The buzz around unfair contract terms – time’s nearly up to be compliant!

Changes to the Unfair Contract Terms Regime under the Australian Consumer Law  

The Unfair Contract Terms regime applies to “standard form contracts” for the supply of goods or services, where one of the parties is a small business or a consumer.   The regime also applies to the sale or grant of an interest in land. From 9 November 2023, the regime expands the definition of a small business and clarifies the key indicators that constitute a standard form contract.  The amended regime also imposes greater civil penalties of up to AU$50 million (or more) for non-compliance.  

There are similar changes under the ASIC Act which also regulates unfair contract terms, but those topics are not discussed in this article.

Expanded Meaning of a Small Business

The amended regime significantly expands the meaning of a small business, which includes a business that employs 100 people or less (increased from 20) or a business whose turnover in the last income year is less than $10 million.   The contract value thresholds no longer apply.

Got some part time and some casual staff?

Part time employees are included in the count proportionately to a full-time employee, but casual employees are excluded.

Usual suspects of unfair contract terms:

• Automatic renewals,
• Unilateral termination rights,
• Price increases during the term of the contract without any termination rights,
• Permitting insubstantial changes, without a real opportunity to negotiate,
• Imbalanced rights or one-sided indemnities.

We can help

The changes mean the unfair contract terms regime could apply to your business.   We can help by reviewing and amending your current contract suite and suggesting mitigation strategies.