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Contracts and unfair contract terms

A contract is a verbal or written legally binding agreement.

There are laws to protect consumers from unfair terms in standard form contracts. If you think your contract includes unfair terms, get legal advice.

Contracts

A contract is a legally binding agreement. It can be verbal (ie spoken), but some contracts must be in writing. It’s possible for a contract to be partly written and partly verbal.

For example, contracts to buy or sell a house or land, borrowing money from a lending business, guarantees or door-to-door sales contracts must be in writing.

Making a contract

When making a contract, the law says you need to have:

  • an offer made and accepted
  • an agreement about all the essential features of the contract (eg sale price, item description, method for calculating the due date for any payments)
  • consideration—meaning you and each person entering the contract must promise to do something or give something of value 
  • an intention to create the contract (eg if the contract is between you, your friends or relatives, it can be difficult to show the agreement was intended to be legally binding).

Do children have legal capacity to make a binding contract?

Children under 18 may make a binding contract for the necessities of life if they understand the significance of their decision. They may also make decisions about their own medical treatment if they understand its significance.

Each legal situation needs to be assessed on its own merits and you should get legal advice to determine whether the person has legal capacity.

Unfair contract terms

There are national laws to protect consumers from unfair terms in standard form consumer contracts.

Standard form contracts are contracts with a business provider where there are  limited opportunities for the consumer to negotiate the terms of the contract.

The unfair contract terms laws only apply to standard form consumer contracts made, renewed or varied on or after 1 July 2010. They don’t apply to insurance contracts.

What is an unfair contract term?

A contract term is unfair if:

  • it would cause a significant imbalance in the rights and obligations of the parties
  • it’s not reasonably necessary to protect the legitimate interests of the party who benefits from the term, and
  • it would cause harm or loss (whether financial or otherwise) to the other party.

Examples of unfair contract terms include:

  • a term that allows one party (but not the other) to terminate the contract
  • a term that allows one party (but not the other) to vary the contract terms
  • a term that allows one party (but not the other) to avoid their obligations under the contract.

What should I do if I think my contract contains an unfair term?

You should get legal advice about whether a term of your contract is unfair and if it affects the contract you have entered into.

If the contract is for financial products and services, you can make a complaint to the Australian Securities and Investments Commission (ASIC).

For other contracts, you can make a complaint to the:

The ACCC, OFT and ASIC can negotiate with the business to have the unfair contract terms removed.

If the contract is for financial services, you can make a complaint directly to the financial services provider. If they can’t resolve the complaint, you can contact a financial services ombudsman, such as the Financial Ombudsman Service (FOS) or the Credit and Investments Ombudsman (CIO). You should get legal advice before starting this process.

If you still can’t resolve your dispute, you may need to apply to the court. Court applications for unfair contract terms can be complex. Get legal advice.

Do I need legal advice?

You may need legal advice if you:

  • are considering applying to the Queensland Civil and Administrative Tribunal (QCAT) or court to resolve a debt dispute
  • have an order from the QCAT or the court showing someone owes you money, but they still won't pay
  • have another party with an order from the QCAT or the court showing you owe them money
  • think your contract contains an unfair term
  • have questions about a particular contract.

How to get legal advice

We may give legal advice about recovering personal debts. We can’t give advice to businesses, or advice about recovering debts on behalf of a business or company.

The following organisations may be able to give legal advice.

Community legal centres give legal information and advice on a range of topics. Contact them to find out if they can help.

LawRight Self Representation Service (Federal) gives legal advice and help to people involved in civil proceedings in the Federal Circuit Court or Federal Court for matters involving bankruptcy and consumer and competition law. They may also be able to help with drafting documents and correspondence relating to your legal matter. They don’t provide legal representation.

LawRight Self Representation Service (Courts) gives legal advice and help to people involved in civil proceedings before the Brisbane District Court, Brisbane Supreme Court and Queensland Court of Appeal. They may also be able to help with drafting documents and correspondence relating to your legal matter. They don’t provide legal representation.

LawRight Self Representation Service (QCAT) gives free legal advice and help to people at the Queensland Civil and Administrative Tribunal. The service may help with drafting documents and correspondence relating to your legal matter. They don’t provide legal representation

Queensland Law Society can refer you to a specialist private lawyer for advice or representation on personal or business matters.

Who else can help?

These organisations may also be able to help. They don’t give legal advice.

The ACCC has information about making a complaint, resolving a consumer problem, consumer guarantees, warranties and refunds, unfair sales methods, and regulations for products and services.

ASIC's MoneySmart website  has information that may be able to help with disputes about financial products and services. It has  independent guidance for consumers when making decisions about their personal finances, including information about: 

They also offer helpful information about important life events, including:

  • buying a mobile
  • starting work
  • buying a car
  • buying a home
  • having a baby
  • losing your job
  • divorce or separation
  • losing your partner.

The Australian Financial Security Authority (AFSA) has information about bankruptcy, including how to go bankrupt, making a person bankrupt, what debts are covered, and consequences of bankruptcy.

Office of Fair Trading (OFT) provides information and help to the public on a wide range of consumer related issues, including:

The Office of the Australian Information Commissioner handles complaints about misusing personal information and inaccurate credit reports.

Queensland Civil and Administrative Tribunal (QCAT) can hear:

You should try and resolve your dispute with the other party before asking the QCAT to hear your dispute.

The following Australian credit reporting agencies can give you a free copy of your credit history:

Energy and Water Ombudsman offers a free service to help resolve disputes with electricity, gas or water suppliers.

Telecommunications Industry Ombudsman (TIO) has a free alternative dispute resolution scheme for unresolved complaints about telephone or internet services.

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