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Unfair Contract Terms

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By Marianne Marchesi, Lawyer, Mason Sier Turnbull

An unfair  term is defined in the Competition and Consumer Act 2010 (Cth) (CCA) and the Australian Securities and Investment Commission Act 2001 (Cth) (“ASIC Act”) as a term in a consumer contract that:

a) would cause a significant imbalance in the parties’ rights and obligations arising under the contract; and

b) is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; and

c) would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on.

Unfair terms in consumer contracts are void under section 23 of the CCA and 12BF of the ASIC Act.

The Abbott Coalition has proposed in a platform paper, “Our Plan“, that the unfair contract term provisions be extended to small business, stating:

“We will ensure that big and small businesses get a ‘fair-go’ and do the right thing by each other in their respective marketplaces, delivering real and lasting benefits to consumers.”

This could have a significant impact on standard form contracts such as franchise agreements and lease agreements.

We will keep clients updated as to any developments in this area. Watch this space!

For advice on unfair contract terms, please contact Mason Sier Turnbull’s Corporate Advisory and Franchising team on (03) 8540 0200.