Big penalties for unfair contract terms

Contracting with small businesses or consumers will become a risky business from 9 November 2023 as changes to the use of unfair contract terms come into effect (the Regime). Parties will be faced with significant repercussions for contracting with unfair terms in standard form contracts.

The Regime applies to both consumer contracts (i.e. contracts with individual consumers) and small business contracts (i.e. contracts wherein a 'small business' is a party), that are also 'standard form contracts'.

Before the changes, if a contract contains an unfair term, the unfair term will be void and have no effect, and the contract would continue if it is capable of operating without that term. There is still some risk associated with contracting with unfair terms if one party were to seek legal remedies, but the risk will increase exponentially.