More recently, the law has recognised that consumers generally lack bargaining power. We now have the Australian Consumer Law (ACL). Even more recently, there has been recognition that small businesses also need this sort of protection when they have unfair contract.
Meaning of 'unfair'
A term in a standard form consumer contract is 'unfair' if:
- it would cause a significant imbalance in the parties’ rights and obligations arising under the contract
- the term is not reasonably necessary to protect the legitimate interests of the party that would benefit from its inclusion
- the term would cause financial or other detriment (e.g. delay) to a consumer if it were to be applied or relied on.
(source: Asic.gov.au)
Only a court can determine whether a contract term is unfair. In deciding whether a term is unfair, a court must consider the extent to which the term is transparent, as well as the contract as a whole. The court may also consider other matters.
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