If your business uses the same contract, terms of trade, quote form or service agreement over and over again, this article is about you. Since 9 November 2023, including an unfair term in a standard form contract has not merely made that term unenforceable — it has been unlawful, and it carries civil penalties.
What has changed recently is the size of those penalties. On 28 March 2026, the Treasury Laws Amendment (Doubling Penalties for ACCC Enforcement) Act 2026 (Cth) commenced, doubling the fixed monetary limb of the maximum penalty for corporations under the Competition and Consumer Act 2010 (Cth) and the Australian Consumer Law from $50 million to $100 million per contravention.
Those headline numbers are aimed at the largest players in the economy, and no small business in Strathpine is going to face a nine-figure penalty. But the doubling signals something that does matter locally: the Commonwealth is sharpening enforcement across consumer and competition law, and the unfair contract terms regime is one of the areas it applies to. If your template agreements have not been looked at since 2023, now is a sensible time.
What the Unfair Contract Terms Regime Actually Covers
The Australian Consumer Law sits in Schedule 2 to the Competition and Consumer Act 2010 (Cth). Section 23 provides that a term of a consumer contract or small business contract is void if the term is unfair and the contract is a standard form contract.
Two elements need to line up before the regime applies.
The first is that the contract must be a standard form contract — broadly, one prepared by one party and offered on a take-it-or-leave-it basis, without meaningful negotiation. Terms of trade, service agreements, subscription documents, equipment hire agreements, supplier terms and online sign-up forms are all commonly standard form. A genuinely negotiated agreement, where both sides moved on substantive terms, generally is not.
The second is that the other party must be a consumer or a small business. Since 9 November 2023, a party meets the small business threshold if it employs fewer than 100 people or had a turnover of less than $10 million in the previous income year. Under the Australian Consumer Law, the old cap on the value of the contract has been removed entirely, so a contract of any size can be caught.
That combination is broader than most business owners assume. A trade services business supplying a national franchisor, a manufacturer contracting with a regional distributor, or a consultancy with a standard engagement letter can all sit inside the regime — on either side of it.
When Is a Term “Unfair”?
Section 24 of the Australian Consumer Law sets a three-part test. A term is unfair if all three limbs are satisfied:
- It would cause a significant imbalance in the parties’ rights and obligations under the contract;
- It is not reasonably necessary to protect the legitimate interests of the party advantaged by it; and
- It would cause detriment — financial or otherwise — to the other party if it were applied or relied on.
A court must consider the transparency of the term and the contract as a whole. Importantly, the second limb is presumed against you: the party who benefits from the term bears the onus of showing it is reasonably necessary to protect a legitimate interest.
Section 25 sets out a list of examples of the kinds of terms that may be unfair. In practice, these are the clauses that come up most often in small-business documents:
- One-sided termination rights — the supplier can walk away at will, the customer cannot.
- Unilateral variation clauses — the right to change price, scope or terms without consent and without a right to exit.
- Automatic renewal with a long notice period buried in the fine print.
- Broad indemnities that make one party responsible for losses beyond their control or fault.
- Limitation of liability that is disproportionate or attempts to exclude non-excludable consumer guarantees.
- Excessive termination or cancellation fees unrelated to actual loss.
- Evidentiary clauses deeming the supplier’s records conclusive proof of a debt.
None of these clauses is automatically unfair. A reasonable termination right, a properly drafted indemnity and a genuine pre-estimate of loss can all survive scrutiny. What tends not to survive is a clause drafted to give one party every advantage, with no corresponding protection for the other side, and no explanation of why it is needed.
The Consequences of Getting It Wrong
Before November 2023, the worst outcome was that a court declared the term void. There was little practical incentive to fix template documents.
That is no longer the position. Proposing, applying or relying on an unfair term in a standard form consumer or small business contract is now prohibited conduct attracting civil penalties, and each unfair term is treated as a separate contravention. A template with four problematic clauses used across a customer base is not one exposure — it is a multiplied one.
For a body corporate, the maximum penalty is the greatest of:
- $100 million (increased from $50 million on 28 March 2026);
- three times the value of the benefit reasonably attributable to the conduct, if the court can determine it; or
- if the court cannot determine that benefit, 30 per cent of the corporation’s adjusted turnover during the breach turnover period.
For an individual, the maximum remains $2.5 million per contravention. The second and third limbs were not altered by the 2026 amendments, and the increased penalties apply to conduct occurring on or after commencement.
Courts also have broader remedial powers than they once did. They can void, vary or refuse to enforce part or all of a contract, and on application by the ACCC, orders about a term that has been declared unfair can extend to similar terms in contracts with parties who were not before the court.
There is a parallel regime under the Australian Securities and Investments Commission Act 2001 (Cth) for financial products and services, administered by ASIC. Under that Act, the regime applies to a small business contract where the upfront price payable is $5 million or less.
What Is Coming Next
There is a further reform on the horizon that business owners should be aware of, though it is not yet in force.
The Competition and Consumer Amendment (Unfair Trading Practices) Act 2026 (Cth) was passed by Federal Parliament on 2 July 2026 and commences on 1 July 2027. It introduces a new, principles-based prohibition on unfair trading practices directed at consumers, along with new requirements around subscription contracts and price transparency.
That prohibition is aimed at consumer-facing conduct rather than business-to-business dealings, and it is not current law. It does, however, mean that businesses reviewing their customer-facing documents and sign-up processes now will be well placed when the new provisions take effect.
A Practical Review Checklist
If you want to work through your own documents before getting advice, these are the questions worth asking:
- Which of our documents are standard form? Terms of trade, engagement letters, hire agreements, online terms, quote conditions.
- Who are our counterparties? Are any of them consumers, or businesses with fewer than 100 employees or under $10 million turnover?
- Is every right reciprocal? If we can terminate, vary, suspend or charge, can they do something equivalent — or is there a good reason they cannot?
- Can we justify each protective clause? For every indemnity, limitation and penalty, what legitimate interest does it protect, and is it no wider than necessary?
- Is it transparent? Legible, plainly expressed, and available to the other party before they sign — not buried in a schedule or a linked policy.
- When did we last update it? Documents drafted before November 2023 were written against a different legal test.
It is also worth remembering the regime cuts both ways. If you are the small business signing someone else’s take-it-or-leave-it terms, an oppressive clause in that contract may well be void and unlawful. That can be a significant lever if a dispute arises.
Where to From Here
Reviewing a set of template contracts is not a large or expensive exercise, and it is far cheaper than dealing with a regulator, a dispute, or a key clause turning out to be unenforceable at exactly the moment you need it. For most small businesses, a single review with a solicitor who understands both the legal test and how you actually trade will resolve the issue.
Our Business Law team can review your standard form contracts and terms of trade, identify terms at risk under the unfair contract terms regime, and redraft them so they still protect your position. Contact us on (07) 3482 6999 or at mail@biglaw.com.au.
