Recognising that its draft provisions on unfair contract terms
released last month have a very broad application to many standard
business-to-business contracts, the Federal Government has
announced some important exclusions in response to stakeholder
feedback. The legislation on unfair contract terms will not apply
to standard form contracts:
where the upfront price payable for the services (including
financial services), good or land supplied under the contract
exceeds $2 million;
that are shipping contracts
that are the constitutions of companies, managed investment
schemes or other kinds of bodies.
While the Government's change is to be welcomed,
the proposed legislation will still have a very wide application
beyond consumer contracts. Once introduced into Federal Parliament,
the legislation will be referred to the Senate Economics Committee,
which will give stakeholders a further opportunity to shape the
final version of the Bill. We urge you to consider the potential
application of the laws to your business and to make a submission.
You can learn more about the draft provisions on unfair contract
terms in our
briefing note. Victoria's Fair Trading and Other Acts
Amendment Act 2009 No. 19 (Vic) is now law, having been assented to
on 10 June 2009.
Among other matters, this Act amends the unfair contract terms
provisions in Part 2B of the Fair Trading Act and applies them to
contracts covered by the UCCC.
It also removes the requirement that an unfair term be contrary to
the requirements of good faith and it introduces in new section
32ZC(4) powers for a court or tribunal, having declared a term to
be an unfair term, to make an order:
(a) for the payment of a sum of money
(i) by way of damages (including exemplary damages and
damages in the nature of interest); or
(ii) by way of restitution;
(b) that the contract is varied in the manner
specified in the order and that the variation takes effect from the
time specified in the order;
(i) money paid by a person under the contract be
refunded to that person; or
(ii) property transferred by a person under the contract is
returned to that person;
(d) in the nature of an order for specific performance
of the contract;
(e) for rescission of the contract;
(f) for rectification of the contract;
(g) that all or any of the provisions in the contract are not to be
(h) declaring that a debt is, or is not, owing;
(i) that a person do something, including an order that -
(i) the person repair or provide parts for goods
provided under the contract to another person; or
(ii) the person supply services required to be supplied under the
contract to another person;
(j) an order that a person refrain from doing
Those changes come into effect 11 June 2009.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
We discuss whether certain clauses commonly found in ordinary commercial contracts could be considered to be penalties.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).