Unfair Contract Terms

Generally, a contract term will deemed to be unfair if it:

• Causes a significant imbalance in the parties’ rights and obligations;

• Is not necessary to protect the legitimate interests of the party benefiting from the term; or

• Would cause detriment (financial or otherwise) to a party if it were applied or relied upon.

Some examples of an unfair contract term include:

Penalty clauses: terms that impose excessive fees or penalties for minor breaches or for things outside the control of a consumer.

Binding renewal: automatically renewing a contract without the consumer’s explicit consent.

Limited liability: excessively limiting the liability of a business in situations where they breach a contract or cause harm.

Unilateral changes: allowing one party to change the terms of the contract without the consent of the other party.

Hidden terms: important terms hidden in fine print or made unclear to the average person.

In Australia, protections against unfair contract terms are primarily governed by the Australian Consumer Law (ACL), which is found in Schedule 2 of the Competition and Consumer Act 2010 (Cth). The ACL provides a national framework that aims to protect consumers against unfair terms in standard form consumer contracts.

The Australian Competition and Consumer Commission (ACCC) is the primary regulatory body responsible for enforcing the ACL, including its unfair contract term provisions. The ACCC can take action against businesses that include and enforce unfair terms in their consumer or small business contracts.

If you believe the terms within your contract are unfair, always consult a lawyer. They will be able to advise you on the legality of the contract and assist in resolving any dispute. A lawyer will be able to help negotiate with the other party to modify or remove the unfair term, or if necessary, assist in reporting it to the ACCC.

At Inkling Law, we are experts in contract law and the nuances of the Australian Consumer Law (ACL). We specialise in reviewing contracts, including unfair terms and can use our expertise to ensure that your interests are safeguarded.

We conduct thorough reviews of detailed contracts and provide tailored recommendations for modifications, negotiations or potential redress. Contact us today to ensure you are not caught off-guard by an unfair term in your contract.