The Commonwealth Government has recently amended the Australian Consumer Law in relation to unfair contracts. These are significant changes aimed at providing a level playing field when parties negotiate contracts.
The changes apply to standard form contracts entered into or renewed on or after 12 November 2016, where the following criteria is met:
If a contract is varied on or after 12 November 2016, the amended consumer law applies to the varied terms of the contract.
A standard form contract is a ‘take it or leave it’ type contract that has been prepared by one party to the contract and the other party has little or no opportunity to negotiate the terms of it.
Types of terms that may be unfair
The amended consumer law sets out the following examples of contract terms that may be unfair:
It is important to note that contract terms that set the upfront price payable under the contract are not covered by the law. Price is a negotiation point for the parties.
Who decides if a contract term is unfair?
It is not the ACCC that determines this but it is only a court or tribunal that has the jurisdiction to decide on whether or not a contract term is unfair.
Effect of having an unfair contract term
If a court or tribunal finds that a term is ‘unfair’, the term will be void – this means it is not binding on the parties. The rest of the contract will continue to bind the parties to the extent it is capable of operating without the unfair term.
Contracts and terms that are not covered
While the unfair contract terms laws cover most standard form contracts and contractual terms, there are a number of exceptions. The types of contracts that are not covered include:
The types of terms that are not covered include:
If you think your contract or a term in your contract is unfair you should ask the other party to remove the term or amend it so it is no longer unfair or talk to your lawyer.
We are happy to assist with advice in relation to a contract that you have entered into or are considering entering into. Please contact us on 03 6332 9353 or use our Contact Us form - http://www.cormistonlegal.com.au/contact
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