Mark Gustavsson Lawyers and Solicitors

Business Owners Must Ensure Compliance with New Unfair Contract Terms Laws

The reforms will apply to a wider range of contracts and provide stronger penalties for breaches of the UCT laws.

The recent reforms to Australia’s unfair contract terms laws (UCT laws) will come into effect on November 9, 2023. The reforms will apply to a wider range of contracts and provide stronger penalties for breaches of the UCT laws. Businesses must take note of the changes and ensure compliance with the new regime. Under the changes, it will be an offence to enter into a standard form consumer or small business contract that contains an unfair term, and businesses will also face penalties for relying on such a term. The UCT laws will now apply to all standard form contracts regardless of the value of the contract, and businesses that have fewer than 100 employees or less than $10 million in annual turnover in the previous income year will have the benefit of the protections. The reforms will provide clarity on the factors that may be taken into account by a court when determining whether a contract is a standard form contract.

Businesses must be aware that each individual unfair term contained in a contract is considered a separate contravention. The maximum pecuniary penalties per contravention for companies are the greater of $50 million, three times the value of the benefit, or 30% of the adjusted turnover during the period of the breach, or the previous 12 months, whichever is longer. The reforms are extensive and businesses must ensure that they are across the changes, including any impact on their standard contracts, contract terms, and customer engagement processes. Business owners must act now to avoid being caught by the new UCT laws, and to prevent costly penalties and potential legal action.

In summary, the reforms to the UCT laws are a significant change that businesses must comply with. Business owners must take steps to understand the changes, ensure compliance, and avoid penalties. The changes will provide stronger protections for small businesses and consumers, and businesses must act now to ensure they are meeting the requirements of the new regime.

If you have concerns about the upcoming changes to the unfair contract terms laws (UCT laws) or need assistance ensuring compliance, don’t hesitate to contact our law firm team. We’re here to help you navigate the new regime and avoid costly penalties.

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