Changes to unfair contract terms
Do you own and operate your own business? Do you send your customers standard contracts? Are you asked to sign standard contracts? If you answered yes to these questions, read on…..
On 12 November 2016, significant changes with respect to the Australian Consumer Law came into effect. Those changes have the potential to cripple your business if your standard contract terms are found to be unenforceable.
The changes are likely to have a significant effect in a variety of industries. For example in the building and construction where the use of standard form contracts prepared by one party with superior bargaining power, effectively prepared without negotiation on a take it or leave it basis are common place.
In short, a term of a contract may be unfair if it isn’t reasonably necessary to protect the legitimate interests of the party advantaged by the term and the clause itself will cause a disadvantage to the other party if it were applied or relied upon and causes a significant imbalance in the respective parties obligations (and rights) under the contract.
Examples of clauses that may (likely) be unfair are clauses that purport to allow one party to terminate the contract without cause or compensation to the other party; or expose one party to excessive default fees; or purport to allow one party to vary the contract without the other party’s right to terminate the contract if that party doesn’t agree with the variation.
Now is the time to review and obtain advice on the standard form contracts that you use in your business (or the standard form contracts that you are asked to sign), particularly if your business has fewer than 20 employees and either the upfront price payable is less than $300,000; or the contract will run for more than 12 months and the upfront price payable is no more than $1 million.
Please contact our office on 8362 5269 to make an appointment for an initial without cost consultation to discuss your particular circumstances.
If you would like to know more, please contact one of our experienced staff at Bambrick Legal today: