10 November 2020

Penalties to be introduced for unfair contract terms

The Morrison Government has secured the agreement of state and territory Consumer Affairs Ministers to strengthen protections for consumers and small businesses from unfair contract terms.

Evidence gathered through public consultation indicates that unfair terms remain prevalent in standard form contracts and there is uncertainty around the scope of the existing protections.

Following discussions at the Consumer Affairs Forum last week, the Commonwealth and state and territory governments have agreed to strengthen existing unfair contract term protections in the Australian Consumer Law, by:

  • making unfair terms unlawful and giving courts the power to impose a civil penalty;
  • expanding the definition of small business and removing the requirement for a contract to be below a certain threshold; and
  • improving clarity on when the protections apply, including on what is a ‘standard form contract’.

These reforms will improve consumer and small business confidence when entering into contracts.

Treasury will develop exposure draft legislation that will provide a further opportunity for stakeholders to comment on the detail of the reforms.

Further detail on the reforms is available on the Treasury website