🥊 Unfair Contract Terms? ➲ Legal Wizard [Australia]

Is this Unfair Contract Terms? ➲ Legal Wizard right for you?

This Unfair Contract Terms Wizard release provides guidance under Australian Law to help you decide (regardless of which side of the contract you are on) whether:

⚖️ The Unfair Contract Terms regime established by Australian Consumer Law and the ASIC Act applies to your Small Business Contract or Consumer Contract; and if so

⚖️ Whether your existing or proposed contract terms would be likely to be declared unfair by an Australian Court.

Important Note: This Legal Wizard is currently 🏗 Under Construction.

Please contact our legal team directly if your legal matter is urgent.

Even if you don't want to talk to a lawyer … we still recommend you do

The problem is that you don't know what you don't know, and the law (and/or the Courts interpretation of it) does change over time so what might once have been the case may have changed.

In sum, in an abundance of caution, always seek legal advice from a lawyer.

If for any reason you decide you don't want to talk to a lawyer, at a minimum, please consult with this Unfair Contract Terms Wizard so your understanding can at least be litmus tested!

Effective 9 November 2023 ➲ First-Ever Monetary Penalties for Unfair Contract Terms

Commencing 9 November2023 new amendments to the current Unfair Contract Terms regime introduce substantial monetary penalties for imposing unfair contract terms on consumers and small businesses.

“We have long highlighted the adverse consequences of unfair contract terms on consumers and small business, including franchisees, and suggested that they be outlawed and penalties are required to provide a stronger incentive for businesses to comply,” Ms Cass-Gottlieb said.

Previously, the Courts could declare specific terms of a contract unfair and therefore void, but they were not prohibited and the Court could not impose any penalties on businesses that included them in standard form contracts.

“Businesses have 12 months to review and update their standard form contracts before these penalties apply.

These changes will improve small business and consumer confidence that they will not be taken advantage of when entering into or renewing standard form contracts in the future,” Ms Cass-Gottlieb said.

“Many small business complaints about big business are about unfair contract terms and it will be an enormous boost to small businesses that there will be a far stronger deterrent against the use of such terms.”

The changes will also expand coverage to more small business contracts.

The protections will apply to contracts with small business which employ fewer than 100 persons or have an annual turnover of less than $10 million, and will apply irrespective of the value of the contract. The changes also clarify other aspects of the laws, such as more clearly defining ‘standard form contracts'.

“Standard form contracts provide a cost-effective way for many businesses to contract with significant volumes of customers.

However, by definition, these contracts are largely imposed on a ‘take it or leave it’ basis.

The unfair contract terms laws are vital to protect consumers and small businesses against terms in these contracts that take advantage of this imbalance in bargaining power.

We are pleased that these laws have been strengthened,” Ms Cass-Gottlieb said.

Maximum Penalties increased Five-Fold

Under the changes increasing penalties for some conduct, maximum penalties for companies that breach those provisions have increased to the greater of $50 million or three times the value derived from the relevant breach, or, if the value derived from the breach cannot be determined, 30 per cent of the company’s turnover during the period it engaged in the conduct.

“The increase in penalties should serve as a strong deterrent message to companies that they must comply with their obligations to compete and not mislead or act unconscionably towards consumers” ACCC Chair Gina Cass-Gottlieb said.

“These maximum penalty changes will allow the Courts to ensure that the penalties imposed for competition and consumer law breaches are not seen as a cost of doing business, but rather as a significant impost and something likely to raise the serious attention of owners or shareholders.”

Background

The Treasury Laws Amendment (More Competition, Better Prices) Bill 2022 passed both Houses of Parliament on 27 October 2022.

The higher penalties under the Competition and Consumer Act will apply to breaches which take place after it commences.

The new maximum financial penalties for businesses are the greatest of:

• $50,000,000;
• Three times the value of the "reasonably attributable" benefit obtained from the conduct, if the court can determine this; or
• if a court cannot determine the benefit, 30 per cent of adjusted turnover during the breach period.

Under former penalties, the maximum penalty was $10 million; three times the benefit or 10 per cent of relevant turnover.

The maximum penalty for an individual will increase from $500,000 to $2.5 million.

These maximum penalties apply to a range of offences and civil penalty provisions under the Australian Consumer Law including unconscionable conduct, false or misleading representations, harassment and coercion, supplying products that do not comply with safety or information standards or that are covered by a safety ban, and more.

They also apply to most civil and criminal offences under competition law, including cartel offences, the news media & digital platforms mandatory bargaining code provisions, the international liner cargo shipping provisions, and the prohibited conduct in the energy market provisions.

The ACCC has long advocated for the introduction of penalties to unfair contract terms, including in our submission to the Government review of the unfair contract terms protections in 2018, and in a submission to the regulation impact assessment process in early 2020 about proposed enhancements to the unfair contract terms provisions.

How this Unfair Contract Terms Wizard Works

This Unfair Contract Terms Wizard is designed to be a FREE online guide to help you (at a time that suits you) to make an informed decision regarding whether you need to consult our legal team, as fast as possible.

Our Unfair Contract Terms Wizard giving you the green light to proceed on your own does not mean we support your decision or provide you with any guarantee that you are correct in doing it yourself without seeking legal assistance, just that if you have answered the Unfair Contract Terms Wizard correctly and nothing you have indicated has triggered the risk of potential problems, your risk of proceeding without legal counsel is reduced.

Ultimately it is up to you to decide how you would like to proceed.

As contract terms change we encourage you to revisit this Unfair Contract Terms Wizard to determine whether its recommendation has changed.

Further reading:

👉 ACCC welcomes new penalties and expansion of the unfair contract terms laws

Optional Extra:

➲ 💡 Authentic8 / Genuin Fraud + Litigation Prevention Technology.

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