- A bill currently before Federal Parliament contains wide-ranging reforms to Australia’s Unfair Contract Terms regime in the Australian Consumer Law and the Australian Securities and Investments Commission Act.
- The reforms include:
- a significant broadening of what amounts to a small business – thereby broadening the regime’s coverage; and
- the introduction of very significant pecuniary penalties (as well as other broad remedies).
- Businesses should review all standard form contracts with consumers and small business counterparties to ensure compliance with the proposed regime.
Australia’s Unfair Contract Terms (‘UCT’) regime is designed to stop powerful businesses from using their stronger bargaining position to essentially ‘force’ the inclusion of UCTs into agreements with consumers and/or small businesses.
UCT rules are found in both the Australian Consumer Law (‘ACL’) and the Australian Securities and Investments Commission Act (‘ASIC Act’). Over the years, the scope of the UCT regime has steadily broadened, covering an ever-greater number of contracts and consumers, and businesses.
A bill currently before Parliament signals some of the most significant UCT reforms to date – the Treasury Laws Amendment (Enhancing Tax Integrity and Supporting Business Investment) Bill 2022 (‘the Bill’). The Bill will significantly expand the scope of the UCT regime, and for the first time, introduce pecuniary penalties for contraventions. The reforms will come into force 12 months after the Bill receives royal assent.
The UCT provisions in the ASIC Act and the ACL are broadly similar, and many of the Bill’s reforms apply equally to both. However, we will focus our analysis on the ACL provisions in this article.