Update: Unfair contract terms reforms commence

Posted on by influence legal.
The current status

From 9 November 2023, expanded provisions for unfair contract terms (‘UCTs’) found in standard form contracts have taken effect under the Australian Consumer Law and the ASIC Act. These changes will apply to any new contract, and any amended or renewed contract, made from that date.

unfair contracts
To assist understanding of the reforms for both industry and consumers, ASIC has provided new guidance you can find here.

Background

Before the reform, unfair contract terms in standard contracts with small businesses and consumers were void but not illegal. The first key amendment is that unfair contract terms are now illegal and attract significant financial penalties. The criteria for establishing whether a contract term is deemed ‘unfair’ have remained largely unchanged.

Expanded scope

Small business threshold: As part of these reforms, the scope of small businesses eligible for Unfair Contract Terms (UCT) protections has been widened. To fulfill the updated criteria for small businesses, a company must either employ fewer than 100 individuals or generate less than $10 million in annual turnover.

Standard form contracts: The UCT protections continue to apply to standard form contracts. However, a significant change is that even if the other party is provided the opportunity to negotiate minor adjustments to the contract’s terms or to choose from a selection of term options, the contract may still be considered standard form. Also, a contract may still be classed as standard even if another party involved in a different transaction had the ability to negotiate and implement significant modifications to that same form of contract.

Notable legislative changes

The recent amendments have removed the monetary contract threshold formerly stipulated by the ACL, which restricted the upfront price payable in the contract to not exceed $300,000.

Under the ASIC Act, the UCT regime will now only apply to a small business contract if the upfront price payable (excluding interest) for the contract is $5 million or less.

Implications

Under the Australian Consumer Law, the maximum penalty for violations of the UCT regime has been raised.

For companies, the penalty has increase to $50 million from the previous $10 million, or it may calculated as three times the benefit gained by the company if quantifiable. Alternatively, it can amount to 30% of the corporation’s turnover during the period of the offence, as opposed to the previous penalty of 10% based on the annual turnover only within the 12 months before the breach. For individuals, the maximum penalty has been changed from $500,000 to $2.5 million.

These penalties will apply to new contracts, renewals, or modifications of existing contracts that are entered into on or after 9 November 2023.

If you would like us to review your standard templates in light of the new provisions, please contact us.

Author: Zaki Zeini, paralegal.

Licensing your copyright? Get it in writing!

Posted on by influence legal.

As an artist or content creator, licensing your artworks and content can be one of your most important and rewarding streams of income. As well as getting your work out there, ensuring that you are paid appropriately and your works are protected arejust as important.

Make sure your licence contracts are in writing.

Unfortunately, many artists and creators often make unwritten or informal arrangements when licensing their copyrighted works to others.  Whether this is based on the assumption that it’s unnecessary to enter into a contract, that it’s safer to work under an informal agreement, or simply trusting that the licensee will do the right thing, operating without expressly written terms can pose significant risks for artists and creators .

The recent case of Hardingham v RP Data Pty Ltd demonstrates just how easily issues can arise from informal or unwritten copyright licencing arrangements – especially if your works are being uploaded to third party websites.

Hardingham v RP Data – what was the issue?

Mr Hardingham is a professional photographer who provided photographs and floorplans to real estate agencies to be used in marketing campaigns for the agencies’ listed properties, including for listings on realestate.com.au, which had standard terms for agents. These terms include a broad licence of uploaded content.

However, these photographs and floorplans were then reproduced and uploaded by a third-party company, RP Data, under a separate sub-licensing agreement with realestate.com.au.

Mr Hardingham commenced court proceedings claiming that RP Data had infringed his copyright in his images and floorplans.

Well if Hardingham didn’t license the works to RP Data, they shouldn’t be able to use his works, right?

Unfortunately for Mr Hardingham, this was not the case.

While it may have been his initial intentions that the licence granted to the agencies was for house marketing purposes only, and that no sub-licence could be granted, the court took a different view.

As there was no formal written contract between Hardingham or his company and the agencies, the court relied on evidence surrounding the context and the commercial arrangements between each of the parties. The court said that these factors meant that realestate.com.au had a licence, and was able to grant a sub-licence to RP Data. This right was either:

  • inferred from the conduct of the parties’, or
  • implied into the agreements in order to give business efficacy to the agreements.

The lack of any formal or written licensing agreement between Mr Hardingham and the agencies was a crucial factor that allowed for the legal sub-licence of the works.

Get on the same page – literally!

Without a formal licensing agreement, you are putting yourself at the risk of your works or content being used or reproduced without your permission. As a result, you can incur significant financial loss by missing out on important licensing fees you would otherwise have negotiated for.

So, if you are an artist, creative or content creator and are planning to license your copyright works to others, you should always make sure you have the crucial terms of your licence arrangement set out in a written, signed contract.

If you’d like to put together a standard licence for your works, contact us.

Author: Blake Motbey, Associate