11Obligation to deal in good faith

11 Obligation to deal in good faith

(1) A processor must at all times deal with farmers in good faith, within the meaning of the unwritten law as in force from time to time, in relation to the supply of milk.

Civil penalty:

(a) if the processor is a small business entity for the financial year in which the contravention occurs—100 penalty units; or
(b) otherwise—300 penalty units.

(2) A farmer must at all times deal with processors in good faith, within the meaning of the unwritten law as in force from time to time, in relation to the supply of milk.

Civil penalty: 100 penalty units.

(3) Without limiting subsections (1) and (2), those subsections apply in relation to the following: (a) negotiating or entering into a milk supply agreement; (b) exercising rights, or performing obligations, under a milk supply agreement; (c) dealing with or resolving complaints or disputes arising under or in connection with a milk supply agreement; (d) varying or terminating a milk supply agreement. (4) In determining whether a processor or farmer (the first party) has acted in good faith in dealing with a farmer or processor (the other party), the following may be taken into account: (a) whether the first party has acted honestly; (b) whether the first party has tried to cooperate with the other party to achieve the purposes of any relevant milk supply agreement; (c) whether the first party has not acted arbitrarily, capriciously, unreasonably, recklessly or with ulterior motives; (d) whether the first party has not acted in a way that constitutes retribution against the other party for past complaints and disputes; (e) whether the first party’s relationship with the other party has been conducted without duress; (f) whether the first party’s relationship with the other party has been conducted in recognition of the need for certainty regarding the risks and costs of supplying or purchasing milk; (g) whether the first party has undermined, or denied the other party, a benefit of any relevant milk supply agreement; (h) whether the first party has observed any confidentiality requirements relating to information disclosed or obtained in dealing with or resolving a complaint or dispute with the other party; (i) whether, in dealing with the first party, the other party has acted in good faith. (5) Subsection (4) does not limit subsections (1) and (2).