Unfair Contract Terms In Victoria: Practical Guide For Businesses

If you run a small business or startup in Victoria, contracts are part of daily life. You might be signing supplier agreements, onboarding customers, entering leases, subscribing to software, or negotiating partnerships - often quickly, and often using templates.

But there’s a growing legal risk many business owners don’t realise they’re exposed to until something goes wrong: unfair contract terms.

The rules around unfair contract terms can affect how you draft, negotiate and enforce your agreements in Victoria. And importantly, these laws don’t just protect consumers - they can also apply in business-to-business deals, especially where a small business is asked to sign the other party’s “standard terms”.

In this practical guide, we’ll break down what unfair contract terms in Victoria means in real terms for your business, what clauses commonly cause issues, and what you can do to reduce your risk while still protecting your commercial interests.

What Are Unfair Contract Terms And Why Do They Matter In Victoria?

“Unfair contract terms” usually refers to protections in the Australian Consumer Law (ACL) and the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act). These protections can apply nationwide, including in Victoria, because they are federal laws.

So why do people search for unfair contract terms in Victoria? Because even though the rules are national, the way they impact your business is very practical and local:

• Victoria has a huge concentration of startups and small businesses signing standard-form contracts at speed.
• Many businesses operate across state lines but still negotiate, deliver, and resolve disputes in Victoria.
• If you end up in a dispute, the contract will often be enforced (or challenged) through Victorian courts/tribunals depending on the agreement and the claim.

At a high level, the unfair contract terms regime is designed to stop one party (usually the stronger party) from using standard-form contracts to impose one-sided terms that are not reasonably necessary to protect legitimate business interests.

That matters whether you’re:

• a startup using templated customer terms to scale quickly,
• a small business signing a “take it or leave it” supplier or SaaS agreement, or
• an established business issuing standard terms to clients.

When Do Unfair Contract Terms Laws Apply?

Unfair contract terms rules generally become relevant where:

• the contract is a standard form contract (more on that below), and
• the contract is a consumer contract and/or a small business contract, and
• the term is “unfair” under the legal test.

In other words, this is often about the contracts you sign quickly without negotiation - or the contracts you give customers where you don’t expect negotiation.

Importantly, since 9 November 2023, the “small business contract” category is broader than it used to be. In general terms, a contract can fall within the small business unfair contract terms regime if at least one party is a small business (for example, it employs fewer than 100 people or has annual turnover of less than $10 million). Upfront price thresholds that used to apply have also been removed, meaning more contracts can be captured.

Is Your Agreement A “Standard Form Contract”?

This is the first practical question to ask, because unfair contract terms laws generally target standard form contracts.

A standard form contract is typically one where one party prepares it and the other party has little or no real opportunity to negotiate. These are common in small business, including:

• website terms and online sign-up terms,
• service agreements issued on a “standard” basis,
• supply terms, purchase orders, and master agreements,
• software subscription contracts, and
• many franchise-style or reseller arrangements.

Even if you can negotiate in theory, a contract may still be treated as standard form if, in practice, the other party doesn’t meaningfully negotiate terms.

Quick Indicators Your Contract Might Be Standard Form

• You use the same terms for every customer with minimal changes.
• The other side says “these are our standard terms” and won’t change them.
• The contract is long, legalistic, and provided late in the process (after the commercial deal is mostly decided).
• Pricing and scope might be negotiated, but the “legal” clauses are not.

If this sounds familiar, it’s worth treating unfair contract terms as a real compliance area - not just a theoretical risk.

What Makes A Term “Unfair” Under The Law?

For a term in a standard form consumer or small business contract to be unfair, it generally needs to satisfy a three-part test. In plain English, a term is likely to be considered unfair if:

• it causes a significant imbalance in the parties’ rights and obligations, and
• it is not reasonably necessary to protect the advantaged party’s legitimate interests, and
• it would cause detriment (financial or otherwise) if relied on.

Courts can also consider how transparent the term is (for example, whether it is hidden in fine print or drafted in dense language) and look at the contract as a whole.

