Bellingen Chamber of Commerce

New contract law – are you prepared?

21 Nov

Call us on 13 26 96
Recent amendment protects businesses from ‘unfair’ terms in standard form contracts

The end of year vibe is in the air but don’t start winding down too much – a new law is in town to keep you on your toes! This new law will affect standard form contracts. Do you have any?



The new law will apply to any contracts that are entered into, renewed or varied after 12 November 2016. This change will protect businesses from ‘unfair’ terms in standard form contracts.



What does unfair mean?

The new law will void terms in standard small business contracts which are considered unfair.


A term is unfair if: 

  • 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 who would be advantaged by them 
  • It would cause detriment (financial or otherwise) to a party if it were to be relied on

For a contract to be declared unfair it must satisfy all three of the above. 



Unfair examples include the types of terms that allow one party but not the other to: 

  • -avoid or limit performance of contractual obligations
  • -vary the contract term or terminate the contract
  • -vary, after the contract commences, the price without the other party having the right to terminate
  • -vary the nature of the goods or service to be provided under the contract 

What contracts are we talking about?

Contracts that will be affected include ones where:

  • -at least one party is a business that employs fewer than 20 people
  • -the upfront price payable under the contract is: 
    • $300,000 or less
    • $1,000,000 or less (if the contract is for more than 12 months)
  • -the contract is a standard form contract

Check your contracts now! 

You may not even be aware that some of your contracts are affected by these new changes. The law has now commenced operation which means you need to take action and review your current standard form contracts. 



So…what do I do now? Call our Legal Advice Line 13 29 59

Don’t balk at the sight of dense contracts. As part of your membership and at no extra cost – call an expert! Call the Legal Advice Line for a better understanding of which contracts this new law will affect. The team can help you cut to the chase, focusing your attention on the contract types which require amendments. Keep your business game plan fair by calling the experts on 13 29 59.



Your next steps
Contact Us | Visit the NSW Business Chamber website