Unfair Contract Terms
Changes to the Unfair Contract Terms (UCTs) regime came into effect on 9 November 2023, making it illegal to enter into a standard form contract containing UCTs with a consumer or a business that has fewer than 100 employees or generates under $10 million in annual revenue. The ACCC and ASIC have noted that they will be making UCT enforcement a priority, with courts able to impose significant pecuniary penalties.
Whilst the Unfair Contract Terms regime has been in place since 2019, the recent changes mean that the number of businesses that fall into the regime is greater and the penalties are much harsher. The change in legislation has come about as the ACCC seeks to find a way to even the bargaining power imbalance between large organisations and consumers or small businesses. The legislative amendments also provide clarity for the factors that may be taken into account by a court when determining whether a contract with a small business is a standard form contract.
To assist our clients navigate their obligations under the changes, we have developed a simple tool to help identify contracts that may require a more detailed review for potentially unfair terms. It is available through a Maddocks Digital account.
UCT laws provide that a contract term is an ‘unfair’ term where:
- the term causes a significant imbalance in the parties’ rights and obligations arising under the contract
- the term is not reasonably necessary to protect the legitimate interests of the party who would be advantaged by the term; and
- the term would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on.
Read more about the changes and recent UCT case studies.
Our highly skilled team can assist you with your contract review process to determine which contracts are deemed standard form contracts, and which terms would be considered as unfair.
We are well equipped to prosecute or defend our clients in the event of court proceedings, and will work closely with you to achieve the best possible outcome.
The Unfair Contract Terms Team
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