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Description of this module

The Consumer Guarantees Act 1993 and Fair Trading Act 1986 are at the core of our consumer law and both of these acts are being amended as part of significant law reform that will address gaps and issues, modernise an outmoded approach and align our legislation with that of Australia for economic synergy (we had better give them something after thrice losing the ANZAC Test). These changes affect all businesses and consumers.

A key part of the law reform was the introduction of ‘unfair contract terms’ regime on 17 March 2015. An unfair contract term:

1. causes a significant imbalance in the parties’ rights under the contract;
2. is not reasonably necessary to protect legitimate interests of the party advantaged by the term; and
3. would cause detriment to a party.

For a contractual term to be fair it must be transparent, written in plain language and readily available. The term is not considered in isolation but as part of the whole contract, so where one term is highly favourable to one party it may be balanced by another term favourable to the other. A key example of an unfair contractual term is one where the provider of goods or services excludes all liability, even if they are at fault.

The unfair contract terms regime places standard form contracts under particularly shrewd scrutiny. These are used in most businesses on a daily basis, common examples being property management agreements, terms and conditions of trade, terms of engagement and disclaimers. If a term is declared unfair, businesses can incur crippling penalties and cannot enforce the term, and unfortunately enforcement is sometimes the final means for redress for a breach by the other party.

A review of your terms of trade and standard form contracts ensures not only compliance with the new legislation, but that your business also receives the benefit of favourable changes, such as the new ability to exclude Fair Trading Act provisions from applying to business to business transactions. Over the past eight months we have assisted over 50 pro-active small, medium and national businesses review their terms of trade and contracts and urge you to consider doing the same.