Book Now Book Now

Navigating the Unfair Contract Terms Regime in Australia: A Guide for Businesses

Australia's legal landscape for consumer and business contracts has undergone a significant transformation with the recent amendments to its competition and consumer laws, particularly focusing on Unfair Contract Terms (UCT). Effective from 9 November 2023, the New UCT Regime brings forth crucial changes that businesses must be aware of to stay compliant and avoid substantial penalties.

Key Changes in the New UCT Regime

Expansion of 'Standard Form' Contract Definition: The New UCT Regime broadens the scope of what constitutes a 'standard form' contract. These are generally contracts where terms are not subject to much negotiation, often offered on a 'take it or leave it' basis. The new definition includes contracts even if there are minor negotiations or choices between pre-set options.

Wider Coverage for 'Small Businesses': The threshold for what defines a 'small business' has significantly increased. Now, businesses with less than 100 employees, or an annual turnover of less than $10 million, fall under this category, thereby widening the scope of contracts subject to the UCT scrutiny.

Legal Prohibition of Unfair Contract Terms: It's now unlawful to propose, apply, or rely on an unfair contract term. This elevates the seriousness of ensuring fair contractual practices.

Introduction of Civil Penalties: Infringements can lead to severe financial consequences, with penalties reaching up to $2.5 million for individuals and greater amounts for companies, based on various criteria like benefit derived from the contravention.

Stronger Remedies: Beyond declaring an unfair term void, the court can now impose additional penalties for each unfair term identified in a contract.

Understanding the New Regime

What Contracts are Affected?

Contracts falling under the New UCT Regime are those deemed as 'consumer contracts' or 'small business contracts' that are also 'standard form'.

Identifying Standard Form Contracts

To determine if a contract is 'standard form', consider factors like the pre-existence of the contract, the level of negotiation involved, and whether the contract caters to the specific characteristics of the parties involved.

Consumer and Small Business Contracts

Consumer contracts remain largely unchanged, still pertaining to goods, services, or interests primarily for personal use. However, the definition of small business contracts now includes a broader range of businesses, considering employee numbers and annual turnover.

What Constitutes an Unfair Term?

An unfair term is one that creates a significant imbalance in the parties' rights and obligations, is not necessary to protect legitimate interests, and could cause detriment if relied upon. This includes terms allowing one party to avoid obligations, terminate the contract, penalize the other party, or unilaterally alter the contract.

Preparing for Compliance

Businesses have a 12-month grace period from 9 November 2023, to review and adjust their contracts to align with the New UCT Regime. This is a crucial step to avoid the risk of hefty penalties.

Penalties for Non-Compliance

The penalties for non-compliance are substantial, with individual fines up to $2.5 million and higher for companies, calculated based on various factors like the benefit obtained from the contravention.

The New UCT Regime marks a significant shift in Australian contract law, emphasizing fairer and more balanced contractual practices. Businesses must proactively review and adjust their contracts to ensure compliance and avoid the severe penalties associated with unfair contract terms. As always, seeking legal advice tailored to your specific circumstances is advisable.

Connect with us at Allied Legal on 03 8691 3111 or drop us an email at to discuss how we can assist you in complying with the UCT regime.

*The insights presented in this article are derived from ‘Are your standard terms and conditions unfair?’ published to Mondaq by Harrison Humphries on 14 December 2023.

Related Articles


Privacy Law in Fintech: Allied Legal's Guide to Startups and Fintech Companies

Privacy law is important for trust in fintech. Allied Legal explains why following privacy law is not just a legal obligation but also a strategic imperative for fintech companies. It helps build trust with customers and reduces risks to their reputation.

Robo-Advisors and Wealth Technology: Exploring the Evolution of Automated Investment Platforms in Australia

In recent years, Australia's financial landscape has undergone a remarkable transformation with the ascent of robo-advisors and other automated investment platforms. These technological innovations, often referred to as Wealth Technology (WealthTech), are reshaping how individuals invest, providing streamlined solutions, and democratising access to wealth management services.

In this blog post, we will delve into the phenomenon of robo-advisors and WealthTech, examining their rapid rise, regulatory considerations, benefits for investors, and opportunities for WealthTech startups with insights from Allied Legal's team of expert commercial lawyers.

Opportunities for Fintech Startups: ESG Investing and Sustainable Finance Solutions in Australia

As the fintech landscape continues to evolve, environmental, social, and governance (ESG) considerations are increasingly gaining prominence among startup fintech companies in Australia. In this comprehensive guide, we delve into the growing interest in ESG investing and sustainable finance solutions and how fintech can capture this opportunity to provide solutions to the finance industry.


Subscribe to our newsletter to receive exclusive offers and the latest news on our products and services.

First Name
Last Name
Email Address

Need some help?

If you need assistance, why not book a call with us today? Or fill out the form below to book in for a free confidential consultation.