Increased penalties are here, while clock ticks on unfair contract terms

Published On 10/11/2022 | By Gabrielle Jack | Reform, Unfair contract terms

The Treasury Laws Amendment (More Competition, Better Prices) Act 2022 (Act) has come into force today, after it was passed without amendment by both Houses of Parliament on 27 October and granted Royal Assent yesterday.

The Act delivers on a key Labor election promise to make unfair contract terms illegal and raise maximum penalties for breach of competition and consumer laws. You can read more about the content of the Act in our previous blog post.

What changes apply from today?

From today, the maximum penalties applicable to certain breaches of the Competition and Consumer Act 2010 (Cth) (CCA) and the Australian Consumer Law (ACL) have increased substantially to:

  • For body corporates: The greater of:
    • $50 million (a fivefold increase from the previous maximum of $10 million);
    • three times the value of the benefit obtained; or
    • if the court cannot determine the total value of those benefits, 30% of adjusted turnover during the ‘breach turnover period’ (increasing from 10% of annual turnover in the 12 months prior to the conduct).
  • For individuals: $2.5 million (up from $500,000).

The new penalties will apply to any conduct occurring from today, meaning that businesses are now exposed to significantly greater financial consequences if they fail to comply with the CCA and ACL.

What changes come into force later?

With a 12-month grace period, the prohibition against proposing, applying or rely on unfair contract terms in standard form consumer or small business contracts will come into force on or around 9 November 2023. This means the clock is now ticking for businesses to review their contracts and practices for any potentially unfair terms and take timely action to ensure compliance with the new provisions before they come into force.

Businesses should also be aware that the Act expands the application of the unfair terms provisions to a broader range of small business contracts, meaning that contracts that previously fell outside of the regime may be required to comply with the new prohibition. The regime will apply to businesses with less than 100 employees or an annual turnover of up to $10 million, and there will no longer be a monetary ceiling for the value of contracts subject to the ACL regime, while the threshold in the ASIC Act will be raised from $300,000 to $5 million.

This post was written by Gabrielle Jack and Peta Stevenson.

Image credit: Law by Woody Hibbard is licensed under CC BY 2.0. Remixed to B&W and resized.

About The Author

is a Solicitor in the Competition and Regulatory team in Melbourne.

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