Unfair contract terms will become illegal under a new government proposal.

The federal government will introduce amendments to better protect small businesses from unfair contract terms.

The government said it will consult on the following options:

  • Making unfair contract terms illegal
  • Imposing civil penalties on parties that impose unfair contract terms
  • Extending unfair contract protections to government contracts
  • Further clarifying the definition of a ‘standard form’ contract
  • Redefining a small business as having under 100 staff or under $10 million turnover

It comes after a review in late 2018 found that while new laws on unfair contracts that were introduced in November 2016 had improved protections to small businesses in some sectors, they did not provide a strong enough deterrence or offer appropriate protections.

Furthermore, some of the legislative settings have created confusion and imposed practical difficulties on businesses that try to comply with the laws.