The new unfair contracts laws under the Trade Practices Amendment (Australian Consumer Law) Bill 2009 (ACL) will be effective from tomorrow, 1 July 2010.

The unfair contract provisions contained in the ACL will apply to standard form contracts between corporations and individuals under which goods or services are supplied to an individual for personal, domestic or household use or consumption. The ACL will not regulate business to business contracts or insurance contracts.

A term will be unfair if:

• it would cause significant imbalance in the parties’ rights and obligations arising under the contract
• it is not reasonably necessary in order to protect the legitimate business interests of the party who would be advantaged by the term, and
• it would cause detriment to a party (financial or otherwise) if it were to be relied upon.

Examples of terms which may be considered unfair (depending on the circumstances) include terms which limit one party’s right to sue the other party, penalties for one party but not the other for breach of contract and permitting one party (but not the other) to avoid or limit performance of the contract.

Organisations need to take into account the new unfair contracts laws in respect of all their standard form consumer contracts entered into from tomorrow.

If you require assistance in reviewing your standard form contracts please contact:

Malcolm McBratney on 07 3233 8878
David Downie on 07 3233 8842.