Unfair Contract Terms with Small Businesses: Implications for the Construction Industry

By Sandra Steele and Andrew Hales, K&L Gates, Sydney

The unfair contract term prohibitions in the Competition and Consumer Act 2010 (Cth) were recently extended to cover standard form contracts with small businesses.

The new law provides for unfair contract terms to be declared void and unenforceable. The relevant contract will then only continue to bind the parties insofar as it can operate without the unfair terms.

These changes may have significant impacts on the building and construction industry as terms typically found in construction contracts are likely to be subject to the prohibitions. We recommend that principals and contractors identify and review any standard form contracts they may have with small business counterparties that may be impacted by this new regime.

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