LAWS105 Lecture Notes - Lecture 8: Burns Philp, Electricity Trust Of South Australia, Rank Hovis Mcdougall
LAWS105 – CONTRACT LAW
Wk. 8 – Unfair Contract Terms & Illegality
Unfair Contract Terms
ACL Ch 2, Part 2-3
Section 23: unfair terms of consumer contracts
A term of a consumer contract is void if the term is unfair and the contract is a
standard form contract
Consumer contract = a contract for the supply of goods and services/ sale or
grant of an interest in land – to an individual for personal/domestic/household
use
Meaning of unfair is in s24
Significant imbalance
Not reasonably necessary to protect legitimate interests
Causes detriment
Examples in s25
Not defined in the ACL
Section 27 states list of factors courts may consider, including:
s27(2)(c) whether another party was, in effect, required either to accept or
reject the terms of the contract in the form in which they were presented; and
s27(2)(d) whether another party was given an effective opportunity to
negotiate the terms of the contract.
Effect of Including an Unfair Term
An unfair term in a standard form consumer contract is void (ACL s23)
If the term is severable, remainder of contract continues
If term cannot be severed, whole contract is void
Remedies:
Declaration that a term is unfair (ACL s250(1));
Injunction (ACL s232); and / or
Compensation (ACL s237)
Illegality
find more resources at oneclass.com
find more resources at oneclass.com
Statutory Illegality
Statutory illegality =
where legislation
prohibits contractual
formation or
performance. Arises:
Contracts prohibited by statute
Contracts entered into for an illegal purpose
Contracts that are performed illegally
Contracts rendered void by statute
Contracts Prohibited by Statute
Contracts that are themselves illegal (eg. a contract between competitors to
form a cartel prohibited by the Competition and Consumer Act 2010 (Cth))
versus contracts tainted by illegal performance.
Issue = whether the statute only intends to penalise the
unlawful performance, OR it intends to prohibit the contract
St John Shipping Corp v Joseph Rank Ltd [1957] 1 QB 267
Contracts Entered into for Illegal Purposes
Case by case basis.
Philosophy is whther public policy considerations require that the court should
refuse to enforce the contract (Miller v Miller (2011) HCA 9).
Nelson v Nelson (1995) 184 CLR 538.
“[The Act] contains internal mechanisms for dealing with false declarations…
The Act …provides for recovery of the subsidy paid… These provisions lend
weight to the submission… that the policy of the Act will not be defeated if
the Court enforces her equitable rights…”.
Contracts Performed Illegally
Example: transporting goods is legal, but if the person driving speeds, is
unlicensed or intoxicated, then the contract was performed in an illegal
manner.
Matter of construction if illegal and unenforceable or void or if merely penalty
attached.
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
A term of a consumer contract is void if the term is unfair and the contract is a standard form contract. Consumer contract = a contract for the supply of goods and services/ sale or grant of an interest in land to an individual for personal/domestic/household use. Section 27 states list of factors courts may consider, including: S27(2)(c) whether another party was, in effect, required either to accept or reject the terms of the contract in the form in which they were presented; and. S27(2)(d) whether another party was given an effective opportunity to negotiate the terms of the contract. An unfair term in a standard form consumer contract is void (acl s23) If the term is severable, remainder of contract continues. If term cannot be severed, whole contract is void. Declaration that a term is unfair (acl s250(1)); Statutory illegality = where legislation prohibits contractual formation or performance. Contracts entered into for an illegal purpose.
