We’ve been looking at the topic of unfair contract terms in standard form consumer contracts, following ACCC’s challenge to telcos (and other industries) to delete them from their agreements. In this post, we de-bunk the myth that unfair contract terms are valid until a court makes a contrary ruling.
The law: Unfair contract terms are void, with or without a court decree
Section 23 of the Australian Consumer Law simply says that:
A term of a consumer contract is void if:
(a) the term is unfair; and
(b) the contract is a standard form contract.
Now, ‘consumer contract’, ‘unfair’ and ‘standard form contract’ are specially defined terms, so readers shouldn’t assume they have plain or loose meanings. But if a term is unfair (as defined) and it is in a standard form contract (as defined) that is a consumer contract (as defined) then it is void. No court judgment is required.
Of course, if a consumer decides to treat a term as unfair/void and a court later disagrees with their assessment, the consumer has a problem. So consumers should be sure of their position before they act on it. But if they are correct, they don’t need a court judgment to say so. Terms aren’t unfair only if a court declares them so.