What is an unfair contract?
The Australian Consumer law introduced protection against unfair contracts from January 2011. But this is an area of law that many people still haven’t heard about.
The law applies only to:
- Consumer contracts
- That are in standard form.
A contract term is unfair if it:
- Causes a significant imbalance in the rights of the consumer and the other party
- Is not reasonably necessary to protect the rights of that party, and
- Would cause detriment to the consumer if relied upon.
Examples might include terms that:
- Allow the business to vary the contract but not the consumer
- Allow the business to change the price without giving the consumer the choice to end the contract
- Allow the business to change the goods or services supplied without giving the consumer a choice to end the contract.
Regulators like the Australian Competition and Consumer Commission and the Queensland Office of Fair Trading (for goods and services) and the Australian Securities and Investment Commission (for financial products) consider complaints about unfair contracts and can investigate.
Insurance contracts are currently exempt from the unfair contracts laws, despite lobbying by consumer advocates to have them included.
Our Legal Diagnosis Service can help if you are wondering if the unfair contracts laws might apply to a contract you have.
