Significant Changes To Unfair Contract Terms Regime

Background

On 6 November 2020, Federal and State Ministers agreed to extend the unfair contract terms (UCT) law provided by the Australian Consumer Law.

What contracts are currently covered?
Standard form contracts entered into on or after 12 November 2016, where:

• It is for the supply of goods or services;
• At least one party is a small business (employs less than 20 people);
• Upfront price payable under the contract is no more than $300,000.00 or $1 million if the contract is for more than 12 months.

What are the changes?

1. Small and medium businesses can now use UCT law
2. There is no cap on the upfront price payable under the contract
3. Businesses are considered small businesses under UCT law if:
4. They employ up to 100 employees; or
5. The annual turnover of the business is not more than $10million.

Details on the timing of implementation has not been released.

What this means for you

If you are a ‘small business’ under the new definition:
Review your standard terms to avoid unenforceability;
Review standard terms presented to you to avoid unenforceability.