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Unfair Contract Terms Law

On 12 November 2016, a new law came into place to help better protect small businesses from unfair terms in ‘Standard Form Contracts’.

Under the new Unfair Contract Terms Law – administered by the Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC) – contract terms presented to a small business may be struck out if they’re considered by a court or tribunal to unfairly benefit one party over the other.

The law applies to a standard form contract entered into or renewed on or after 12 November 2016, where:

  • it is for the supply of goods or services or the sale or grant of an interest in land;
  • at least one of the parties is a small business (employs less than 20 people, including casual employees employed on a regular and systematic basis); and
  • the upfront price payable under the contract is no more than $300 000 or $1 million if the contract is for more than 12 months.

 

If a contract was varied on or after 12 November 2016, the law will apply to the varied terms.

Only a court or tribunal can determine whether a contract is unfair, however there are a range of services available to you if you think a term in a contract is unfair or if you are in a dispute over a contract term.  Please view the ‘Dispute Resolution Services’ tab to find the contact details of the relevant service in your state or territory.

Further information on Unfair Contract Terms Law can be found on the ACCC website (http://www.accc.gov.au/business/business-rights-protections/unfair-contract-terms), or the ASIC website for financial contracts (http://asic.gov.au/about-asic/what-we-do/laws-we-administer/unfair-contract-terms-law/unfair-contract-term-protections-for-small-businesses/).