Unfair contract terms law |
We can ask courts to remove unfair terms in standard form consumer contracts.
The following clip, which is part of our film on the Australian Consumer Law, explains unfair contract terms.
When a term is unfair
A term will be considered unfair if it:
- causes a significant imbalance in the parties´ rights and obligations arising under the contract
- is not reasonably necessary to protect the legitimate interests of the business
- would cause detriment to another party if it were to be applied or relied on.
Standard form consumer contracts
A standard form consumer contract will typically be one that has been prepared by one party to the contract and is not subject to negotiation between the parties. Generally it will be offered on a ´take it or leave it´ basis. Standard form consumer contracts are typically used for the supply of products and services to consumers in industries such as:
- telecommunications
- finance
- domestic building
- gyms
- motor vehicles
- travel
- utilities.
If a term of a contract is found to be unfair, then it is void as if it never existed. The contract is still valid to the extent that it can operate without that term.
Declaring a term unfair
Only a court can declare a term to be unfair. The court must take into account whether the term is transparent and also consider the contract as a whole. A term on its own may seem unfair, but when looked at as a part of the whole contract it may be reasonable in the circumstances.
Types of terms that may be deemed unfair
A court may deem a term to be unfair if it:
- permits one party, but not another party, to avoid or limit performance of the contract
- permits one party, but not another party, to terminate the contract
- penalises one party, but not another party, for a breach or termination of the contract
- permits one party, but not another party, to vary the terms of the contract
- permits one party, but not another party, to renew or not renew the contract
- permits one party to vary the upfront price payable under the contract without the right of another party to terminate the contract
- permits one party unilaterally to vary the characteristics of the goods or services to be supplied, or the interest in land to be sold or granted, or the financial goods or services to be supplied under the contract
- permits one party unilaterally to determine whether the contract has been breached or to interpret its meaning
- limits one party´s vicarious liability for its agents
- permits one party to assign the contract to the detriment of another party without that other party´s consent
- limits one party´s right to sue another party
- limits the evidence one party can adduce in proceedings relating to the contract
- imposes the evidential burden on one party in proceedings relating to the contract.
More information
Guides have been prepared to help businesses and legal practitioners to understand key elements of the Australian Consumer Law, including unfair contract terms law. Download A guide to the unfair contract terms law (PDF, 1.8 MB) or order a hard copy from the Queensland Government bookshop.
Last reviewed 06/06/2011 |
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