Understanding Australia’s Unfair Contracts Regime: What Construction Professionals Need to Know
If you’re in the building and construction industry, it’s time to take a hard look at your contracts to ensure they are not “unfair”. Significant changes to Australia’s Unfair Contracts Regime came into effect on 9 November 2023 and the penalties for non-compliance are important. Whether you’re a contractor, supplier, or small business owner, failing to adhere to these new rules could cost you.
What Contracts Are Affected?
Your contract might be covered if it falls into one of these categories:
Consumer contracts – Goods, services, or property for personal use.
Small business contracts – Where one party has <100 employees or <$10M turnover.
Standard form contracts – ‘Take it or leave it’ agreements with little negotiation.
What Makes a Term Unfair?
A clause is unfair if it:
Creates a significant imbalance in the parties’ rights and obligations.
Isn’t necessary to protect a party’s legitimate business interests.
Causes detriment (financial or otherwise) to the other party.
Common Unfair Terms in Construction Contracts
Be on the lookout for terms (especially special conditions) that:
Allow one party to change, terminate, or interpret the contract unilaterally.
Include broad indemnities or unfair limitations on liability.
Impose excessive penalties for breach or termination or delays.
Restrict legal rights (e.g., limiting a party’s ability to sue).
Consequences of Unfair Term
An unfair term is unenforceable and will carry severe financial penalties (up to 2.5m for individuals).
The Bottom Line
Review and revise your contracts now to avoid penalties. Need legal guidance? Get in touch with Oldham Construction Lawyers on (03) 9640 0002, or via email info@oclawyers.com.au for expert advice on ensuring your contracts are fair and enforceable.