Does your business have unfair contracts?

Under Australian Consumer Law there are provisions to protect people and businesses from unfair contracts.

If a term is found to be ‘unfair’, the term will be void – this means it is not binding on the parties. The rest of the contract will continue to bind the parties to the extent it is capable of operating without the unfair term.

Now for a business, it makes sense to ensure your contract terms are fair.  Who wants to have a contract you may not be able to enforce because it is unfair?

But it seems some businesses don’t understand the risk of unfair contracts. 

For example, the other day, my daughter had me review a contract from a service provider they were thinking of using, who was going to charge a 5 figure sum on an exclusive contract.

I read the contract and noticed that whilst my daughter as the client had a number of obligations, the service provider had none.  Not even the requirement to act reasonably and use their best endeavours to deliver the services under the agreement.  This was a “one sided contract” and to my bush lawyer perspective, this meets the definition of unfair.

My daughter asked the supplier to amend the contract, but they refused stating the terms “were put together by a lawyer”.

Now either lawyer did not know the rules around unfair contracts, or they deliberately avoided making a fair contract with appropriate obligations for the service provider.

The impact – this service provider lost a 5 figure sale, over missing terms that a court or tribunal would probably have enforced anyway.

And that’s why you should make sure your contract terms are fair to both parties.

 

If you want a confidential discussion on your business situation, contact me below

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To ensure I help your business specifically, the best approach I have found is to have an obligation free session with you.  In this session we will review your current business in a factual and objective manner, to better understand the challenges that you face.  And this session does not need to be face to face.

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Wayne Wanders, A Real CFO

wayne@aRealCFO.com.au

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