Unfair terms shakeup

The Federal Government is considering reforms to the Unfair Contract Terms regime under the Australian Consumer Law and Australian Securities and Investment Commission Act 2001 (Cth).

The changes are aimed at increased protections for consumers and small businesses from unfair terms in standard form contracts.

There a number for changes set out in the Treasury Laws Amendment (Measures for a Later Sitting) Bill 2021: Unfair contract terms reforms (the UCT bill) including:

• revamping the remedy and enforcement options under the existing regime, including by:

  • giving courts new powers to impose pecuniary penalties for parties proposing, applying or relying on an unfair term in a standard form contract;

  • streamlining existing powers to make orders to void, vary or refuse to enforce, part or all of a contract;

• Tweaking the prohibitions on proposing, applying or relying on unfair terms,

Key issues for business with be:

• removing the contract value threshold that prevented low value contracts being caught by the existing regime; and

• an increased scope of businesses subject to the regime with the definition of “small business” to capture businesses employing fewer than 100 people, or less than $10 million in annual turnover.

This means that the following contracts will be captured by the regime:

• a contract for the supply of goods or services, or a sale or grant of interest in land;

• a “standard form contract” (i.e a contract that is used repeatedly without negotiation); and

• a party to the contract falls within the expanded definition of “small business” above.

  If your business or startup needs help navigating legal contracts our business lawyers can help. Contact us here.

  A copy of the draft bill can be viewed here.

  The above article was written by Pippin Barry (BA, JD - 2012, The University of Melbourne), an Australian Legal Practitioner.