Important changes to the Unfair Contract Terms regime may have a significant impact on your business, with the legislation now applying to a broader range of businesses than before.
These changes are designed to protect small businesses from unfair terms in standard form contracts. The updated laws apply to contracts that were entered into, renewed, or varied after November 2023, and they provide clearer guidance on what may be considered an unfair contract term.
A contract term may be considered unfair if it:
- creates a significant imbalance in the rights and obligations of the parties;
- is not reasonably necessary to protect the legitimate interests of the party benefiting from the term; and
- would cause financial or other harm to the other party if the term were enforced.
If a term is found to be unfair, it may be declared void. This means the term cannot be enforced or relied upon, which can create serious consequences for contract certainty, business operations, and commercial relationships.
Businesses may also face substantial penalties if they include unfair terms in their contracts or attempt to enforce them.
M & Z Lawyers can assist by reviewing your existing contracts to identify, amend, or negotiate any terms that may be considered unfair. We strongly recommend having your contracts reviewed to ensure they remain compliant and commercially secure.