New Unfair Contract Terms Australia
New Unfair Contract Terms in Australia: What You Need to Know
As of November 12, 2016, Australian businesses must comply with new laws regulating unfair contract terms. The amendments to the Australian Consumer Law (ACL) aim to protect small businesses from being subject to unfair contract terms in their dealings with large businesses.
The new laws apply to contracts entered into, renewed or varied after November 12, 2016, and are enforceable by the Australian Competition and Consumer Commission (ACCC) and other small business commissioners across Australia. The amendments apply to standard form contracts, which are contracts that are not negotiated between the parties and are presented to the small business on a “take it or leave it” basis.
Under the new laws, a term in a standard form contract will be void if it is found to be unfair. A term will be considered unfair if:
– it would cause a significant imbalance in the parties’ rights and obligations arising under the contract
– it is not reasonably necessary to protect the legitimate interests of the party who would be advantaged by the term, and
– it would cause detriment (whether financial or otherwise) to a small business if it were relied on.
Examples of unfair contract terms include:
– Terms that give one party the right to unilaterally change the terms of the contract without the other party’s consent.
– Terms that allow one party to terminate the contract but not the other.
– Terms that limit a party’s right to sue the other party or impose liability on one party only.
– Terms that require one party to indemnify the other for loss or damage caused by the other party, regardless of fault.
– Terms that require the small business to pay for the other party’s legal costs in the event of a dispute.
If a term is found to be unfair, it will be void and the contract will continue to bind the parties to the extent possible without the unfair term. This means that the rest of the contract will remain in force, but the unfair term will be unenforceable.
It is important for businesses to review their standard form contracts to ensure compliance with the new laws. If a contract term is found to be unfair, businesses may face serious consequences, including fines, orders to refund money, and negative publicity.
In summary, the new unfair contract terms in Australia aim to protect small businesses from being subjected to unfair terms in their dealings with larger businesses. Businesses should review their standard form contracts to ensure compliance with the new laws and avoid potential penalties.