From 9 November 2023, reforms will make UCTs illegal, attracting substantial penalties under the Competition and Consumer Act 2010 and the ASIC Act 2001, with each unfair term forming a separate contravention.
The reforms also expand the class of small business that can rely on UCT protections. To meet the small business threshold from 9 November 2023, a business must either employ fewer than 100 people or have a turnover of less than $10 million for the previous income year. Under the ASIC Act, the UCT regime will only apply to a small business contract if the upfront price payable (excluding interest) for the contract is $5 million or less. Under the ACL, the monetary contract threshold has been entirely removed.
Additionally, the reforms provide further detail about what constitutes a standard form contract (e.g. minor negotiated changes to an agreement might not exclude that agreement from the standard form definition).
The existing UCT law came into effect in 2010 and is contained within the Australian Consumer Law (ACL) and mirror provisions in the ASIC Act. Under the UCT regime, a term in a standard form contract is unfair if it:
The reforms do not change the test for whether a term is unfair.
To assist industry and consumers understand the reforms, ASIC has updated its existing UCT guidance materials:
ASIC is Australia’s corporate, markets and financial services regulator.