Most businesses have a standard contract they send to every customer, supplier or client. Since 9 November 2023, that document is also a compliance risk. Under the Australian Consumer Law, proposing or relying on an unfair term in a standard-form consumer or small business contract is prohibited, and it can attract substantial penalties.
What changed in 2023
Before November 2023, an unfair term was simply void: the customer could ignore it, but the business faced no penalty for including it. Now the regulator (the ACCC or ASIC, depending on the product) can take a business to court and seek penalties, and the court can declare a term unfair and unenforceable.
The Government has since signalled that regulators will get more tools. In June 2026 it announced plans to give them wider infringement-notice powers for unfair contract term breaches, so enforcement is likely to become faster and more routine.
Who is protected?
The rules protect:
- Consumers buying goods, services or land for personal, domestic or household use, and
- Small businesses that sign a standard-form contract, generally a business with fewer than 100 employees or annual turnover under $10 million.
The contract must be standard form: offered on a take-it-or-leave-it basis, with little or no real room to negotiate. A court will presume a contract is standard form unless the business that relies on it proves otherwise, so do not assume that a contract sent as a Word document is automatically safe.
What makes a term "unfair"?
A term is unfair if all three of these apply:
- it causes a significant imbalance in the parties' rights and obligations;
- it is not reasonably necessary to protect the legitimate interests of the business that benefits from it; and
- it would cause detriment (financial or otherwise) to the other party if relied on.
Terms that set the main subject matter of the contract or the upfront price are generally outside the regime, as are terms required or permitted by law.
Terms regulators and courts look at closely
- Automatic renewals that lock a customer into a new term unless they cancel in a narrow window.
- One-sided variation rights: letting only you change the price, the scope or the terms.
- One-sided termination or cancellation rights, or penalties that apply only to the customer.
- Broad limits on your liability combined with unlimited liability for the customer.
- Unilateral rights to treat the other party as in breach, or to keep deposits and prepayments.
What to do now
- Audit your templates: terms and conditions, service agreements, quotes, online terms and supplier forms.
- Look for one-sided clauses and ask for each: what legitimate interest does this protect, and is it narrower than it needs to be?
- Check your renewal and variation clauses first. They are the most common source of complaints.
- Review contracts as they renew or are varied. The regime applies to contracts made, renewed or varied after 9 November 2023.
- If you are the small business signing someone else's standard terms, an unfair term may not bind you, but get advice before you refuse to perform a contract.
Fixing a template is far cheaper than defending an enforcement action. Our contract lawyers review business terms and conditions for Perth and Western Australian businesses, usually at a fixed fee.
General information only, current at November 2026. It is not legal advice and does not take account of your circumstances.
