Unfair contracts

Proposed legislation will give consumers uniform protection from unfair contracts.
Learn more
  • Updated:18 Feb 2009

01.Unfair contracts

Person signing contract

*On 1 January 2011, a new national Australian Consumer Law regime came into effect. Please see our article or go to http://www.accc.gov.au/consumerrights for information on these changes.

The issue

Currently almost all consumer contracts in Australia include non-negotiable terms and conditions. Typical examples are rental car agreements, mobile phone contracts, and banking and credit contracts. These so called 'standard terms' - usually published in small print and filled with legal jargon – are rarely included for the benefit of the consumer. Sometimes these contracts include terms which are completely unfair.

In February 2009, the Assistant Treasurer and Minister for Competition and Cosumer Affairs Chris Bowen announced plans to fast-track legislation banning unfair contract terms. The consultation paper proposes that unfair terms in standard form consumer contracts can be struck out. The government proposes to give consumers and the ACCC the power to challenge unfair terms.

Consumers focus on the key terms of the contract – the price and the quality of the goods or services. Even particularly skilled and knowledgeable consumers are not in a position to negotiate the terms of a standard consumer contract. Contracts routinely fail to achieve a fair balance between the interests of consumers and suppliers.

Laws to prevent unfair contract terms are in place in Victoria – and the proposed legislation means that these terms will become uniform across Australia.

What we want

We think unfair contract terms should be banned by national laws which apply to all industries. Fair contract terms legislation should:

  • Give consumers the right to challenge an unfair term, and obtain compensation where justified.
  • Enable the ACCC to remove an unfair contract term from a company's standard contracts.
  • Be accompanied by an effective enforcement mechanism.

The Victorian legislation excludes consumer credit but the Victorian government is currently considering extending the law. We want consumer credit contracts to be included in the Victorian law, as well as a new national fair contract law.

What we're doing

The Productivity Commission recently reviewed Australia's consumer policy framework. Our submission to the inquiry argued that new national fair contract laws are needed.

A NSW Legislative Council committee released its report Unfair terms in consumer contracts in November 2006. The report recommends the NSW Government introduce Unfair Contracts legislation. CHOICE submitted to and appeared before the Inquiry recommending that unfair terms legislation be introduced in NSW and nationally.
Read the submission.

What you can do

Send us feedback about your experiences with unfair contract terms to campaigns@choice.com.au

Victorian consumers can get more information about challenging unfair contract terms at www.consumer.vic.gov.au

More information

VCAT Decision: Director of Consumer Affairs Victoria v AAPT Limited

Keep up to date with our work on this issue - subscribe to CHOICE Campaigns Update (eNews).



Sign up to our free

Receive FREE email updates of our latest tests, consumer news and CHOICE marketing promotions.