It’s also worth noting that, since 9 November 2023, unfair contract terms are no longer just a “void term” risk. Depending on the situation, proposing, using, or relying on an unfair contract term in a standard form consumer or small business contract can expose a business to civil penalties, along with other court orders.

Important: “Unfair” Doesn’t Mean “A Bad Deal”

A common misconception is that unfair contract terms laws let someone escape any contract that feels harsh.

In reality, the laws are usually focused on unfair clauses in standard form contracts - especially clauses that let one party change the deal, avoid responsibility, or punish the other party in a way that doesn’t match the actual risk.

That’s why it’s critical to review the specific wording of your terms (or the terms you are being asked to sign), rather than relying on a general sense that the contract “seems fine”.

Common Unfair Contract Terms Risks For Victorian Small Businesses

If you want to reduce your risk around unfair contract terms in Victoria, it helps to know what types of clauses are often scrutinised.

Below are common examples we see in standard form contracts across many industries (including tech, agencies, trades, professional services, and retail).

1. Unilateral Variation Clauses (One Party Can Change The Deal)

These clauses allow one party to change key parts of the contract (price, scope, features, renewal terms) without the other party’s agreement.

Variation clauses aren’t automatically illegal, but they can become risky if they’re too broad and not balanced by safeguards, like:

• clear notice requirements,
• a right for the other party to terminate if they don’t accept the change, and
• limits on what can be changed and when.

2. Automatic Renewal (Especially With Difficult Exit Rights)

Auto-renewal isn’t always a problem, but it becomes an issue when combined with:

• short cancellation windows,
• high termination charges, or
• renewals that happen without proper notice.

If you’re selling subscription services, it’s worth checking that your renewal and cancellation mechanics are clear, fair, and consistent with your operational processes.

3. Broad Indemnities (You Take On The Other Party’s Risk)

Indemnities can be commercially appropriate, but a “blanket” indemnity can be a red flag - for example, where you indemnify the other party for losses that are:

• outside your control,
• caused by the other party, or
• not reasonably foreseeable.

A more balanced approach often links an indemnity to specific risks (like IP infringement where you supplied the materials) and includes reasonable carve-outs.

4. One-Sided Limitation Of Liability Clauses

Limitation of liability clauses are standard in many industries, but they can attract attention where they effectively eliminate responsibility for one party while leaving the other party exposed.

For example, a clause that says “we are not liable for anything, ever” while still requiring the customer to pay all fees might be harder to justify.

A better approach is often to tailor your limitation of liability to match the commercial reality of your service and the risks you can reasonably control.

5. Unfair Termination Clauses

Termination rights should generally be proportionate and clear.

Clauses can be problematic where:

• one party can terminate “for convenience” but the other party cannot,
• termination can happen with no notice for minor breaches, or
• termination triggers excessive exit fees that look like a penalty.

If you’re planning to end contracts quickly or suspend services during disputes, it’s also worth thinking through what your process looks like in practice so your terms match reality.

6. “No Refunds” Or Overly Restrictive Remedy Clauses

If you sell goods or services, you need to be careful with clauses that attempt to remove statutory rights or restrict remedies too heavily.

The ACL includes consumer guarantees and protections against misleading conduct, which can’t simply be contracted out of. Your terms need to sit comfortably alongside those obligations.

This is a common issue for online businesses, where templated terms often overreach. If you’re unsure, it can help to get your customer-facing terms reviewed through an ACL consultation so your wording matches your actual offering.

Practical Steps To Reduce Unfair Contract Terms Risk (Without Weakening Your Contract)

Most small businesses don’t want “soft” contracts. You still need to get paid, control scope, protect your IP, and manage risk.

The goal is not to remove protections - it’s to make sure your protections are reasonable, clear, and defensible.

Step 1: Identify Your Standard Form Contracts

Start by listing the agreements you use most often, especially those you issue on repeat:

• customer terms / service agreements
• supplier terms
• online subscription terms
• contractor templates
• platform terms (if you run a marketplace)

These are your “highest leverage” documents - changes here can reduce risk across hundreds of future transactions.

