Contract Countdown Series: Most Dangerous Risks #8

#8 – Potential Unfair Contract Terms

You’re probably used to seeing signs advertising the Australian Consumer Law (‘ACL’) in shops like Telstra or Apple when you go to buy the latest iPhone, but did you know that the ACL also applies business to business as well?

That’s right, the ACL also governs standard form business contracts entered into or renewed after 12 November 2016. #8 in our Contract Countdown is the risk of having potentially unfair contract terms in the documentation you use with your customers. If your contract:-

  1. Is for the supply of goods or services;
  2. Has at least one party that is a small business (one that employs less than 20 people including casuals employed on a regular basis; and
  3. Has an upfront price payable of no more than $300,000.00 or $1 million if the contract is for more than 12 months, then you may be at risk of being caught by the unfair contract provisions of the ACL.

If you think this could be you, review your contract for things like:-

  • Tiny font;
  • Very high-interest rate;
  • Blanket exclusion of any liability whatsoever;
  • Avoidance or limitation of performance of the contract;
  • Changes to credit without notice;
  • Unbalanced party rights;
  • Confusing and overly legalistic language;
  • Wide indemnities; and
  • Could cause a significant imbalance.

If a term of your contract is unfair under the ACL, it can be void and removed from the contract, which could leave you exposed.

Here at Ledlin Lawyers, our view is that all contracts should be transparent, fair, and easy to understand, regardless of whether they are governed by the unfair contracts regime. Contracts that are balanced and protect both parties’ rights help you build a more trusting, less adversarial relationship with your customer – now that’s win/win!

Contact us for a free LEDcheck of your contract to check for any unfair terms. And of course, stay tuned for #7 in our Contract Countdown…

 

For more information, contact Ledlin Lawyers:-

Email:               info@ledlinlawyers.com.au  

Phone:              02-8488-3389