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What Are Unfair Contract Terms?

What Are Unfair Contract Terms?

Before you skip the fine print, make sure the terms you're signing up for are fair.

18th January 2019

Transactions that we undertake in our daily lives all have one thing in common – they’re all a type of contact. However, we often don’t consider what we’re signing up to, or read the fine print even though the terms of these contracts can be unfair. This is most common when one party benefits from the contract significantly more than the other. As a result, consumer law exists to help enforce and prevent these unfair contract terms.

Standard Contract

In order for consumer law to apply, it must be the right form of contract. Generally, it has to be a standard form contract. You would have signed one such as a gym, phone or electricity contract for example. The key feature is that the consumer has not much power. The contract is a take it or leave it basis.

When it doesn’t apply

There are just certain terms that aren’t going to be unfair. This is because the act doesn’t regulate them. There are three main terms the law will not cover. First is the main subject matter of the contract. Next is the upfront price they are to pay. Finally are terms which are required by either the federal or state government. Likewise, it won’t apply to an insurance contract, most shipping contracts or constitution of companies. If the term is not one of the above then it may be unfair and consumer law may cover it.

Unfair contract terms

A standard contract can put the power with one party. Therefore, an unfair term is something which strengthens that power play. Some terms, don’t need to be there to protect the interest of a party. This would make them also unfair. Lastly, but more vague, if a term could cause financial or other damage to a party.

The Specifics

The issue with which terms are unfair is that it changes on a case by case basis. The example of upfront prices to pay is a good case. The upfront price to pay would not be an unfair term as it falls outside of consumer law. This includes future payments to be made. However, if these future payments were not told to the consumer then it may be unfair. Even more confusing, fees and levies do not count as the upfront payment. This means consumer law does apply to them. So extra fees for leaving a contract could be unfair. As you can tell there is a lot of nuance around which terms and parts of terms are unfair. If you want to find out whether a contract’s terms are unfair you can check with a contract lawyer

Need further advice? Contact a LawPath Consultant on 1800 529 728 to learn more about customising legal documents and obtaining a fixed-fee quote from Australia’s largest legal marketplace.

Justin Pasqualino

Justin is a legal intern at Lawpath as part of the content team. He is currently studying a Bachelor of Laws and a Bachelor of Economics at UTS.