Back in November 2022, the Commonwealth Government passed the Treasury Laws Amendment (More Competition, Better Prices) Act 2022 (Cth) to broaden the scope of existing unfair contract terms (UCT) regime.
The new UCT regime expands coverage to small businesses from having fewer than 20 employees to up to 100 employees or having annual turnover of less than $10 million. We anticipate more construction contracts will now become subject to the new UCT regime.
Under the new UCT regime, should a term in a standard form small business or consumer contract be found unfair, the courts may:
- void, vary or refuse to enforce the particular term or the whole contract;
- prevent the same or substantially similar term from being included in any future standard form small business or consumer contracts; and
- restrain the same or substantially similar term to be applied or relied on across all the existing contracts.
Why should contractors care?
It is common in the construction industry for the head contractors or principals to dictate the terms of the contract. Under the new UCT regime, businesses may be running a heightened risk of being unable to rely on an unfair term across all existing standard form contracts.
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The new regime will come into force on 10 November 2023 and businesses have until then to bring their standard form contracts in line with the new UCT regime.
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