Unfair contract terms

There are laws protecting consumers from unfair terms in circumstances where they have little or no opportunity to negotiate with businesses, such as with standard form contracts.

Standard form contracts

It is common for businesses to offer consumers the same or a similar contract. This is known as a standard form contract.

Businesses may use standard form contracts to improve efficiency, but they must take account of your consumer rights when preparing their contracts.

There are laws in place to protect you from unfair terms in standard form consumer contracts.

Contract terms that are not covered

Most terms in standard form consumer contracts are covered by the unfair contract terms law. However, the following terms are exempt:

  • terms that set out the price
  • terms that define the product or service being supplied
  • terms that are required or permitted by another law (such as terms limiting liability permitted by Australian Consumer Law).

Contracts that are not covered

There are also contracts for certain goods or services that this law does not apply to, including:

  • constitutions, including the constitutions of many superannuation funds, companies, and managed investment schemes
  • contracts for the shipping of goods.

How can I tell if a term in my contract is unfair?

There are a number of factors to consider when deciding whether a term is potentially unfair. The fairness of a term must be considered in the context of the contract as a whole.

The following questions can help you recognise a potentially unfair term, but it is important to note that the final decision on whether a term is unfair can only be made by a court.

  • Does the term cause a significant imbalance between your rights and obligations and those of the business?
  • Is the term reasonably necessary to protect the legitimate interests of the business?
  • Would the term cause you detriment (financial or non-financial) if the business tried to enforce it?
  • How transparent is the term?

If you think a term in your contract is unfair

Make a consumer complaint

More information

Consumers and unfair contract terms
Unfair contract terms review report
Unfair contract terms in relation to financial products and services (including insurance)