Unfair contract terms

As a supplier, you must ensure your standard form consumer contracts comply with national unfair contract terms laws.

These protect consumers against contract terms that:

  • would cause a significant imbalance in the parties' rights and obligations under a contract;
  • are not reasonably necessary to protect the trader; or
  • would cause detriment (financial or otherwise) to a consumer.

You must not include terms that allow you to:

  • change the contract without reference to the consumer;
  • avoid responsibility when things go wrong;
  • avoid liability; or
  • determine if the contract has been breached.

If a court finds a term is unfair, that term is treated as if it never existed. If the contract can operate without the unfair term, it will still be binding. Any party to the contract can apply to a court for such a declaration that a term of a contract is unfair.

On 12 November 2016, a new law to protect small businesses from unfair terms in business-to-business standard form contracts took effect across Australia. A separate unfair contract terms regime applies to financial services contracts under the Australian Securities and Investments Commission Act 2001.

Unfair contract terms legislation was part of the national changes made to consumer laws in 2010. For more information about the national legislation, download A guide to the unfair contract terms law.

Monitoring and enforcement

We use our unfair terms compliance program to:

  • promote and encourage fair and balanced trading practices; and 
  • encourage and support transparent practices in the marketplace.

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