When does the Unfair Contract Term law not apply?

When does the Unfair Contract Term law not apply?

Commercial Law, Private Law

In our previous article we examined the situations in which unfair contract term law applies. While unfair contract term laws apply to most standard form contracts and contractual terms, there are a number of excluded contracts and excluded terms. We discussed these below.

Excluded contracts:

  • Contracts entered into a date prior to the commencement of the unfair contract term laws, as applicable between consumer and business contracts, are excluded from the operation of the unfair contract term laws.
  • Contracts which are expressly excluded by section 28 of Australian Consumer Law: including contracts of marine salvage or towage, ship charter contracts, contracts for the carriage of goods by ship, constitutions of a corporation, managed investment scheme or other kind of body.
  • Contracts for financial services. Financial services are excluded from Australian Consumer Law by section 131A of the Competition and Consumer Act. Financial services are regulated separately under the ASIC Act.
  • Insurance contracts that are regulated by the Insurance Contracts Act 1984 (Cth). This act does not apply to private health insurance contracts, state and Commonwealth government insurance contracts, reinsurance contracts, and others.

Excluded terms:

  • a term that defines the main subject matter of the contract;
  • a term that sets the upfront price payable under the contract; and
  • a term required, or expressly permitted, by law of the Commonwealth, a State or a Territory.

Upfront price and subject matter are considered matters which parties exercise choice in deciding to proceed with a contract and are, therefore, excluded. This was explained in the second explanatory memorandum to the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010:

where a party has decided to purchase goods, services, land, financial services or financial products that are the subject of the contract, that party cannot then challenge the fairness of a term relating to the main subject matter of the contract at a later stage, given that the party had a choice of whether or not to make the purchase on the basis of what was offered.

In deciding whether a contract or term type is excluded from the unfair contract terms law, it is important to consider the law as of the date that the contract is entered into as an assumption that the law does not apply may be incorrect with serious consequences.

When do the Unfair Contract Term laws apply?

When do the Unfair Contract Term laws apply?

Commercial Law, Private Law

The unfair contract term law applies to consumer contracts and to small business contracts. The law only applies to contracts that are “standard form contracts.” Standard form is usually understood to mean a document that is routinely used in all transactions without negotiation or amendment. Standard form contracts are commonly described as presented to consumers on a “take it or leave it” basis.

Australian Consumer Law expressly excludes certain categories of contract from unfair contract term law and we will consider these in our next article.

Section 27(2) provides a non-exclusive list of considerations for a court when determining if a contract is a standard form contract including:

  • whether one of the parties has almost the bargaining power in the transaction;
  • whether the contract was prepared by one party before any discussion relating to the transaction occurred between the parties;
  • whether another party was, in effect required to accept or reject the terms of the contract in the form in which they were presented; and
  • whether another party was given and an effective opportunity to negotiate the terms of the contract.

Application to consumer contracts

In the case of consumer contracts, courts will consider the purpose of the acquisition and the law will apply where the purpose is wholly or predominantly for personal, domestic or household use or consumption.

Consumer contracts are defined in section 23(3):

A consumer contract is a contract for:

  • a supply of goods or services; or
  • a supply or grant of an interest in land;

to an individual whose acquisition of the goods, services or interest is wholly or predominantly for personal, domestic or household use or consumption.

The term individual is defined in the Acts Interpretation Act 1901 (Cth) to mean a natural person.

When examining section 23(3) it is necessary to consider the purposes for which goods or services were acquired. Unlike in other provisions of Australian Consumer Law, is not necessary for goods or services to be of a personal, domestic, or household nature rather it is the purpose for which they were acquired that will be relevant at the time that the contract was entered into.

The natural assumption is that businesses will consider the inclusion of business purpose declarations whereby purchases sign a declaration to state that goods or services are being purchased for business purposes. Section 25(1) gives an example of a term that may be unfair, termed that the limits or has the effect of limiting the evidence that one party can adduce in proceedings relating to a contract. Therefore, a business purpose declaration may itself be an unfair contract term.

Application to small businesses

The law was extended to apply to small businesses on 12 November 2015. Businesses were given 12 months to comply with the law and so, it applies to small business standard form contracts that were entered into, renewed, or varied after 12 November 2016. The law applies where a contract that is between businesses:

  • is for the supply of goods or services or the sale or grant of an interest in land;
  • at least one of the parties is a small business employing less than 20 people, including casual employees employed on a regular and systematic basis; and
  • the upfront price payable under the contract is no more than $300,000 or $1 million if the contract is for more than 12 months.

The business may be the purchaser or acquirer under the contract and the business may be conducted by a natural person, a body corporate, a partnership, a trust, or a joint venture.

Citizen Reef?

Citizen Reef?

Private Law

Today LADbible launched a campaign labelled ‘Citizen Reef’ petitioning for the Great Barrier Reef to be granted Australian citizenship. The idea behind the push is to increase the Reef’s protection by ensuring it has the rights to freedom from torture, minimum standards of healthcare and the right to life, as any other citizen. We look at whether this is this merely a publicity stunt, or there is a legal basis for this argument.

