Unfair Contract Terms in Australia
Reviewed by the Commoner Law Editorial Team. Sourced from Commonwealth Acts of Parliament, federal regulations, and official government guidance. State-level information reflects each state's own Acts and court decisions. Written in plain language for general understanding — this is educational content, not legal advice. Our editorial standards
What is this right?
The ACL's unfair-contract-terms regime tackles the "take it or leave it" agreements people sign with phone companies, gyms, landlords, online services — the contracts where there's no real chance to negotiate.
- What makes a term unfair: 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 offenders: one-sided cancellation clauses, terms letting the business change the price or terms without notice, limits on your right to sue, and excessive early-termination fees.
- Since 9 November 2023: unfair terms aren't just void anymore — they're 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 them. The 2022 reform turned what was a quiet provision into a serious enforcement lever.
- Standard form contracts: the regime covers any contract where you had little or no opportunity to negotiate.
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 to Do If an Australian Business Is Enforcing an Unfair Contract Term Against You
- 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.
Use the jurisdiction bar at the top of the page to pick your state — you'll see how state law differs from Australian federal law.
6 states available
Common Questions
When does unfair contract terms 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 I do if a business in Australia is trying to enforce a contract term that seems unfair?
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 mistakes should I avoid with unfair contract terms?
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.
Unfair Contract Terms in other states
Same topic, different jurisdiction. Pick the one that applies to you.