Step 2: Stress-Test Your “Power Clauses”

These are the clauses that most often create an imbalance:

• variation and price change rights
• termination rights
• automatic renewal
• indemnities
• limitations of liability
• set-off and payment controls

If a clause gives you a broad power, ask: “What would this look like if the other party relied on it against us?” If the answer feels unreasonable, it’s a sign you should refine it.

Step 3: Add Safeguards And Transparency

Many terms become more defensible when you add safeguards like:

• notice periods (e.g. before changing pricing or suspending services)
• cure periods (time to fix a breach before termination)
• mutuality (similar rights for both parties where appropriate)
• clear drafting (avoid hidden terms and dense cross-references)

These changes can make your contract feel fairer while still protecting your legitimate business interests.

Step 4: Make Sure Your Contract Matches How You Operate

One practical risk area is when a contract says you’ll do something (or can do something) that you don’t actually do in practice.

For example:

• If your terms say you can change fees at any time, but you never give notice, that mismatch can create dispute risk.
• If your terms say “no refunds” but your support team routinely offers refunds, inconsistency can undermine enforcement.

It’s usually better to have terms that reflect your actual process - and then build internal procedures that support compliance.

Step 5: Review Your Website Legal Stack If You Sell Online

If you collect customer information (names, emails, payment details, usage data), you should ensure your online legal documents align with your data practices.

That often includes a properly tailored Privacy Policy and, depending on your model, Website Terms and Conditions.

These documents are also often treated as standard form contracts - which means unfair contract terms risk can overlap with privacy and consumer law compliance.

What Should You Do If You’re Asked To Sign Unfair Terms?

It’s common for Victorian startups to be handed a contract by a larger customer, landlord, supplier, or platform and feel like they have no bargaining power.

You usually have more options than you think - especially if you approach the negotiation commercially and focus on the clauses that create the most risk.

Prioritise The Clauses That Can Hurt You Most

If you can’t negotiate everything, focus on the few clauses that can create disproportionate downside, such as:

• indemnities that make you responsible for the other party’s actions
• uncapped liability
• termination without notice where you’ve made upfront investments
• one-sided variation rights (especially price reductions or scope expansions)
• payment terms that allow long delays or broad set-off

Sometimes small wording changes can dramatically improve your position without derailing the deal.

Use A Short Amendment Instead Of Rewriting The Whole Contract

If the other party won’t accept a full rewrite, you may be able to propose a targeted amendment (for example, through a short variation document).

In practice, the fastest path is often to adjust:

• liability caps,
• termination notice, and
• indemnity carve-outs.

This can be a helpful way to keep negotiations moving while still reducing risk.

Don’t Ignore The Contract Just Because It “Seems Standard”

Many disputes happen because a business owner assumes “this is just how contracts are”. But if a term is unfair and the other party tries to rely on it later, you may end up spending far more time and money arguing about it than it would have taken to negotiate early.

If you’re unsure, a legal review can help you understand what’s market-standard, what’s a red flag, and what you can realistically push back on.

Key Takeaways

• Unfair contract terms in Victoria usually comes up where you’re dealing with standard form contracts, including customer terms, subscription terms, and supplier agreements.
• A term is more likely to be unfair if it creates a significant imbalance, isn’t reasonably necessary to protect legitimate interests, and causes detriment if relied on.
• Common risk clauses include unilateral variation rights, automatic renewal with harsh exit terms, broad indemnities, one-sided limitations of liability, and unfair termination rights.
• You can often reduce risk without weakening your contract by improving transparency, adding safeguards (notice and cure periods), and tailoring clauses to how your business actually operates.
• If you’re asked to sign unfair terms, prioritise the high-risk clauses (liability, indemnities, termination, payment) and negotiate targeted amendments where possible.
• Since 9 November 2023, more business-to-business contracts can fall under the small business unfair contract terms regime, and unfair contract terms can expose businesses to civil penalties.

This article is general information only and isn’t legal advice.

If you’d like help reviewing or updating your contracts to reduce unfair contract terms risk in Victoria, contact Sprintlaw on 1800 730 617 or email team@sprintlaw.com.au for a free, no-obligations chat.