Legal
Is your credit documentation and terms of trade unfair? By Anna Taylor MICM*
Anna Taylor MICM 48
With the introduction of Unfair Contract Terms Regime on November 9th, it is more important than ever for creditors to ensure that their Credit Documentation and Terms of Trade are compliant with existing laws – as failure to do so can now result in your business being exposed to not only increased legal disputes but also new punitive penalties. The “Reference Guide to Understanding Unfair Terms’’ in this article will assist you to identify whether you are prepared for and compliant with the upcoming changes. In this article, we’ll discuss what these changes mean for you as a creditor and how best approach updating or reviewing the relevant documentation within your business.
Why are these changes significant? In 2016, when the unfair contract laws were introduced, lawyers took a cautious “wait and see” approach to understand how the courts would define an “unfair term”. However, the landscape has shifted. Effective November 9, 2023, changes to the Unfair Contract Terms Regime now expose your company to significantly higher risks of both increased disputes and penalties. Under the expanded UCT Laws, unfair contract terms will no longer be deemed unenforceable – they will instead be illegal. This represents a significant shift in the practical application of these laws and requires action by businesses to limit exposure come November 9th.
“...when the unfair contract laws were introduced, lawyers took a cautious “wait and see” approach to understand how the courts would define an “unfair term”. However, the landscape has shifted.”
CREDIT MANAGEMENT IN AUSTRALIA | October 2023