We wish to draw your attention to some recent developments as follows:-

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Unfair Contract Terms

Amendments to the law on Unfair Contracts will take effect on 9 November 2023. The amendments prohibit businesses from proposing, using or relying on unfair contract terms. The Amendments include maximum penalties of $50 million for body corporates and $2.5 million for individuals.

The unfair contract provisions apply to small business contracts and consumer contracts, where they are standard form contracts.

According to the Australian Consumer Law, a contract term is considered unfair if it satisfies three main criteria:

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1. Significant Imbalance: The term creates a significant imbalance between the parties to the contract.

2. Not Reasonably Necessary: The term is not reasonably necessary to protect the legitimate interests of the party who would be advantaged by the term.

3. Detriment to the Consumer: The term would cause a financial or other detriment to the consumer if it were to be relied upon.

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Common Examples of Unfair Contract Terms:

1. Excessive Penalties: Terms that impose disproportionately high penalties for breaching the contract may be deemed unfair.

2. Unilateral Variation of Contract Terms: If the contract allows one party to unilaterally change the terms without the other party's consent, it could be considered unfair.

3. Limited Liability for the Supplier: Contract terms that seek to limit the liability of the supplier in case of a breach may be scrutinized.

4. Automatic Renewal Clauses: Terms that automatically renew the contract without providing a reasonable opportunity for the consumer to terminate can be considered unfair.

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In addition to the unfair contract term provisions under the Australian Consumer Law (ACL), the Australian Securities and Investments Commission (ASIC) Act plays a pivotal role in regulating unfair contracts in the financial and investment sector. Complementary provisions for unfair contracts are also found in ASIC Act.

If you have any concerns regarding unfair contracts, in particular where they are standard form contracts, speak to us for a review of the contracts.

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Fixed Term Employment Contract

Effective from 6 December 2023, unless an exception applies, employers must not enter into a fixed term contract with ‘identifiable end date’ of more than 2 years (including extensions) or a contract which may be extended more than once.

If you use fixed term contracts for your employees, you should review your contract to ensure that you are in compliance with the law.  If you are intending to renew any fixed term contract with your employee, note that the previous and new contracts together will constitute consecutive contracts under the new provisions. You may be required to provide your new and existing employees with a new Fixed Term Contract Information Statement. Speak to us if you need a review of any of your contracts or have any questions on fixed term contract.

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Increase of Absentee Owner Surcharge Rates from 2024

The 2023-2024 Victorian Budget increased the Absentee Owner Surcharge (AOS) Rates from 2% to 4% with effect from 1 January 2024.

AOS is an additional amount that must be paid over the land tax. It is in addition to trust surcharge rates.

If you are an absentee person (foreign owner), a corporation which is controlled by an absentee person or a trust with beneficiaries or potential beneficiaries that are absentee persons, you may be affected by the AOS.

If you have any queries regarding the AOS please contact us.