If a contract’s not fair, who’s going to care?

January 23, 2017

One of the lesser known functions of Australian Consumer Law is the protection it provides against unfair contract terms for consumers.

So, as you probably know if you are a regular reader of this blog, a contract is an agreement made between two or more parties that is intended to be legally enforceable.

What role does Consumer Law play?

Previously, Australian Consumer Law only applied to any contract for the supply of goods and services, or the sale or grant of an interest in land, to an individual for personal, domestic or household use or consumption. In November 2016 this was extended to include protection for small business – you can read more about that here.

The most common unfair contract offenders are those who regularly use standard form consumer contracts – that is, a contract prepared by the more powerful party to the contract and presented to the consumer on a “take it or leave it basis” with no opportunity for negotiation.

These are the type of contracts you get from telecommunication providers, large banks and finance companies. and utilities such as electricity providers. Other industries that commonly offend in this area include home builders and gym memberships.

Helping the little guys win!

In this David and Goliath scenario, the Australian Consumer Law provides the stone for your sling! Either the consumer, the ACCC or a state or territory consumer protection agency can apply to have a term of a standard contract declared unfair.

If a term is declared to be unfair, it becomes void – that means it is not operative – it has no effect and the person arguing that it is unfair is entitled to compensation for any loss or damage they have suffered as a result of the unfair term.

It is important to note, however, that this is a protective measure, not a punitive one. The court’s remedies are there to stop consumers being taken advantage of, but they have no power under the Australian Consumer Law to punish the party who attempts to rely on the unfair contractual term.

How I can help

If you have any questions about how this law might apply in this situation, or would like a contract reviewed to see if it contains unfair provisions, feel free to book a no-obligation 30 minute connection chat with me.

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