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Changes to the Australian Consumer Laws - Part 6 - Unfair contract terms

Business Law: 23 March 2019

A number of changes have been made to the Trade Practices Act 1974 (Cth) (TPA) as Australian Consumer Law (ACL) reforms have been progressively implemented, with the final portion commencing on 1 January 2011. In addition to these changes the TPA has been renamed the Competition and Consumer Act 2010 (Cth) (CCA).This is the 6th a series of blogs summarising the changes and the implications for businesses operating in Australia.

Unfair contract terms

Unfair terms in standard form consumer contracts are now void.A term is deemed unfair where:

  • it would cause a significant imbalance in the parties' rights and obligations arising under a contract;
  • it is not reasonably necessary to protect the legitimate business interests of the party who would be advantaged by the term (i.e. the supplier); and
  • It would cause detriment to a party if it were to be applied or relied upon.

 Essentially this provision aims to level the playing field (in favour of consumers) to rectify imbalances in bargaining power arising from standard form consumer contracts. Suppliers must ensure that a term of the contract which limits or excludes liability is not classed as 'unfair'.

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