The ACCC is encouraging businesses to review their standard form contracts before new penalties take effect on 9 November.
The consumer watchdog is asking businesses to remove or amend any unfair contract terms before 9 November, when changes to the Australian Consumer Law are introduced, which will prohibit businesses from proposing, using, or relying on unfair contract terms in standard form contracts with consumers and small businesses.
Mick Keogh, Deputy Chair of the ACCC, said the changes to the unfair contract terms laws should motivate businesses to take steps to ensure their standard form contracts are fair, including by removing or amending concerning terms.
“There was previously little motivation for businesses to comply with the law, despite the ACCC’s compliance and enforcement actions. We strongly urge businesses to review their contracts now to ensure they comply.”
The changes will allow Courts to impose substantial penalties on businesses and individuals who include unfair terms in their standard form contracts. Currently, a Court can only declare specific terms of a contract unfair and therefore void.
“The test for whether a contract term is unfair has not changed. However, businesses now could potentially face substantial penalties for contravening the law. This will better protect consumers and small businesses who have limited bargaining power, expertise, and ability to negotiate or assess standard form contracts.”
Among the changes is the expansion of the coverage of the unfair contract term to include small businesses that employ fewer than 100 people or have an annual turnover of less than $10 million.
“While some of the changes won’t apply to contracts until they are renewed, or a new contract is entered into, businesses should be proactive in reviewing their standard form contracts now,” said Keogh.
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