The unfair contract terms rules in the Australian Consumer Law (ACL) let a small business challenge one-sided clauses in a large company’s standard form contract. Their real value often shows up during the negotiation itself. Flagging a term as potentially unfair can get it changed before you sign, even when you have little commercial leverage to bargain with.

Small businesses are regularly handed a large company’s standard form agreement on a take it or leave it basis, with no realistic room to put up their own document. The unfair contract terms regime gives you some power because if a term is unfair on the statutory test, the other party has a problem to deal with!

What the unfair contract terms regime protects

The rules apply to standard form contracts where at least one party is a small business, meaning it employs fewer than 100 people or has annual turnover under $10 million. A term is unfair if it creates a significant imbalance in the parties’ rights, is not reasonably necessary to protect the legitimate interests of the party it favours, and would cause detriment if it were relied on. Including an unfair term is illegal with significant penalties and the term cannot be enforced.

Three points matter when a smaller party is sizing up a big company’s contract:

• First, you are probably covered. Since 9 November 2023, the small business threshold has been fewer than 100 employees or annual turnover under $10 million (section 23 of the ACL), up from the old limit of fewer than 20 employees. Most founder-led and privately held businesses now sit inside it.
• Second, negotiating does not necessarily push you back out of the regime. A contract is presumed to be standard form unless the other party proves otherwise (section 27 of the ACL), and it can still be standard form even where you were allowed to negotiate a few minor changes or pick between set options. The other side cannot escape the regime just by pointing to some back and forth.
• Third, “unfair” has a defined meaning. Section 24 of the ACL sets out the three limbs above, and section 25 gives examples, including broad indemnities, rights to vary the contract unilaterally, and one-sided limits on liability. Those examples are usually where the value sits.

How this worked in a real negotiation

Before founding Camber Law & Advisory, its founder acted for a small business caught in exactly this position. The client had to sign on to a much larger, ASX listed customer’s standard form services agreement. Using the client’s own document was never on the table, and the customer had resisted push back on a multitude of terms throughout the document.

Two clauses were a real problem for the client:

• The first required the client to indemnify the customer for any loss arising from conduct that would have breached a privacy requirement if the customer had engaged in it. Stripped back, the client was being asked to carry the customer’s own privacy compliance risk.
• The second was a broad indemnity for any claim by any third party arising out of any breach of the agreement by the client. No cap, and no carve out for loss the customer had brought on itself.

Given where the client sat, arguing about commercial fairness got them nowhere. So the client’s position instead focused on highlighting its belief that such clauses were unfair terms, that the customer was formally on notice of that, and the client would still sign if it came to it but reserving its rights under the unfair contract term regime.

That was enough. The customer dropped both clauses rather than leave an unfair contract terms allegation sitting on the file against it.

Why putting the other side on notice works

Since 9 November 2023, including an unfair term in a standard form small business contract has been illegal. A business that proposes, applies or relies on such a term breaches the Australian Consumer Law and faces civil penalties, and the term cannot be enforced against the other party. For a company the maximum penalty is the greater of $50 million, three times the benefit, or 30 per cent of turnover. For an individual it is $2.5 million.

That exposure is what gives a notice its weight. For a large, listed business, an unfair terms allegation carries regulatory and reputational risk that a smaller counterparty never faces, and every term in the contract counts as a separate potential breach, so the numbers climb quickly. Giving up clauses that are simply not reasonably necessary to protect its position is cheap by comparison.

Enforcement has only sharpened since this matter was handled. The ACCC brought its first action under the expanded regime against Mable Technologies in June 2025, resolved through a court enforceable undertaking and a three year compliance program. In June 2026 it filed Federal Court proceedings against Amazon Australia over Prime subscription terms, one of the first contested penalty cases under the regime, affecting more than a million subscribers. Unfair contract terms, and harmful cancellation and automatic renewal terms in particular, sit on the ACCC’s enforcement priority list for 2026 to 2027.

A small business raising the issue is therefore pointing at something the regulator is actively chasing. The other side has to weigh giving up some abstract protections against the cost and exposure of having its position tested.

How to use this in your own negotiation

You do not need to threaten litigation. Pick out the specific terms that shift disproportionate risk onto you, record in writing that you regard them as potentially unfair under the Australian Consumer Law, and reserve your position. For a larger counterparty, adjusting the clause is usually cheaper than leaving that allegation unanswered.

In practice:

• Confirm you qualify. You need to be a small business (fewer than 100 employees or under $10 million turnover) and the contract needs to be standard form. Minor negotiation does not take you outside the regime.
• Target the right clauses. Broad or uncapped indemnities, terms that make you liable for the other party’s own conduct, unilateral variation rights, and one-sided termination or liability caps are the usual candidates.
• Put it in writing, and keep it measured. Name the term, say briefly why you think it is unfair, and reserve your rights. This is about getting a position on the record, so there is no need to make it combative.
• Know it is not automatic. Whether a term is actually unfair turns on the three limb test and the particular facts, and you will not always be right. The leverage lies in the other side’s reluctance to have that question tested at all.

There are always risks with this approach, however. The counterparty may decline to shift its position and that forces it to effectively decline to do business with you. That’s why the real value is having a contracts lawyer lead the negotiations for you.

The takeaway

Most of the attention on the unfair contract terms regime goes to what happens in a dispute, once a term is challenged and a court rules on it. For a small business, the more useful moment tends to come earlier, at the negotiating table, where raising a term as potentially unfair can get it changed before anything is signed. The clauses worth focusing on are the ones that load risk onto you for things you cannot control, and broad indemnities are the obvious place to start. Put the point carefully and in writing, and it often does the work on its own, because a larger counterparty would usually rather adjust a clause than have to defend it.

If you are being asked to sign a larger company’s standard form contract and some of the terms feel one sided, Camber Law & Advisory can help you work out which ones are worth challenging and how to raise them. Get in touch for a 30 minute consultation.

Frequently asked questions

Does negotiating a contract mean it is no longer “standard form”?

No. A contract can still be standard form even if you negotiated some minor changes or chose between options. What matters is that it was prepared by one party and offered on a substantially take it or leave it basis. Minor back and forth does not take it outside the regime (section 27 of the ACL).

Which contract terms are most likely to be unfair?

Common candidates are broad or uncapped indemnities, terms that let one party vary the contract unilaterally, terms making you liable for the other party’s own conduct, and one-sided termination or limitation of liability clauses. Section 25 of the ACL lists examples. Whether a term is unfair still depends on the three limb test in section 24.

What size business is protected?

The regime covers standard form contracts where at least one party is a small business, meaning it employs fewer than 100 people or had annual turnover under $10 million in the previous financial year. Many founder-led and privately held businesses qualify.

Do I have to go to court to rely on this?

No. The value is often at the negotiation stage. Recording in writing that you consider a term potentially unfair, and reserving your position, can be enough to have it changed. Only if a term is relied on and then disputed would a court decide whether it is actually unfair.