Home topics news Credit: Romain Dancre Legal News Legal Australia to introduce harsh penalties for unfair contract terms Yajush Gupta October 3, 2022 As the federal government introduces legislation that could considerably increase the repercussions of violating consumer and competition laws, penalties of $50 million for companies that engage in anti-competitive behaviour may soon become law. The government is also attempting to put an end to the use of unfair contract terms (UCT), which give one company an unfair advantage over another. What are the current UCT laws? Under the current UCT rules, UCTs in specific standard form contracts formed with consumers or certain categories of small businesses may be declared void and unenforceable by a court. This means that as long as the unreasonable term can still bind the parties, the contract is valid as if it never existed. Unfair conditions have no additional consequences under the current system. READ: A guide to the unfair contract terms law What are the key changes proposed? The Bill contains numerous significant amendments to UCT legislation that, if passed, would subject a broader range of agreements to the regulations and subject corporations that use UCTs in standard form contracts to severe penalties. Entering into a standard form consumer or small business contract that contains an unfair term (or attempting to rely on the unfair term) will now result in financial penalties under the Bill rather than simply being void. For companies, the maximum monetary penalties per violation are greater than $50 million