Effect of the New Australian Consumer Law on the Use of Standard-Form Contracts within the Australian Construction Industry

Abstract

Standard forms of contract have been part and parcel of the construction industry for many years. They are associated with economies of scale and efficiency, allowing businesses to complete the contract negotiation phase quicker than if all contracts had to be individually negotiated. However, in many standard-form contracts, the opportunities for genuinely free and informed consent to the contract terms may be restricted given the consumer’s limited ability to assess the merits of, or the risks inherent in, the terms of a contract. The new Australian Consumer Law (ACL) reflects concern about the impact of changes in consumer markets, including the proliferation of standard-form consumer contracts and concern that the current regulatory framework does not provide adequate relief from substantive unfairness in consumer transactions. This paper examines the effect of the new ACL regarding good faith and unfair contract terms and considers existing legislation and practices that suggest that the construction industry already has a number of checks and balances in place.