The Business Council of Australia (BCA) welcomes the opportunity to provide a submission to Treasury on the Review of the Amended Unfair Contract Terms (UCT) Protections consultation paper.
The BCA represents Australia’s leading businesses, which operate across all sectors of the economy and regularly engage with consumers and small businesses through standard form contracts. Our members strongly support fair and transparent contractual arrangements and recognise the importance of maintaining appropriate safeguards for consumers and genuinely vulnerable small businesses.
Given the relatively short period since commencement, it is important that any further changes to the UCT regime are approached cautiously. Several members have noted the ongoing additional compliance costs that the amended provisions introduced, particularly in regard to assessing and keeping current the small business status of commercial customers. The current review provides an opportunity to assess whether the amendments are operating as intended, while ensuring the framework remains proportionate, practical to comply with, and aligned with broader policy objectives. We make the following key observations.
Small business definition
The reforms significantly expanded the definition of a small business contract, increasing the threshold to include businesses with fewer than 100 employees or annual turnover below $10 million.
While the intention of expanding protections is well understood, the revised definition may capture businesses that do not exhibit the characteristics of vulnerability typically associated with small business protections.
Remedies and enforcement
The introduction of civil penalties represents a significant tightening of the framework. However, the BCA considers that enforcement should focus primarily on remediation and deterrence of harmful conduct, rather than penalising technical non-compliance. In general, there is a need for additional guidance on key concepts and criteria applied in the regime, with any such guidance developed in consultation with industry.
Completed contracts
Treasury has sought views on whether courts should be able to make orders relating to completed contracts under section 12GNF of the ASIC Act. In the BCA’s view, that extension to the existing provisions should not be made.
Extending the UCT regime to completed contracts would represent a significant and unjustified departure from established principles against retrospective regulation, particularly in circumstances where the relevant amendments only commenced in November 2023. Any extension should also exclude contracts entered into prior to the publication of regulator guidance or judicial interpretation relevant to the impugned term.
Connection with Australia
The BCA is concerned that an overly broad interpretation of “connection with Australia” may expose Australian headquartered groups to UCT risk in respect of offshore contracts governed by foreign law, negotiated and performed outside Australia, merely because one party has an Australian nexus.
We recommend further clarification on the extent of the extraterritorial application of the UCT regime, including an explicit statutory confirmation that the UCT regime does not apply to contracts that are offshore in nature and governed by foreign law, absent clear consumer or small business harm within Australia.
Clarifying “standard form” contracts
The amendments introduced additional factors to determine whether a contract is a standard form contract, including consideration of the repeated use of a contract and circumstances where minor negotiation is permitted.
Application to the franchising sector
Treasury has sought feedback on extending UCT protections to all franchisees, including those that may currently fall outside the small business definition. The BCA notes that the franchising sector is already subject to a detailed and comprehensive regulatory framework, including the Franchising Code of Conduct. Recent reforms to the Code have only recently commenced, with some provisions taking effect in November 2025.
The BCA supports the objectives of the UCT regime and recognises the importance of protecting consumers and genuinely vulnerable small businesses from unfair contractual practices. However, given the relatively recent commencement of the reforms, the BCA encourages the Government to adopt a measured and evidence-based approach to any further changes, taking these issues into account in the context of Australia’s need to reduce the regulatory burden on businesses and address weak productivity growth and inflationary pressures.