Copying someone else's contract could cost your business up to $50m

By Jonas Valenti · 2026-08-04

From void to illegal: what actually changed

Since 9 November 2023, businesses are prohibited from proposing, using, or relying on unfair contract terms in standard form contracts with consumers and small businesses, making such terms illegal rather than merely void.^[1] Before that date, an offending clause was unenforceable. Now, including one carries its own penalty.

ACCC Deputy Chair Mick Keogh was direct about the intent. "The test for whether a contract term is unfair has not changed. However, businesses now could potentially face substantial penalties for contravening the law. This will better protect consumers and small businesses who have limited bargaining power, expertise, and ability to negotiate or assess standard form contracts," Keogh said.^[1]

Courts may impose maximum penalties for corporations of the greater of $50 million, three times any benefit obtained, or 30 per cent of adjusted turnover during the breach period, and up to $2.5 million for individuals, per contravention.^[1] A business operating at scale with a single template sent to hundreds of counterparties is not facing one contravention. It is facing one per contract.

Who is now caught by the law

From 9 November 2023, the small business threshold for unfair contract term protections was expanded to cover businesses employing fewer than 100 persons or with annual turnover under $10 million.^[2] The previous threshold was 20 employees, so the reform swept a substantially larger portion of the economy into its protective scope.

A business supplying services to a 60-person accounting firm or a regional retailer turning over $8 million a year is now dealing with a counterparty that carries full unfair contract term protections. If the supplier's agreement was drafted on a template and has not been reviewed since November 2023, it may already be in breach.

The definition of a standard form contract has also been tightened. Under the 2023 reforms, a contract is presumed standard form where one party drafted the agreement and the other had little or no opportunity to negotiate. Any variation or addition of a term from 9 November 2023 triggers the presumption for the entire contract.^[4] A business cannot partially redraft a template, call it a negotiated agreement, and claim the remainder sits outside the regime.

The statutory test: three elements courts apply

Section 24 of the Australian Consumer Law sets out the test in three parts. A term is unfair if it causes a significant imbalance in rights and obligations, is not reasonably necessary to protect the advantaged party's legitimate interests, and would cause detriment if applied or relied on.^[2] All three elements must be satisfied. A term that creates imbalance but genuinely reflects a legitimate commercial need may survive scrutiny, so the inquiry is always contextual.

Section 23 makes the mechanics of exposure clear. A person who proposes, applies or relies on an unfair term in a standard form consumer or small business contract commits a separate contravention for each unfair term.^[2] A template with three problematic clauses sent to 200 counterparties is a problem of serious scale before any court has reached a finding on the merits.

The clauses regulators keep targeting

The ACCC's enforcement focus has been consistent across successive reviews of small business contracting. Regulators commonly challenge terms allowing unilateral variation, automatic renewal without express consent, broad indemnities limiting liability, and one-sided termination rights.^[3] These are also the clauses most likely to appear verbatim in a downloaded template or an agreement copied from a larger firm's precedent.

Unilateral variation clauses, which allow a supplier to change pricing, service levels or key terms by notice alone, are a particular pressure point. Where the agreement also contains an automatic rollover provision that makes exit difficult, courts have treated the combination as compounding the detriment element of the unfairness test.

Broad indemnity provisions present a similar structural problem. A clause requiring the other party to indemnify the drafter against any loss, including losses arising from the drafter's own negligence, is precisely the kind of significant imbalance the legislation targets. Keogh said the changes "should motivate businesses to take steps to ensure their standard form contracts are fair, including by removing or amending concerning terms."^[1]

What to actually fix in a copied template

The ACCC has outlined the practical edits that carry the most de-risking value. Template changes with the highest impact include removing unconstrained termination clauses, adding transparency and reminders for renewals, limiting unilateral variation rights to genuinely necessary circumstances, and narrowing cost recovery and indemnity provisions.^[5] Each targets a clause type regulators have consistently attacked.

On automatic renewal, the fix is procedural rather than structural. Adding a written notice requirement, so the drafter must notify the counterparty within a defined window before the rollover date, converts an opaque mechanism into a transparent one and materially reduces the detriment argument for the entire clause.

For unilateral variation, the goal is constraining the trigger, not eliminating the right. A variation clause limited to changes in regulatory requirements, material cost increases above a defined threshold, or documented changes in scope is defensible. An unrestricted right to vary any term on short notice is not. For indemnities, the standard fix is mutual drafting: each party indemnifies the other for its own acts or omissions, removing the asymmetry that triggers the significant imbalance element of the test. Businesses that have not reviewed their standard agreements since before November 2023 are accumulating exposure with every contract currently in use.

Jonas Valenti

Jonas Valenti writes about search and how businesses get discovered. He has spent years watching what makes a company visible online, and is unsentimental about tactics that no longer work.