The sanctity of a contract might appear inviolable, envisaged as a self-contained entity enshrining the rules of engagement. Yet, it must bow to the overarching regulatory frameworks and legislation, including the Australian Consumer Law and other pertinent Australian statutes. These laws define the acceptable boundaries of fairness in contractual agreements and open the door for contract terms to be adjudged unfair.
In a litigious situation, or even when merely scrutinised by a legal professional, it becomes apparent how critical it is to get the contract terms correct at the outset.
What Constitutes a Consumer Contract?
A consumer contract is an agreement formulated by a business or seller for the provision of goods or services to a consumer. A typical form of such contract is the 'standard form contract'. This form of contract is prepared unilaterally by one party and presented on a take-it-or-leave-it basis — either accepted or rejected by the client.
Australian courts possess the authority to decree that a standard form contract is unjust. This subsequently invalidates any unfair terms within that contract. If the impugned term is essential to the contract, the entire agreement may be rendered void.
Such a ruling could have extensive implications for all standard-form contracts, affecting agreements signed by other consumers.
What Qualifies as Unfair Contract Terms?
The court deploys a tripartite test to ascertain whether a contract term is unfair under Australian consumer law. A term will only be declared unfair, and therefore void, if it satisfies this criteria.
A term could be judged unfair if it substantially skews the balance of rights and obligations, if the term extends beyond safeguarding the interests of the party that benefits from it, and if the application of the term would harm the other party.
The courts also scrutinise the transparency of the questionable terms. Ambiguous or intentionally hidden terms are likely to invite severe judgment. The disputed term is evaluated in the context of the overall contract.
Potential red flags indicating an unfair contract may include:
An exclusion clause favouring one party.
A one-sided termination or renewal clause.
An excessive penalty for the client for contract termination or violation.
An unreasonable disavowal of liability or imposition of liability on agents.
A clause that inhibits one party from seeking legal recourse.
A provision allowing one party to alter the contract terms or price, particularly if the contract doesn't reciprocate the right to terminate in these circumstances.
Are you a client alleging unfair contract terms, or do you feel that the terms in your contract are unjust?
Legal services are invaluable in achieving the best possible outcome under such circumstances. The team at Arida Lawyers can advocate for your rights and provide expert legal advice on issues relating to contract law, debt recovery, and consumer law. For legal assistance, feel free to contact Arida Lawyers on 1300 146 390 or at info@aridalawyers.com.
This article provides general information relevant to our expert services. It is not legal advice and should not be relied upon as such. If you are seeking legal advice, you should contact us for a free initial consultation.
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