The Australian Competition and Consumer Commission (the ACCC) has recently begun the process of reviewing the new provisions governing Unfair Contract Terms (UCTs), which began operation on 9 November 2023. These new provisions considerably widened the scope of the old UCT provisions and have profound implications for many contracts, especially in the franchising sector. In this blog post we will unpack what the UCT provisions are, the type of contracts they affect, how the amended provisions changed the law and what the ACCC's review is hoping to achieve. We will also consider whether the amendments have, thus far, actually had the effects that the Government set out to achieve.
The UCT provisions appear in the Australian Consumer Law set out in Schedule 2 of the Competition and Consumer Act 2010 (Cth) (the ACL) and the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act). They are designed to protect consumers and small businesses from unfair terms which appear in "standard form contracts". These protections recognise that consumers and small businesses often have limited bargaining power in arrangements with larger corporations, which can cause them to enter into contracts with unfair terms.
Standard form contracts are contracts entered into with limited input from one or more of the parties. They are relied upon in many sectors across the economy to avoid the transaction costs associated with numerous individually negotiated contracts. Common examples include contracts that are simply handed out to be signed without much opportunity for negotiation, like terms and conditions for a gym membership or a contract for services with an internet service provider.
Standard form contracts are not explicitly defined in the ACL or the ASIC Act, but there are a number of factors a court may take into account when determining whether a contract is a standard form contract, including:
There is a presumption at law that if one party alleges a contract is a standard form contract, then it is a standard form contract unless the other party to the proceeding proves otherwise.
The 2023 amendments made it clear that a contract may still be a standard form contract even if there was opportunity for:
Standard form contracts can exist between a consumer and a business or a business and a business. However, UCT laws only affect business to business contracts if at least one of the parties qualifies as a small business (see below).
When determining whether a standard form or small business contract is unfair, a court or tribunal must consider whether the term:
The UCT provisions include a list of example terms which may be considered unfair, including terms which:
UCT provisions under the ACL are enforced by the ACCC alongside state and territory consumer protection agencies, and UCT provisions under the ASIC Act are enforced by ASIC.
The changes that the ACCC are reviewing were enacted by the Treasury Laws Amendment (More Competition, Better Prices) Act 2022 (Cth) (the amending Act), which authorised changes to the ACL and the ASIC Act. These changes came into force on 9 November 2023, approximately a year after they were passed.
The amendments were designed to strengthen existing UCT protections and increase consumer and small business confidence in three ways, namely by:
We will now explore the ways the amendments changed the law in more detail.
The amendments gave the courts greater flexibility to determine appropriate remedies for UCTs. For example, a court can now make an injunction order preventing a party from enforcing a term that has been declared unfair. Previously, unfair terms were just automatically void – meaning they could not be relied upon – and courts could only make orders in relation to UCTs where a party had suffered, or was likely to suffer, loss or damage because of the conduct of another party.
The most significant change was the introduction of new civil penalty provisions for breaches of the UCT provisions, making individuals liable for a maximum penalty of $2.5 million per contravention, and corporate bodies liable for up to the greater of:
Penalties in the ASIC Act for contraventions of its UCT provisions were adjusted to align with the penalties for other breaches of that Act. For individuals, the maximum penalty is now the greater of:
For corporate bodies, the maximum penalty is the greater of:
The amendments also extended ASIC’s powers to issue public warning notices on certain grounds, bringing them into line with the ACCC’s powers to issue public warning notices under the ACL.
The amending Act abolished limitations on the UCT provisions which caused them to only apply to contracts where the upfront price of the transaction did not exceed $300,000, or $1 million where the contract would run for more than 12 months.
In the ASIC Act, a limitation restricting the provisions to applying to contracts below a certain upfront transaction price was retained, but that upfront price was increased from $300,000 to $5 million.
In both Acts, the definition of small business was expanded from a business with 20 or fewer employees to a business with 100 or fewer employees OR an annual turnover of less than $10 million for the previous income year. This has dramatically increased the scope of the UCT provisions.
Guidelines were added to assist the courts in determining whether a contract is a standard form contract. The repeated use of a contract was added as a matter a court must account for when classifying a contract as standard form, and it was clarified that a contract may be standard form even if a party was given the opportunity to negotiate minor or insubstantial changes to the contract, choose from pre-determined options or negotiate the terms of another contract.
The ACCC’s review aims to determine how effective the new amendments have been. As part of the review, the ACCC sought the views of stakeholders, particularly those who have engaged with the relevant provisions as applied to contracts in practice. Submissions for the review closed on 17 March 2026.
A report setting out the findings of the review was mandated under the amending Act to be produced within 6 months after the amendments had been in operation for two years. The report is due to be tabled to Parliament in or around May 2026.
Another purpose of the review is to seek input on further proposed changes to UCT provisions affecting the franchise sector. The Government announced an intention in March 2025 to extend UCT protections to all businesses regulated under the Franchising Code of Conduct (the Code). This is the latest in a slate of reforms to the franchising sector proposed as part of the Government’s response to the 2023 Independent Review of the Franchising Code of Conduct (the Franchising Review).
The Franchising Review was undertaken by economist Dr Michael Schaper, who noted that expanded small business thresholds would likely encompass a large number of franchise agreements previously exempt from UCT provisions, which would ‘have the potential to quite significantly improve the fairness of agreements entered into between franchisees and franchisors.’
While the amending Act mandated that a review be undertaken after two years of the amendments being in effect, transitional arrangements meant that the older version of the law still applied to ongoing standard form contracts until they were reviewed or amended after 9 November 2023. Given this, the amended provisions have only been in force for a short period and there have been limited opportunities for disputes to reach the court stage, and hence limited opportunities for the courts to consider the amended provisions.
The ACL and the ASIC Act contain provisions allowing for parties to contact supervisory bodies like the ACCC and ASIC respectively where they believe a party is in breach of their obligations. In the time since the amended UCT provisions have been in force, UCT-related contacts to the ACCC increased slightly, but only by a negligible amount (2075 contacts in the two years after the new provisions compared with 1914 contacts in the two years before the new provisions). However, Reports of Misconduct (ROM) to ASIC referring to UCTs saw a sharp increase over that same period (118 ROM in the two years after the reforms compared to 52 in the two years prior). This would seem to indicate that the amendments have improved the regulation of UCTs.
However, some authoritative bodies have disputed the efficacy of the provisions, especially where they impact small businesses. The Housing Industry Association in a submission to the ACCC noted that to continue down the path of regulation would ‘increase red and white tape where there is no demonstrated need’ and ‘where there is already a robust suite of protections in place’. They indicated that imposing a consumer protection approach on business-to-business arrangements was inappropriate and that further regulation would offend the principle of freedom to contract.