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Important Updates: Australian Consumer Law Changes and Your Clients Contracts

On the 9th of November 2023, Australian Consumer Law changes came into effect, enforced by the Australian Competition and Consumer Commission (ACCC), which have affected some standard form contracts, potentially influencing dealings between brokers, Insurers, clients and small businesses.

What are these Changes?

The Australian Competition and Consumer Commission (ACCC) is actively encouraging businesses to carefully review their standard contracts.

All brokers should review their current contracts to identify and rectify any unfair contract terms and encourage their clients to do the same. These changes to the ACL will prohibit businesses from proposing, using, or relying on unfair contract terms in their dealings with customers and small businesses.

Previous to these changes, a court could only declare specific terms void; however, the updated laws empower courts to impose substantial penalties on businesses and individuals found to have unfair terms in their contracts.

This shift aims to motivate businesses to proactively ensure fairness in their contractual arrangements.

The scope of unfair contract term laws will now extend to cover more small business contracts, with the threshold increasing to apply to businesses employing fewer than 100 persons or with an annual turnover of less than $10 million.

The changes also eliminate the contract value threshold and clarify various aspects of the laws, such as defining ‘standard form contracts’ more explicitly.

What Brokers and your Clients Need to Know

The updated laws apply to standard form contracts, which many businesses, use when dealing with large volumes of customers; however, these contracts often include ‘take it or leave it’ terms, typically in favour of the business. It’s crucial to recognise that the test for determining whether a contract term is unfair remains the same; although, the consequences for breaching the law are now more severe, potentially resulting in substantial penalties.

What is considered an unfair contract term?

  • Causes 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 an individual or small business if it were enforced.

Maximum Financial Penalties

The maximum penalties for businesses under the new laws include a monetary fine, three times the benefit obtained from the conduct, or 30% of adjusted turnover during the breach period. The addition of new penalties means that a court could also impose a fine of up to $50 million. Individuals may face a maximum penalty of $2.5 million.

Tips for Reviewing Your Contracts

  1. Consider Both Points of View: Evaluate contract terms from the perspective of the other party.
  2. Include Counter-Balancing Terms: Ensure your contract has terms that balance the interests of both parties.
  3. Avoid Broad Terms: Limit terms to what is reasonably necessary to protect your business’s legitimate interests.
  4. Meet Obligations under Australian Consumer Law: Do not include terms that seek to avoid your business’s obligations under the law.
  5. Be Clear and Transparent: Use clear and simple language, and ensure key terms are highlighted during the sign-up and renewal processes.

What does this mean for Clients?

  • These changes may protect small businesses from unfair contracts provided by larger suppliers and organisations.
  • Insitut, those small businesses who use written agreements (such as standard trading conditions) to try and exclude their own responsibility may be liable under the new laws.
  • All clients should ensure that they have appropriate comprehensive cover and review their standard contracts for unfair terms.


In the end, per the Insurance Contracts Act, your trusted advisor works for you, not the insurer; this means that even with this revision of contract terms, your Ausure broker will always keep working on your behalf and in your best interest.

Mick O’Bree
General Manager of Operations and Underwriting
Follow me on LinkedIn

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