As you may be aware, many large businesses employ a standard form contract when engaging with their customers so that the same terms and conditions apply to every transaction involving the supply of goods or services. The purpose of such a contract is to prevent any negotiations between the parties thus saving the large business precious time and money!
Up until recently, under the Australian Consumer Law, a consumer or small business could challenge an unfair term of a standard form contract and have it declared void and unenforceable by a court. However, under changes to the Australian Consumer Law, which commenced on 9 November 2023, the unfair contract terms regime was significantly expanded as follows:
* the definition of a small business will expand to cover businesses whose turnover is less than $10m or who have less than 100 employees;
* a standard form contract can be challenged even if there are some negotiations;
* penalties of $50m or more can apply for a breach of the unfair contract terms rules; and
* new remedies can be imposed by a court including orders to prevent or reduce loss suffered by a party and prohibiting an unfair term being used in future contracts.
Considering the new onerous landscape being faced by large businesses in this area, consumers and “small” businesses are better able to fight back against questionable business practices used by large corporations and should definitely consider their legal options when encountering an unfair term in a standard form contract which acts to their detriment.
November 2023