Unfair Contract Terms in Australia (2026)
About this article
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
Compare by state
Statute citations are verified per state. Select a state to jump to its full section below.
| Primary statute | |
|---|---|
| New South Wales | Fair Trading Act 1987 (NSW) |
| Queensland | Australian Consumer Law (Cth), ss 23-28 — unfair contract terms |
| South Australia | Competition and Consumer Act 2010 (Cth), Schedule 2, Part 2-3 — unfair contract terms |
| Tasmania | Competition and Consumer Act 2010 (Cth), Schedule 2, Part 2-3 — unfair contract terms |
| Victoria | Australian Consumer Law and Fair Trading Act 2012 (Vic) |
| Western Australia | Australian Consumer Law (Cth), ss 23-28 — unfair contract terms |
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.
About Consumer Rights in Australia
If a product fails or a business misled you, the Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010) gives you automatic guarantees on most purchases up to $100,000 — repair, replacement, or refund. No contract or "no refunds" sign overrides them. The ACCC enforces bans on misleading conduct, unconscionable conduct, and unfair contract terms. For disputes, your state tribunal — NCAT, VCAT, or QCAT — is built for self-represented consumers.
Worked Examples
ScenarioYour gym membership contract lets the gym change the monthly fee at any time on 7 days' notice, with no right for you to cancel.
OutcomeA unilateral price-change power with no matching exit right would normally cause a significant imbalance, isn't reasonably necessary to protect the gym's legitimate interests, and causes you financial detriment. The ACL is very likely to make it an unfair contract term — meaning it's void and unenforceable.
Verified against ACCC guidance on unfair-terms tests under the ACL (Schedule 2 of the Competition and Consumer Act 2010). Educational information, not legal advice.
Common Questions
What's a 'standard form contract'?
Generally a take-it-or-leave-it contract prepared by one side, where the other side has little or no chance to negotiate — typical of telco, gym, gas, and online subscription agreements. The ACL presumes a contract is standard form unless the business proves otherwise.
Does the law cover small business contracts too?
Yes. Since 2016 (and broadened significantly from 9 November 2023) the unfair-terms regime covers small business standard-form contracts, with expanded business-size thresholds. A small business should never assume an unfair term is enforceable.
What happens if a term is found unfair?
It's void — treated as if it never existed — and cannot be enforced against you. The rest of the contract usually continues to operate without that term. Under the post-9 November 2023 reforms, businesses can also face significant penalties for proposing or relying on unfair terms.
Are price and main-subject-matter terms covered?
Generally no. The unfair-terms regime doesn't apply to the upfront price you agreed to pay or to terms defining the main subject matter of the contract — but it does cover ancillary terms like cancellation fees, automatic renewals, and unilateral variation rights.
What is the unfair contract terms right in Australia?
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...
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.
State-by-state details
New South Wales
Primary statute: Fair Trading Act 1987 (NSW)
Full New South Wales guide →Queensland
Primary statute: Australian Consumer Law (Cth), ss 23-28 — unfair contract terms
Unfair contract terms provisions under the ACL are enforced in Queensland by the OFT and the ACCC.
- A term is unfair if it causes significant imbalance, is not reasonably necessary to protect the benefiting party's legitimate interests, and would cause detriment to the other party.
- Since November 2023, civil penalties apply for including unfair terms — up to $50 million for a body corporate.
- The OFT has investigated unfair terms in residential tenancy agreements, gym contracts, and retirement village contracts in Queensland.
- The Residential Tenancies and Rooming Accommodation Act 2008 (Qld) also addresses unfair terms in residential tenancy agreements independently of the ACL, providing tenants with additional protections through the Residential Tenancies Authority (RTA).
South Australia
Primary statute: Competition and Consumer Act 2010 (Cth), Schedule 2, Part 2-3 — unfair contract terms
Unfair contract terms protections under the Australian Consumer Law apply to standard form consumer and small business contracts. Reforms effective November 2023 make unfair terms unlawful (not merely voidable).
- A term is unfair if it causes a significant imbalance in the parties' rights and obligations, is not reasonably necessary to protect the business's legitimate interests, and would cause detriment to the consumer.
- Since November 2023, businesses can face civil penalties for including or relying on unfair terms — a significant strengthening of the law.
- In SA, Consumer and Business Services (CBS) can investigate unfair terms and take enforcement action. The ACCC also pursues unfair contract terms matters nationally.
- Common examples of unfair terms in SA include one-sided termination clauses in gym memberships, excessive penalty clauses in residential tenancy agreements that go beyond what the Residential Tenancies Act 1995 allows, and auto-renewal clauses that are difficult to cancel.
Tasmania
Primary statute: Competition and Consumer Act 2010 (Cth), Schedule 2, Part 2-3 — unfair contract terms
Unfair contract terms protections under the Australian Consumer Law apply to standard form consumer and small business contracts in Tasmania. Reforms effective November 2023 make unfair terms unlawful (not merely voidable).
- A term is unfair if it causes a significant imbalance in the parties' rights and obligations, is not reasonably necessary to protect the business's legitimate interests, and would cause detriment to the consumer.
- Since November 2023, businesses can face civil penalties for including or relying on unfair terms.
- In Tasmania, CBOS can investigate unfair terms and take enforcement action. The ACCC also pursues unfair contract terms matters nationally.
- Common examples of unfair terms in Tasmania include one-sided termination clauses in service contracts, excessive penalty clauses in rental agreements that go beyond the Residential Tenancy Act 1997, and unreasonable auto-renewal clauses.
Victoria
Primary statute: Australian Consumer Law and Fair Trading Act 2012 (Vic)
Unfair contract terms protections apply in Victoria through the ACL. Since the 2022 amendments, unfair terms are prohibited and attract civil penalties. CAV and the ACCC enforce these provisions.
- A term is unfair if it causes significant imbalance, is not reasonably necessary to protect the benefiting party's legitimate interests, and would cause detriment to the other party.
- Since November 2023, civil penalties apply for including unfair terms — up to $50 million for a body corporate.
- CAV has investigated unfair terms in residential tenancy agreements, gym memberships, car rental contracts, and retirement village contracts in Victoria.
- The Residential Tenancies Act 1997 (Vic) (reformed 2021) also addresses unfair terms in residential tenancy agreements independently of the ACL, providing tenants with additional protections.
Western Australia
Primary statute: Australian Consumer Law (Cth), ss 23-28 — unfair contract terms
Unfair contract terms provisions under the ACL are enforced in WA by Consumer Protection WA and the ACCC.
- A term is unfair if it causes significant imbalance, is not reasonably necessary to protect the benefiting party's legitimate interests, and would cause detriment to the other party.
- Since November 2023, civil penalties apply for including unfair terms — up to $50 million for a body corporate.
- Consumer Protection WA has investigated unfair terms in residential tenancy agreements, fitness contracts, and vehicle rental agreements in WA.
- The Residential Tenancies Act 1987 (WA) provides additional protections for tenants regarding unfair terms, with the Magistrates Court hearing tenancy disputes.
Unfair Contract Terms in other states
Same topic, different jurisdiction. Pick the one that applies to you.