Significant changes to the unfair contract terms [UCT] legislation will come into effect on 9 November 2023, which are intended to deter businesses from using and relying on UCTs in their contracts. The UCT Reform Bill gives the ACCC significantly more power to enforce UCT laws and all business owners should prepare for this significant change.


so what is an unfair contract term?

 A contract term may be determined to be unfair if:

  • It gives one party a significant advantage over the other;
  • It is not necessary to protect the legitimate interests of the party with such an advantage; and
  • will cause financial or other harm to the other party if enforced.


So what are the changes?

increased penalties

Proposing, applying or relying on a UCT in a standard form contract is strictly prohibited.

For companies the maximum penalty for proposing, applying or relying on a UCT has increased to the greater of:

  • $50 million; or
  • 3 times the value of the benefit obtained; or
  • If a value cannot be determined, 30% of the company’s adjusted turnover for the period during the breach period.

Previously the consequence of relying on UCT was that such a UCT would be deemed void. However, under the new reforms the Courts have the power to void the entire contract, to vary the contract or to refuse to enforce the specific UCT.


expansion of small business threshold

The definition of a ‘standard form contract’ has been expanded to capture a wider range of small businesses meaning more business owners should be aware of UCTs and the potential implications of the same.

A contract will be a small business contract or a standard form contract if:

  • The contract is for the supply of goods or services, or a sale or grant of an interest in land; and
  • At least one party to the contract employs fewer than 100 people and/or has a turnover of less than $10 million.

The UCT Reform Bill also clarifies that a contract may be determined to be a standard form contract even if the parties had an opportunity to negotiate minor changes prior, whereas previously this only applied where the parties had no option to negotiate at all.


what should businesses be doing?

Ahead of the reforms coming into effect on 9 November 2023 businesses should consider reviewing their contracts and terms of service and implementing any changes ahead of time.


we’re here to help!

If you would like to know more about the UCT changes and how they may impact your business, reach out to our team of legal experts at or give us a buzz on 1300BDEPOT.


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