Are your standard form contracts fair? (Nat)

In March this year the Federal Government introduced national consumer laws that affected standard form contracts.

From 1 July 2010, unfair terms in standard form contracts will be invalid. However the contract will still continue to bind the parties to the extent that it is able to operate without the unfair term.

The law applies to standard form contracts entered into on or after 1 July 2010, and to terms of existing contracts that are renewed or varied after 1 July 2010.

What is an unfair term?

A term of a consumer contract is unfair if:

• it would cause a significant imbalance in the parties’ rights and obligations arising under the contract; and
• it is not reasonable necessary to protect the legitimate interests of the party who would be advantaged by the term; and
• it would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on.

For example a term that penalises or has the effect of penalising one party (but not another) for a breach or termination of a contract would be unfair.

HIA’s contracts have been drafted over a number of years to reflect long standing industry practice and HIA believe that they provide for a balanced allocation of risk between the owner and builder.

If you have prepared or use your own standard form contracts HIA recommend that you review your documentation against the new laws.

For more information on your HIA standard form contracts contact an HIA Workplace Adviser on 1300 650 620.

_{DISCLAIMER – the above is intended to provide general information in summary form. The contents do not constitute specific advice and should not be relied upon as such. Formal specific advice should be sought by members with respect to particular matters before taking action.}