The Whanganui and Ganges Rivers

Some commentators are pointing to both the Whanganui River in New Zealand and the Ganges River in India as examples. In early 2017, both rivers were granted legal personhood in their respective jurisdictions. In India, the Ganges’ status as a legal person came through a decision made by the Uttarakhand High Court and the Whanganui River was declared to be a legal person by New Zealand legislation following a lengthy consultation and settlement process involving the local iwi.

Both were significant, but can be distinguished from the Citizen Reef campaign in that the rivers received legal personhood, not citizenship. The idea of being a legal entity is different from being a citizen of a country. For example, a corporation is treated as a person by law, but this doesn’t mean a company that operates in Australian is an Australian citizen. Therefore, Citizen Reef seeks a different recognition to that seen in New Zealand and India.

Australian Citizenship Law

Citizenship law in Australia is governed primarily by the Australian Citizenship Act 2007 (Cth). Broadly, it provides that people become Australian citizens in three ways: 1) by operation of law; 2) by descent; and 3) by conferral. It is difficult to see the Reef being successful in receiving citizenship under any of these mechanisms, primarily because the Act is designed for granting citizenship to natural persons. While the term ‘person’ is not defined, it would be a stretch to argue that its natural ordinary meaning as it appears in the Act extends to a geographical area or natural landmark like the Reef. Even if this hurdle was cleared, it is difficult to conceive how, for example, the Minister could be satisfied that the Reef possesses a basic knowledge of the English language, or is of good character.

Citizenship for the Reef appears next to impossible under the current framework. However, it is likely that the Federal Legislature possesses the power to enact an entirely new law that would grant citizenship to the Reef, provided there is sufficient parliamentary support.

Citizenship and Rights

If the Reef were to be granted citizenship, it is questionable whether it would receive the rights and protections that Citizen Reef seeks. While Australian citizenship does confer certain rights, like the ability to apply for an Australian passport, or stand for Parliament, the Reef wouldn’t automatically receive the right to life, or freedom from torture by virtue of being a citizen.

Australia doesn’t have a bill of rights, so many of these basic protections or human rights only form part of Australian law due to international treaties or conventions.


Citizen Reef appears to be more of an exercise to raise awareness for the Reef’s plight, than a genuine attempt to gain citizenship. Firstly, it is important to recognise the difference between personhood and citizenship – citizenship traditionally being limited to natural persons. Secondly, even if citizenship was conferred on the Reef, it doesn’t automatically follow that it would benefit from basic human rights.

While the idea of citizenship might be a stretch, a declaration that the Reef is a legal person, like the Whanganui River, is a more realistic goal. While this wouldn’t allow it to benefit directly from what are considered human rights, there is no doubt that being considered a person in the eyes of the law would give the Reef greater legal protection.       

How do I change my solicitor?

How do I change my solicitor?

Private Law

When faced with a legal problem, it is important you feel that your concerns are being heard and you are receiving the best possible representation. If you are unhappy with your current solicitor, you may consider seeking advice or representation from an alternative law firm.

Reasons for changing

There are a number of reasons why you might wish to consider changing solicitors:

  • You believe that your solicitor has been dishonest or misleading;
  • You feel that you have been overcharged;
  • Your solicitor has ignored or acted contrary to your instructions;
  • You believe that your solicitor may have acted unethically or breached the Solicitors Rules.
  • You feel that your solicitor has been unresponsive, or has not given you quality advice.

While any of the above are valid reasons for wanting to change solicitors, a decision to switch is extremely important and should not be undertaken lightly.

The transfer process

Although it is a big decision to change your legal representative, the process is simple.

  • You should do your own research on a law firm before you approach a new solicitor. It is important that you ensure that they will provide better service in the areas that you believe your current solicitor is lacking.
  • Approach your new solicitor and tell them that you currently have legal representation, but are unhappy and considering a change. This is a good opportunity to determine whether your potential new solicitor is personable and to explain why you are unhappy with your current solicitor. It is possible that your desired new solicitor may advise that you would best served remaining with your current solicitor.
  • After speaking with your new solicitor, if you still wish to change, you need to notify your current solicitor that you want them to cease acting for you. Your new solicitor can draft a letter informing your current solicitor on your behalf.
  • Your new solicitor will ask you to sign a costs agreement and send a letter and an ‘uplift authority’, signed by you, to your old solicitor requesting that they release your file.
  • If you still have outstanding legal fees owing to your old solicitor, they have a right to retain possession of your file. If you are not in the position to pay those costs, your new solicitor can draft an agreement which secures your old solicitor’s payment at the conclusion of the proceedings in exchange for the release of your file.

Changing solicitors is relatively easy, but it is still a big decision. Being unhappy with what your solicitor has told you, is not itself a good reason for changing lawyers. Remember that a good solicitor will always give forthright and honest advice, even if it is not what a client wants to hear. If you are interested in changing solicitors and believe that we can help, please enquire here and we would be happy to arrange a meeting or teleconference.