Innovative interactive quiz reveals challenges of new unfair contract terms regime
8 December 2016
Many Australian businesses and organisations misunderstand the scope and application of the new unfair contract terms regime that applies to 'standard form' small business contracts according to the results of an innovative and interactive quiz developed by leading Australian law firm Henry Davis York.
Developed to test clients' knowledge and understanding of the new unfair contract terms regime, the 'Unfair Contract Law Challenge' has had an overwhelming response from in-house counsel and the broader legal community.
However, according to HDY partner Peter Mulligan, the results have shown that for many organisations there is still a level of confusion around the new regime which commenced on 12 November.
The importance of coming to grips with this new regime cannot be underestimated, according to Peter, given it represents one of the most significant reforms to Australian contract law over the last decade.
Peter said: "HDY developed the learning tool because of the significant nature of the reforms to Australian contract law and because this kind of tool makes a big difference to client understanding - it helps them navigate through the new regime and learn as they go."
Peter noted that both private and public sector organisations are using the tool to help educate their legal teams.
The specially-developed quiz features 20 questions; each one taking the participant through a different factual scenario relevant to the scope and application of the new regime. The participant is asked whether a contractual provision constitutes an unfair term under the new laws. After completing the quiz, participants receive a summary of their results, together with the answers and reasoning.
According to Senior Associate, Monique Azzopardi, who helped develop the quiz: "The scenarios in the tool are designed to assist participants to discover for themselves how the different exceptions apply to individual circumstances. The problem we have found in this area is there is not a strong understanding in the market of the complexities in the regime and the layers of exceptions."
Monique believes the quiz results appear to bear out the concerns of the ACCC from August this year that "many sectors remain unprepared [for the new laws]".
"While over time, case law will hopefully provide additional clarity, this will take quite a while and it will therefore be important for businesses affected by the new laws to urgently upskill and ensure they are compliant," she said.
Peter concluded: "There is no boilerplate to cure unfairness in a contract and this means that clients must look very closely at each contract term on a case-by-case basis. There is no easy fix in this area."
The quiz can be accessed via this link:
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