Australia- Changes in Unfair Contract Term Laws

Australia- Changes in Unfair Contract Term Laws

The Unfair Terms Contract Laws previously only applied to consumer contracts and small business contracts, provided that these contracts were standard form contracts. However, the changes introduced in this law shall extend to insurance contracts covered under the Insurance Contracts Act, 1984. The extension of the law shall significantly increase the scope of the law to include, general insurance, travel insurance etc.

Fundamental changes to the law are as follows;

1. As per the current rules governing small and medium business contracts, at least one party to the agreement was required to impose a limit on the upfront price payable, having a threshold as follows:

$300,000 for a contract whose duration is less than one year;

$1,000,000 for an agreement whose term is one year or more.

With the introduction of new changes, the limit imposed on such upfront price has been removed as per the contract. Further, the law also increases the number of employees to a 100 from the previous 20; annual turnover requirements have been amended to extend up to $10 million.

2. The laws allow for the imposition of civil penalties for contravention of the terms of the contract. Further, the remedies available under the law have been expanded to give courts the power to determine whether the UCT is to be rendered void or not. 
3. The amendment adds a presumption that assists claimants, in that where a term is considered to be unfair by in a different case with regards to the same terms by the same entity and declared by the court to be unfair, the claimants can utilize the same as a rebuttable presumption.
4. The definition of standard term contracts has been proposed to be clarified by considering factors that present an opportunity to parties to negotiate the terms of the agreement and repeat usage of the form of contract as an effective means to determine whether or not a contract is in standard form.
5. The UCT laws shall further, exempt specific clauses such as minimum standards or other industry-specific requirements, as contained in state, territory or commonwealth laws.