Unfair Contract Terms
Written in plain language for general understanding. This is educational content, not legal advice. Based on Commonwealth Acts of Parliament, federal regulations, and official government guidance.
Australian Federal Law
What is this right?
The ACL protects you from unfair terms in standard form contracts — the kind of “take it or leave it” agreements you sign with phone companies, gyms, landlords, and online services:
- What makes a term unfair: A term is unfair if it causes a significant imbalance in the parties’ rights, is not reasonably necessary to protect the business, and would cause you detriment (financial or otherwise).
- Common unfair terms: One-sided cancellation clauses, terms letting the business change the price or contract without notice, terms limiting your right to sue, and excessive early termination fees.
- Since 9 November 2023: Unfair contract terms are not just void — they are now illegal. Businesses face penalties of up to $50 million, three times the benefit gained, or 30% of adjusted turnover (whichever is greatest) for including or relying on unfair terms.
- Standard form contracts: These protections apply to contracts where you had little or no opportunity to negotiate the terms.
When does it apply?
- You entered a standard form consumer contract or a small business contract (where at least one party employs fewer than 100 people, or the contract value is under $5 million).
- The contract was prepared by one party (the business) and presented on a take-it-or-leave-it basis.
- The allegedly unfair term is not a main subject matter term (like the price you agreed to pay) and is not required by law.
What should you do?
- Read contracts carefully before signing and look for one-sided clauses.
- If a business tries to enforce a term you believe is unfair, tell them you consider it unfair under the ACL and refuse to comply.
- Report unfair terms to the ACCC at accc.gov.au — the ACCC can take court action against the business.
- You can also apply to a court or tribunal to have a specific term declared void.
What should you NOT do?
- Don’t assume you’re bound by every term just because you signed the contract — unfair terms can be struck out.
- Don’t ignore unfair terms — if a business enforces one against you, you have the right to challenge it.
- Don’t confuse price terms with unfair terms — the upfront price and main subject are generally not covered.
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