What should you do if you are faced with an unfair contract term?

There have been a number of crucial changes related to the Unfair Contracts Terms that may significantly impact your business and the legislation now applies to a wider range of businesses.

The changes are designed to protect small businesses from unfair terms in standard form contracts. The legislation applies to contracts entered into, renewed, or varied after November 2023 and sets clear guidelines on what constitutes an unfair contract term.

Contract terms are unfair if they:

  • cause a significant imbalance in the rights and obligations of the parties under the contract
  • are not reasonably necessary to protect the legitimate interests of the party who gets an advantage from the term, and
  • would cause financial or other harm to the other party if enforced.

An unfair term can be declared void, meaning it cannot be enforced or relied upon. This can have serious implications for contract stability and business operations.

There are substantial penalties for businesses that include or attempt to enforce unfair terms in their contracts.

Segal Lawyers is here to assist you. We strongly recommend that we review your existing contracts to identify, amend or negotiate any potentially unfair terms.

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