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A business behaving unfairly in their dealings towards another business is prohibited under consumer law. These unfair behaviours include unconscionable conduct and unfair contract terms.

Unconscionable conduct

• Has a large business ever done something to you that was harsh or unfair?
• Have you ever knowingly targeted a vulnerable business for your gain?

Unconscionable conduct is behaviour so harsh or oppressive that it goes against good conscience as judged against the norms of society or what is ‘the right thing to do’. However, it needs to be more than just hard commercial bargaining, or simply unfair treatment. It means doing something deliberate or clearly unfair and unreasonable which cannot be done in good conscience.

It is against the law for businesses to act unconscionably towards other businesses.

Examples of unconscionable conduct are:

• knowingly targeting and taking advantage of or pressuring vulnerable businesses
• abuse of a superior bargaining position.

Assessing whether conduct is unconscionable

Several factors will be considered by the courts when assessing whether conduct is unconscionable.

They include:

• the relative bargaining strength of the parties
• whether the weaker party could understand the documentation used
• the use of undue influence, pressure or unfair tactics by the stronger party
• whether any conditions were imposed on the weaker party that weren't necessary to protect the stronger party's legitimate interests
• the willingness of the stronger party to negotiate
• the extent to which the parties acted in good faith.

Learn more about unconscionable conduct.

Unfair contract terms

• Have you been given a standard form contract to sign by another business?
• Do you give your customers standard form contracts to sign?

Small businesses are protected against unfair terms

As a small business, you may be required to enter into standard form contracts with other businesses for products and services. 

You may also choose to use standard form contracts when dealing with your customers.

Under consumer law, it is against the law for a business to propose, include, rely on, or enforce an unfair contract term in a standard form contract with a consumer or small business.

If a court decides that a term is unfair, it will be void. This means it will no longer apply to those involved in the contract. Substantial penalties also apply.

Small businesses are protected from unfair terms in standard form contracts for products, services or land transactions if they:

• have fewer than 100 employees, or
• make less than $10 million in annual turnover.

Learn more in the toolkit about making and agreeing to contracts.

Contracts covered by the law

The unfair contract terms law applies to consumer as well as small business standard form contracts. For example, shop leases, advertising, equipment lease or hire purchase.

A small business contract is an agreement:

• where at least one of the parties is a small business, and
• for the supply of products or services or the sale or grant of an interest in land.

A consumer contract is an agreement:

• for the supply of products or services, or the sale or grant of an interest in land
• to an individual (not a company) for personal, domestic or household use.

Determining if a contract has unfair terms

To be unfair under consumer law, a term must:

• cause a significant imbalance in the parties’ rights and obligations under the contract
• not be reasonably necessary to protect the legitimate interests of the party advantaged by the term, and
• cause detriment (financial or otherwise) to a party if it were applied or relied upon.

Only a court or tribunal can decide that a term is unfair, not the ÌÇÐÄÔ­´´. A court can also impose significant financial penalties if a contract entered into or renewed after 9 November 2023 contains an unfair term.

Examples of terms that may be unfair

A term may be considered unfair if it enables one party, but not the other to:

• vary the terms of the contract. For example, change its prices or services at any time without prior notice.
• automatically renew the contract without the other party’s express consent
• avoid or limit their obligations under the contract. For example, limit the contract provider’s liability where they have acted negligently.
• terminate the contract
• penalise the other party for breaching or terminating the contract.

If you think a term in your contract is unfair

• Ask the other business to remove the term or change it so it is no longer unfair. Speaking to the other party first could save you time and money – and lead to a better outcome.
• If you haven't signed the contract yet and the contract provider isn’t willing to make a change, don’t hesitate to walk away from a bad deal.
• If you’ve already signed the contract and the contract provider is unwilling to address your concerns, disputes over the fairness of a particular term may be resolved through alternative dispute resolution schemes or industry ombudsmen.
• Talk to a lawyer about your options regarding taking your own legal action to enforce your rights under the law. You may be entitled to take your complaint to your local state and territory small claims tribunal.
• You can report an unfair contract term to the ÌÇÐÄÔ­´´ or your state and territory consumer protection agency. Reports relating to financial products and services should be made to the .

Learn more about unfair contract terms.