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Small Business

Unfair Contract Terms: Australia and the UK

By FixMyContractLast updated Oct 2, 20265 min read

Short answer: Both countries let a court strike out unfair terms, but the rules cover different contracts. In Australia, the Australian Consumer Law makes unfair terms in standard form consumer and small business contracts void, and since 9 November 2023 proposing or relying on one can also attract penalties. In the UK, the Consumer Rights Act 2015 covers terms in consumer contracts, and the Unfair Contract Terms Act 1977 limits exclusion clauses in business contracts.

Australia

Which contracts. Standard form contracts — prepared by one side and offered largely on a take-it-or-leave-it basis — with a consumer, or with a small business. Since November 2023 a small business is one with fewer than 100 employees or annual turnover under $10 million.

What makes a term unfair. All three must be true: it causes a significant imbalance in the parties' rights and obligations; it is not reasonably necessary to protect the legitimate interests of the business relying on it; and it would cause detriment if relied on.

Examples the law lists include terms that let one side alone end the contract, change its terms or the price, limit its own liability, or decide on its own whether the contract is renewed.

Consequences. An unfair term is void. Courts can also order penalties — for companies, up to the greater of $50 million, three times the benefit obtained, or 30% of adjusted turnover during the breach period.

United Kingdom

Consumer Rights Act 2015 (consumer contracts). A term is unfair if, contrary to good faith, it causes a significant imbalance to the consumer's detriment. Unfair terms don't bind the consumer. Schedule 2 gives a "grey list" of terms that may be unfair, and terms must be transparent and prominent. Some terms can't be used at all — for example, excluding liability for death or personal injury caused by negligence.

Unfair Contract Terms Act 1977 (business contracts). Mainly controls exclusion and limitation clauses. A business can't exclude liability for death or personal injury caused by negligence; other exclusions must pass a "reasonableness" test, which looks at things like bargaining power and whether the term was negotiated.

Five things to check in a standard form contract

  1. Can only the other side end the contract, change it or raise the price? See termination for convenience.
  2. Does it cap or exclude the other side's liability, but not yours? See limitation of liability.
  3. Does it renew automatically, with a short window to cancel?
  4. Are penalties or fees on you out of proportion to the other side's loss? See penalty clause.
  5. Was the contract offered take-it-or-leave-it? Keep a record of any requests to change it.

Where FixMyContract fits

Upload a supplier, customer or consumer contract to read the clauses that matter in plain English, with the contract's own words beside each point where they can be matched, and see which ones work against you. It flags one-sided terms; it doesn't decide whether a term is legally unfair.

This is general information, not legal advice. Whether a term is unfair depends on the whole contract and the facts; for a specific contract, talk to a licensed lawyer, the ACCC or your state fair trading office in Australia, or Citizens Advice in the UK.

Sources

All links checked 2 October 2026.

  1. ACCC, Unfair contract terms — https://www.accc.gov.au/business/business-rights-and-protections/unfair-contract-terms
  2. ACCC, ACCC welcomes new penalties and expansion of the unfair contract terms laws — https://www.accc.gov.au/media-release/accc-welcomes-new-penalties-and-expansion-of-the-unfair-contract-terms-laws
  3. Consumer Rights Act 2015, Part 2 (legislation.gov.uk) — https://www.legislation.gov.uk/ukpga/2015/15/part/2
  4. Unfair Contract Terms Act 1977 (legislation.gov.uk) — https://www.legislation.gov.uk/ukpga/1977/50
  5. Competition and Markets Authority, Unfair contract terms guidance (CMA37) — https://www.gov.uk/government/publications/unfair-contract-terms-cma37

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