Unfair contract terms to become unlawful

The unfair contracts regime in the Australian Competition and Consumer Act is about to get some teeth. 

Although some time ago policy makers recognised that consumers practically lack time, expertise and bargaining power to choose with whom to contract, whether to contract or not and on which term to contract, the current regime is difficult to comply with and lacks any real ability to impact consumers.   

According to the communique from the meeting of minsters for consumer affairs, soon:

• unfair contract terms will be unlawful and courts will receive the power to impose a civil penalty;

• courts will be able to determine an appropriate remedy, rather than the term being automatically void;

• the eligibility threshold for the protections will lift from less than 20 employees to less than 100 employees; and

• certain price limitations in order for a contract to be covered by the regime protections will be removed;

There is no doubt the balance between ‘freedom to contract’ and consumer protection continues to tilt towards favouring consumers, and we hope the legislation will improve clarity around the definition of standard-form contract and what constitutes an unfair term.

For business, it’s time to check whether you will be caught by the updated thresholds and review your standard form contracts, (usually in the form of your terms of trade or standard terms and conditions) to ensure they are compliant. 

For more information, please contact:

Paul Gray
Principal
T: 03 5225 5231
E: pgray@ha.legal

Alexander Gulli
Lawyer
T: 03 5226 8573
E: agulli@ha.legal