Australian Consumer Law and unfair contract terms: What is "unfair"?

Background

The Competition and Consumer Act 2010 (Cth), containing the Australian Consumer Law ("ACL"), came into effect on 1 July 2010. The ACL's purpose is so that courts or consumer tribunals (such as QCAT in Queensland) have the power to declare terms of a standard form consumer contract to be void if they are unfair to the consumer.

The criteria for a term to be declared "unfair" are:

• it would cause a significant imbalance in the parties' rights and powers;
• it goes beyond what is reasonably necessary to protect a supplier's legitimate interests;
• it would cause detriment if relied upon;

The court or tribunal may also consider the transparency of the term and more broadly the effect of the contract as a whole, which are discretionary rather than mandatory points of consideration.