length of the agreement
Fuel re-selling agreements have a minimum period.
Fuel re-selling agreements must be for at least 5 years, subject to limited exceptions.
If the agreement requires the retailer to buy fuel from a supplier that owns or leases the site, the agreement must contain an option to renew the agreement for at least a further 4 years (9 years in total).
A supplier and retailer can agree on a shorter length of time for an agreement if:
- the lease relating to the site has less than 5 or 9 years remaining
- the owner of the site plans to stop retailing petrol from that site or plans to sell the site
- where less than $20,000 is paid up‑front to the supplier, such as for goodwill or as “key money”, as a condition of entering into the agreement.
Before entering into a fuel re-selling agreement
There are some things retailers should know before entering into a fuel re-selling agreement.
Retailer must be given certain documents
The supplier must give a copy of the code and a disclosure document to the retailer at least 14 days before:
- entering into a fuel re-selling agreement, or
- the retailer pays non-refundable money to the supplier in connection with the agreement.
The oil code sets out what information must be included in the disclosure document.
A copy of the proposed fuel re-selling agreement must be attached to the disclosure document.
Retailers should seek advice before entering into an agreement
A fuel retailer should get independent advice before entering into an agreement. This includes:
- legal
- accounting
- business
- from their relevant trade association.
A retailer must provide a statement to the supplier confirming that they got advice or decided not to seek it.
Supplier must give retailer copies of leases
If a retailer leases a site from the supplier or an associate of the supplier, the supplier must give the retailer a copy of the lease within one month of the parties signing the lease.
After a fuel re-selling agreement is entered into
There is a cooling-off period
A fuel retailer may end an agreement within 7 days after signing or paying any money under the agreement, whichever comes first.
If the retailer terminates the agreement during this time, the supplier must refund any money paid under the agreement minus the supplier’s reasonable expenses.
Supplier’s obligations during an agreement
When the retailer makes a written request for a disclosure document, the supplier must comply with that request within 14 days. A retailer can only make one written request in any 12-month period.
A supplier must disclose to the retailer any materially relevant facts, not included in the disclosure document. This must be done within 14 days of becoming aware of them. For example, a change in the supplier’s majority ownership.
Termination, expiry and renewal of fuel re-selling agreements
A supplier must not refuse to renew a fuel re-selling agreement, except if the supplier intends to:
- operate or lease the site for a purpose other than the sale of fuel, or
- intends to dispose of the site.
Parties to a fuel re-selling agreement may agree to terminate the agreement before it expires.
A supplier may terminate a fuel re-selling agreement because of a retailer’s breach of the agreement. This is only if the supplier has:
- notified the retailer of the alleged breach, and
- given the retailer an opportunity to fix the alleged breach within a reasonable time.
There are some exceptions. For example, if the retailer no longer holds a licence required to carry on a fuel reselling business.
Other laws that apply to fuel re-selling agreements
If a fuel re-selling agreement is a standard form contract, unfair contract terms laws apply.
This law protects small businesses from unfair terms in standard form contracts entered into or renewed on or after 12 November 2016.
If a fuel re-selling agreement contains potentially unfair terms, it may breach the law. For more information see Contracts.