Australian Parliament Passes Unfair Contract Terms Legislation

The Victorian Automotive Chamber of Commerce (VACC) has welcomed the parliamentary passing of federal government legislation to enhance protections against unfair contract terms (UCT).

According to the VACC, UCT legislation amends the law in relation to the Competition and Consumer Act 2010 (CCA), Australian Consumer Law (ACL) and Australian Securities and Investments Commission Act 2001 (ASIC Act), for insurance contracts.

The VACC said the legislation will strengthen and clarify the existing unfair contract terms provisions – first introduced in 2010 for consumer contracts and in 2016 for small business contracts – and reduce the prevalence of unfair contract terms in consumer and small business standard form contracts. It will also introduce a civil penalty regime prohibiting the use of and reliance on unfair contract terms in standard form contracts, and expand the class of contracts that are covered by the unfair contract terms provisions.

Additionally, it will strengthen remedies available under the new UCT regime. The maximum penalty that can be ordered by a court for an individual will be $2.5 million. For a company or body corporate, the maximum penalty will be $50 million.

“Contract law can be complicated, but the principle is simple: big and powerful businesses must stop putting unfair contract terms into their contracts with consumers and small businesses,” said the VACC.

It is expected the bill will be presented to the Governor-General for assent within two weeks of it passing through Parliament. Businesses will then have one year to review their standard form agreements and remove or amend any unfair contract terms.