The Law Handbook 2024

Chapter 7.2: Consumer protection laws 695 by consumers, rather than businesses. The court will look at the terms of a contract to work out what the purpose of use is, not the intention of the supplier (see Director of Consumer Affairs Victoria v AAPT Ltd (Civil Claims) [2006] VCAT 1493). Since 16 November 2016, unfair terms laws have also applied to small business contracts. A ‘small business contract’ is an agreement for the supply of goods or services, or the sale or grant of an interest in land, and both the following apply: • at least one party to the contract must be a business that employs fewer than 20 employees; • the upfront price payable under the contract must be less than $300 000 or, if the contract has a duration of more than 12 months, $1 million (s 23(4) ACL; s 12BF(4) ASIC Act). The laws do not define ‘standard form contracts’, but in broad terms, a standard form contract will typically be one that has been prepared by one party to the contract and is not subject to negotiation between the parties; that is, it is offered on a ‘take it or leave it’ basis. Standard form contracts are typically used in many consumer sectors, including telecommunications, finance, gyms, motor vehicles, travel and utilities. In deciding whether a contract is a standard form consumer contract, a court may consider any matter it thinks is relevant. The court must take into account: • whether one of the parties has all or most of the bargaining power; • whether the contract was prepared by one party before any discussion occurred about the transaction; • whether one party was required to either accept or reject the contract on the terms as presented; • whether the other party was given any real opport­ unity to negotiate the terms of the contract; and • whether the terms of the contract take into account the specific characteristics of the other party or the particular transaction (s 27(2) ACL; s 12BK(2) ASIC Act). Further, a consumer contract is presumed to be standard form unless the business relying on the term proves otherwise (that is, it is a rebuttable presumption that a consumer contract is standard form) (s 27(1) ACL; s 12BK(1) ASIC Act). The ACL provisions apply to all other consumer contracts, except for: • certain shipping contracts; and • the constitutions of companies and managed investment schemes (s 28 ACL). Examples of unfair terms A non-exhaustive, indicative ‘grey-list’ of examples of types of terms that may be unfair is included in the provisions (s 25 ACL; s 12BH ASIC Act). These examples are subject to the unfair terms test and provide statutory guidance on issues of concern. They do not deem or presume particular types of terms to be unfair. Further examples may be added to this list by regulation. This ‘grey-list’ includes: • a term that permits one party (but not the other) to avoid or limit performance of the contract; • a term that permits one party (but not the other) to terminate the contract; • a term that penalises one party (but not the other) for a breach or termination of the contract; • a term that permits one party (but not the other) to vary the terms of the contract; • a term that permits one party (but not the other) to renew or not renew the contract; • a term that permits one party to vary the upfront price payable without the right of the other to terminate the contract; • a term that permits one party unilaterally to vary the characteristics of the goods or services to be supplied, the interest in land to be sold or granted, or the financial products or services to be supplied; • a term that permits one party unilaterally to determine whether the contract has been breached or to interpret its meaning; • a term that limits one party’s vicarious liability for its agents; • a term that permits one party to assign the contract to the detriment of the other without the other’s consent; • a term that limits one party’s right to sue another party; • a term that limits the evidence one party can adduce in proceedings relating to the contract; and • a term that imposes the evidential burden on one party in proceedings relating to the contract. The ACCC, ASIC and the state and territory con­ sumer protection agencies have prepared A Guide to the Unfair Contract Terms Law , which provides further information about the unfair contract term laws, how they apply and the effect of the law. The guide is available on the ACCC’s website (www.accc.gov.au) .