New Unfair Contracts Laws have been introduced into the Trade Practices Act 1974. These laws are part of the new national consumer law regime and are expected to take effect later this year.
For the purposes of the Unfair Contracts Law, retirement village residence contracts will be standard form consumer contracts. Terms contained in these contracts will be declared void if they are unfair. A term is unfair if it:
• Causes a significant imbalance in the parties’ rights and obligations under the contract; and
• Is not reasonable necessary to protect the legitimate interest of the party that would be advantaged by the term; and
• Would cause detriment, financial or otherwise, to a party if it were to be applied or relied on.
All businesses, including retirement village operators, should review their standard contracts and consider whether those contracts contain any possible unfair terms and if so, whether those terms are reasonably necessary to protect their legitimate commercial interests.
