Reviewing and understanding legal terms in contracts can be overwhelming
Small businesses cannot afford the risk of legal claims due to outdated contract terms
Aligning the right legal support with business affordability is a balancing act
Customers prefer to contract with ethical and conscientious businesses
Ignorance about the existence or application of legislation creating an offence is no excuse
Doing the right thing by your customers will help you to protect your rights with your vendors
An Illustration of an Unfair Contract:
Unbalanced Termination Rights
Imagine you have a standard contract with a commercial property owner to provide building maintenance services. Your agreement includes the following clauses:
- The property owner has the authority to halt your electrical services without prior notice and for any reason.
- The contract allows the property owner to end the agreement at their convenience and without cause.
- If you end the contract prematurely, for any reason, you are exposed to a substantial termination charge, which will be financially burdensome for your business.
To address this unfair contract term (UCT), there are several things you can do- starting with requesting a revision of the agreement to limit suspension only to instances of significant contract breaches. This ensures that performance interruptions are fair.
An Unfair Contract Scenario:
The Risks of Unilateral Variation Terms
Your company recently signed a contract with a customer to provide them with services. The agreement contains conditions that allow your company to modify the service fees without the input of the customer. The contract also mandates that customers pre-pay for the services, providing no opportunity for refunds, even in the event of changes.
This type of imbalance in the contract is unjust. To address this issue, consider revising the contract to provide a fair exit clause for your customer in case of significant changes.
Be sure you are compliant
Our team of experienced Legal Specialists can do a review of your contract templates to ensure they are compliant with the new legislation.
Email us a copy of your contract at email@example.com with your name and short overview of your business. We will review your contract and identify any unjust clauses, providing you with an expert summary of its compliance.
Saraswathy VaratharajulluPrincipal Lawyer Read Bio
Saraswathy Varatharajullu is the Principal Lawyer of Constructive Legal Solutions. Saraswathy has years of experience in employment law and industrial relations having previously worked at the Fair Work Commission, and Professionals Australia (Union) as a Lawyer and National Industrial Officer. She also has expertise in construction contracts and commercial contracts as well as debt recovery.
Saraswathy is dedicated to providing support and guidance to clients with a pragmatic and tailored approach in a wide variety of matters from contract reviews and employee management to termination matters such as unfair dismissals and Enterprise Agreement bargaining. Saraswathy is also a qualified mediator and sits on the Law Institute of Victoria’s Workplace Relations Committee.
Marie CocherilSenior Commercial Lawyer Read Bio
Senior Commercial Lawyer
Marie is a senior corporate and commercial lawyer. Marie has an LL.B (Hons) and an LL.M (Corporate & Commercial) and is also a graduate of the Australian Institute of Company Directors. Marie has strong leadership experience, having worked closely with CEOs, Boards, and stakeholders to provide legal & compliance advice, corporate governance, strategic development & mitigation of organisational risk advice.
She is a hands-on lawyer with experience in commercial contracts, intellectual property law, procurement, information technology, competition and consumer law, insurance, and privacy (including management of big data).
See what our customers say
We used CLS for updating all our employee contracts, the lawyer was a pleasure to work with and was very patient and easy to deal with.
Thank you for preparing this letter for us quickly and for the valuable advice you have provided both of us. You have explained the procedure of the Unfair Dismissal Application to us in a manner that is easy to understand and your honesty has been greatly appreciated. Again, we appreciate all that you did to help us with this case.
Constructive Legal Solutions were excellent for us in assisting with enterprise Agreement and went out of her way to navigate us through the complex nature of EA bargaining.
We are so grateful to the lawyer for her assistance in drafting sub contractor contracts tailored to our business. The process was easy from start to finish and the lawyer was informative and clear explaining all aspects of the contracts. The pricing for this service was very affordable which is an important consideration for small business owners.
Engaging, entertaining, thought provoking……
In the current climate and the crazy litigious society we live in, it is good to know that NECA have expanded the services offered to members with the lawyer and her team.
A “must attend” event for NECA members and a gentle hint for members to let non-members know what they are missing out on by not being a member….
Thanks to all who made the event possible and thanks to the lawyer for the laid back approach to the minefield of employee / employer relationships.
The lawyer provided us with clear, sound and prompt advice – a huge thank you, and happy to have an engaging law firm as easily accessible as Constructive Legal Solutions.
Frequently asked questions
Have questions? We are here to help.
A standard form contract is a pre-prepared set of terms and conditions that are frequently issued to multiple individuals. These can include:
- Terms and conditions that regulate the services provided by your business to customers
- Contracts between head contractors and sub-contractors
- Maintenance work agreements
- Terms and conditions between your business and a manufacturer or supplier of goods
- Business loan agreements
- Software user agreements
If you’re curious about what an “unfair term” is, let us explain. The test for unfairness has not changed with the recent Unfair Contract Term regime updates. A term in a standard form contract is classified as unfair if it meets the following criteria:
- It creates a significant imbalance in the parties’ rights and obligations
- It does not serve a reasonable purpose in protecting the legitimate interests of the advantaged party
- It causes harm (financial or otherwise) to a party if applied or relied on
- The Australian Consumer Law does not provide a definitive list of “unfair” terms, but it does offer a list of clauses that could be considered unfair. Ultimately, the determination of whether a term is “unfair” depends on the specific circumstances of the case.