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Unfair contracts

Contract Law News | September 2016

In previous news issues Forum Law has notified our readers of the impending changes to the Australian Consumer Law to help balance the bargaining position between small business and big business in contracts.

From 12 November 2016 new protections will apply to new or renewed “standard form” small business contracts. A “small business contract” is a contract where at least one of the parties is a “small business” and the upfront price payable under the contract is less than $300,000, or less than $1 million if the contract if the contract runs for more than one year. A “small business” is a business that employs less than 20 employees including casual employees employed of a regular and consistent basis.

What is a standard contract?

The consideration of what is a “standard” form of contract includes whether the contract was prepared in advance, and whether the parties had an opportunity to negotiate the terms of the contract before the contract has been presented to the other party.

What makes a contract unfair?

A court may decide that a term in a contract is “unfair” if:

  • only one party is able to change or vary terms in the contract,
  • only one party has the right to terminate the contract,
  • the contract provides that only one party can determine the meaning and interpretation of terms in the contract or
  • the clauses in the contract have the effect of penalising one party for a breach of the contract that do not apply to the other party.

If a court finds that a term or terms in the contract are unfair, then the court can set aside the term and the term would be unenforceable.

Forum Law Solicitors, in Sydney’s inner west suburb of Leichhardt, can advise and assist you with reviewing contracts you have been provided for potentially unfair terms, and we can prepare contracts for you that are not likely to be set aside on the grounds that the terms are unfair. Call us for a free 30-minute conversation on (02) 9560 3388 or in our friendly and professional office in Leichhardt where parking for clients is free.

Forum Law is an active member of several reputable law and industry associations. We have recently obtained ISO9001 accreditation.