2020Unfair Contracts

16 November 2020

The Federal and state governments reached a historic agreement to make “unfair contracts” illegal. (Nov 2020)

The Commonwealth and state and territory governments had agreed to strengthen existing unfair contract term protections in the Australian Consumer Law, by making unfair terms unlawful (not simply void) and giving courts the power to impose a civil penalty;

Clauses are “unfair” and void if they give one party, but not the other, the ability to:

  • Avoid or limit the performance of the contract.
  • Terminate the contract.
  • Apply penalties against the other party for a breach or termination of the contract.
  • Vary the terms of the contract.
  • Renew or not renew the contract.
  • Vary the price payable under the contract without the right of the other party to terminate the contract.
  • Unilaterally vary the characteristics of the goods or services to be supplied under the contract.
  • Unilaterally determine whether the contract has been breached or to interpret its meaning.
  • Limit one party’s vicarious liability for its agents.
  • Permit one party to assign the contract to the other party’s detriment without their consent.
  • Limit one party’s right to sue the other party.
  • Limit the evidence one party can adduce in legal proceedings in respect to the contract.
  • Impose the evidential burden on one party in legal proceedings in respect to the contract.

Exemption. A key caveat in the current legislation is that such provisions can be acceptable if they have been properly negotiated. But in the vast majority of “unfair contracts,” there are no negotiations. Large corporations just say take it or leave it.