The UCT regime applies to standard form consumer and small business contracts.
A ‘standard form’ contract is one which is provided by one party to another on a ‘take it or leave it’ basis, with the receiving party having little or no opportunity to negotiate. ‘Consumer’ contracts are those for supply of goods or services for personal or domestic uses. A ‘small business’ contract is one in which one of the parties is a business with less than 20 employees and the upfront price of the contract is less than $300,000; or less than $1,000,000 (if the contract term exceeds 12 months).
An unfair contract term is one which:
In making this assessment, a key factor which the court must consider is the extent to which the term is transparent. The transparency of a contract term depends on how it is expressed, presented and whether it is made accessible to the parties that will be affected by it.
Once a term is determined to be ‘unfair’, the current regime deems it void without the need for any other orders to be made. This means that the contract continues to operate as though the unfair term never existed, provided it is still capable of binding the parties. There are no other consequences for unfair terms under the current regime.
The proposed changes broaden the application of the UCT regime and increase both its protections and its penalties. The key changes are:
New offences and penalties
Expanded scope of UCT regime
While the Bill provides for a 12 month grace period after assent, given the likely introduction of substantial fines and the broadened scope of the regime, you should immediately:
Our experience in relation to UCTs to date is that the ACCC has taken a strong investigative approach in presuming that any one-way or unilateral type terms are likely to be “unfair”. In line with this approach, the ACCC has effectively required parties to amend terms to the satisfaction of the ACCC. With significant penalties for breaches of the UCT regime, we anticipate that the ACCC will also take a strong approach to prosecution.
 Schedule 4 of the Treasury Laws Amendment (Enhancing Tax Integrity and Supporting Business Investment) Bill 2022 The Bill proposes to reform both the Competition and Consumer Act 2010 (Cth) (CCA) and Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act).
 The ASIC Act protections will continue to retain a value threshold for small business contracts, with the UCT regime applying where the upfront price payable is $5 million or less
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