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  • Writer's pictureAmy Reed

Unfair Contract Terms: Protecting the end consumer in standard form consumer contracts

The scenario of entering a standard form consumer contract is likely all too familiar. More often than not, the end consumer will ‘tick the box’ to agree without reading the terms in their entirety.

Although it seems impossible to consider reading the never ending updated contract terms from a service providers, it is important to know your rights with respect to unfair contract terms.

Australian Consumer Law (ACL) imposes restrictions on ‘unfair contract terms’ in standard form consumer contracts. To determine if this ACL regulation applies, the following criteria must be met:

1. A standard form consumer contract is in question: This is typically a contract that is prepared by one party, without negotiation between the parties. Standard form contracts are used predominately in the supply or goods and services arrangements such as finance, gyms, motor vehicle rentals and travel.

2. The term is unfair: To determine if a term is in fact unfair, the court will consider if:

a. The term causes a significant imbalance between the parties’ rights and obligations – for example, one party is required to indemnify the other party for a particular event, but that indemnity is not reciprocated.

b. The term is not necessary to protect the legitimate interests of the party who benefits from the clause. To determine this, the party benefiting from the term must provide sufficient evidence that its legitimate interest is greater than any detriment caused to the customer.

c. The term would cause financial or other detriment to a party, if such term is enforced – for example, termination of the contract.

The court will take various matters into account in its determination of whether a contract term is unfair, but it must consider the transparency of the term and the contract as a whole.

If you have any questions regarding creating or entering into contracts, then do not hesitate to contact our specialist commercial lawyers at Jenkins Legal & Advisory.

This article is not legal advice, and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.



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