For consumers / Unfair contract terms
Unfair contract terms
Take-it-or-leave-it contracts sometimes contain terms that are unfair. In consumer and small business contracts, an unfair term is void. Since November 2023, using one can also lead to a penalty.
In short
- In consumer and small business contracts, an unfair term is void.
- Small business contracts: at least one party has fewer than 100 employees or an annual turnover of less than $10 million. There is no limit on the value of the contract.
- Since 9 November 2023, proposing, using or relying on an unfair term in these contracts is itself a breach of the law, each term counted separately.
- Signing does not make an unfair term enforceable in a standard form contract covered by these rules.
- Cost and next step: $990 for a review and a letter, including GST. Start online or call 1800 776 529.
Key numbers
Under 100
A business with fewer than 100 employees, or turnover under $10 million, is protected as a small business, whatever the value of the contract.
Each term
Since 9 November 2023, proposing, using or relying on an unfair term is itself a breach of the law, each term counted separately.
30%
Of adjusted turnover: the maximum penalty for a company since 28 March 2026, if greater than $100 million or three times the benefit.
Who is protected
The rules apply to standard form contracts that are either:1
- consumer contracts: an individual acquiring goods, services or land wholly or mainly for personal, domestic or household use; or
- small business contracts: at least one party has fewer than 100 employees or an annual turnover of less than $10 million.
There is no limit on the value of the contract.
What makes a term unfair
A term is unfair if it would cause a significant imbalance in the parties’ rights and obligations, is not reasonably necessary to protect the legitimate interests of the business relying on it, and would cause detriment to the other party if relied on.2 The term is presumed not to be reasonably necessary unless the business proves otherwise. Transparency matters: a hidden or unclear term is more likely to be unfair. Examples include terms that let one side cancel or change the contract but not the other, penalise only one side, or let one side decide alone whether the contract has been breached.3 The terms that set the main subject matter and the upfront price are not tested.4
What happens to an unfair term
It is void, and the rest of the contract continues if it can operate without it.1 Since 9 November 2023, proposing, using or relying on an unfair term in these contracts is itself a breach of the law, each term counted separately.5 From 28 March 2026 the maximum penalty for a company doubled to the greatest of $100 million, three times the benefit obtained, or 30% of adjusted turnover.6
For businesses
If your terms were drafted some time ago, or copied from someone else, they are worth checking. See Terms, refund policies and warranties.
What my $990 covers
I review the contract and the terms you are concerned about, tell you whether they are likely to be unfair and what that means for your dispute, and send a letter to the other party.
Questions
Have another question? Phone 1800 776 529 or send me a message.
Signing does not make an unfair term enforceable in a standard form contract covered by these rules.
Ultimately a court or tribunal. In practice, a well-argued letter often leads the business to drop the term.
The law
- ACL s 23, including s 23(1), (3) and (4).
- ACL s 24(1); transparency s 24(2), (3); presumption s 24(4).
- ACL s 25(b), (c), (d), (h).
- ACL s 26(1)(a), (b); terms required or expressly permitted by law are also excluded (s 26(1)(c) to (e)).
- ACL s 23(2A) to (2C); Treasury Laws Amendment (More Competition, Better Prices) Act 2022 (Cth) sch 2.
- ACL s 224(3A); Treasury Laws Amendment (Doubling Penalties for ACCC Enforcement) Act 2026 (Cth); application s 310.
Last reviewed: November 2026. This page is general information about Victorian and Commonwealth law as at November 2026. It is not legal advice about your circumstances.
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Phone: 1800 776 529
Email: info@consumerlawyers.com.au
Hours: Monday to Friday, 9 am to 5:30 pm
Office: 435 Nepean Highway, Frankston VIC 3199 (by appointment)
I act for consumers and for businesses, but never for both sides of the same dispute. Before I start, I check that I have not acted for the other party.