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Legal > Competition & Trade

Unfair Contracts:

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Pursuant to the Competition & Consumer Act (“the Act”), a term of a consumer contract will be unfair if it: 

  • Would cause a significant imbalance in the rights and obligations of the parties under the contract; and 
  • The term is not reasonably necessary to protect a party's interests; and 
  • The term would have an adverse effect if it was enforceable; 
  • Is listed as an unfair term in the Act, such as a term that: 
    • Allows one party to avoid having to perform an obligation otherwise required under the contract;
    • Allows only one party to terminate the contract; 
    • Penalises only one party for breaching the contract; 
    • Allows only one party to vary the terms of the contract; 
    • Restricts the rights of one party to sue the other; 
    • Restricts one party's agents from being vicariously liable in the event of a breach of contract.  

Only a Court or tribunal, such as the NSW Civil and Administrative Tribunal (“NCAT”), can decide whether a term of a consumer contract is unfair, however, this will not usually affect the operation and enforcement of the balance of the contract.   

There are some contracts that are not covered by the unfair term provisions of the Act, including: 

  • Some standard contracts; 
  • Company constitutions; and
  • Some insurance contracts.  

If you are in business and need to have your terms and conditions drafted or updated to reflect the requirements of the Act, or if you are a party to a consumer contract and you consider there to be an unfair term, we recommend that you contact our office and arrange an appointment to see one of Competition & Trade Solicitors in our Sydney office. By appointment, we can also arrange a time for you to see one of our lawyers at a branch office. For a complete listing of our branches please see our "Locations" tab.

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