Unfair contract terms now attract penalties: what to review

From 9 November 2023, unfair terms in standard form contracts can attract penalties. Review patient agreements, deposits, packages and memberships.

9 November 202311 min read

From 9 November 2023, it became unlawful to propose, use or rely on an unfair term in a standard form contract with a consumer or a small business, and courts can now impose penalties for doing so. Before that date, a court could only declare an unfair term void. There was no fine attached.

For health practices this matters more than it first appears. Treatment agreements, deposit and cancellation terms, payment plan terms, membership plans and online booking conditions are almost always standard form contracts. So are many of the contracts your practice signs with software providers, equipment suppliers and agencies, where you may be the small business on the other side.

Note on penalties: when this change started, the maximum corporate penalty was the greatest of $50 million, three times the benefit, or 30% of adjusted turnover. The fixed amount was doubled to $100 million for conduct on or after 28 March 2026. The unfair contract terms rules themselves have not been replaced. Separate new rules for subscription contracts are due to start on 1 July 2027, which we cover in our article on the Unfair Trading Practices Act 2026.

What changed

The changes came from Schedule 2 of the Treasury Laws Amendment (More Competition, Better Prices) Act 2022 (Act No. 54 of 2022). The Act received Royal Assent on 9 November 2022, and Schedule 2 commenced 12 months later, on 9 November 2023. The ACCC enforces these rules under the Australian Consumer Law (ACL), with ASIC enforcing equivalent rules for financial services.

The key changes were:

New contraventions. A person contravenes the law if they make a standard form consumer or small business contract and proposed an unfair term in it. A person also contravenes the law if they apply or rely on, or purport to apply or rely on, an unfair term in such a contract.
Each term counts. Proposing an unfair term is a separate contravention for each unfair term proposed.
Penalties. For businesses, the maximum at the time was the greatest of $50 million, three times the value of the benefit reasonably attributable to the conduct, or 30% of adjusted turnover during the breach period if the benefit cannot be determined. The maximum for an individual is $2.5 million.
Wider small business coverage. A small business contract now covers a party that employs fewer than 100 people, or has turnover of less than $10 million in its last income year. The contract value threshold was removed.
Clearer definition of standard form contract. Courts must now consider whether a party has made other contracts in the same or substantially similar terms, and how many. A contract can still be standard form even if the other party could negotiate minor changes or choose from a range of options set by the business.
Stronger court orders. Courts can make orders to void, vary or refuse to enforce contracts, and on the regulator’s application can make orders that stop similar terms being used in future contracts, even with people who were not part of the case.

What did not change is the test itself. As ACCC Deputy Chair Mick Keogh put it, “The test for whether a contract term is unfair has not changed.” What changed is that getting it wrong now carries penalties.

Who it applies to

The rules apply to standard form contracts that are either consumer contracts or small business contracts. For a practice, that usually means two directions.

Your contracts with patients

Patients are generally consumers. If you present patients with terms on a “take it or leave it” basis, such as a treatment consent and financial agreement, booking terms, a membership agreement or a payment plan, those terms are likely to be standard form contracts.

Your contracts as a small business

Most practices employ fewer than 100 people or turn over less than $10 million. That means the contracts you sign with suppliers, such as practice management software, phone systems, equipment leases and marketing agencies, can also be covered. Casual staff are only counted if they are employed on a regular and systematic basis, and part-time staff count as a fraction of a full-time equivalent.

Timing

The changes apply to standard form contracts made or renewed on or after 9 November 2023, and to terms varied or added on or after that date. The ACCC notes that where a term is varied or added on or after 9 November 2023, the rules for deciding whether the contract is standard form apply to the whole contract. If your patient terms are accepted fresh at each booking or each treatment plan, every new acceptance is likely to be a new contract.

What the rules require

Do not propose unfair terms

Simply including an unfair term in your standard terms can be a contravention, even if you never enforce it. This is the biggest practical shift. Old templates with aggressive clauses that “we never actually use” are now a risk in themselves.

Do not apply or rely on unfair terms

Enforcing an unfair term, or telling a patient you are entitled to rely on it, is a separate contravention.

Know what the rules do not cover

The unfair contract terms provisions do not apply to a term to the extent that it defines the main subject matter of the contract, sets the upfront price payable, or is required or expressly permitted by law. So the price of a treatment itself is not tested for fairness under these rules. But terms about what happens if a patient cancels, reschedules, changes their mind or has a complication are not the upfront price, and can be tested.

Follow the ACCC’s review tips

When it urged businesses to review contracts before the change, the ACCC suggested:

Consider both points of view. If a term seems necessary to protect your legitimate interests, look at it from the patient’s side too.
Include counter-balancing terms. If you can change the service, can the other party exit without penalty when that happens?
Avoid broad terms. Terms should only be as broad as reasonably necessary to protect your legitimate interests.
Meet your ACL obligations. Do not include terms that try to limit consumer guarantee rights or disclaim representations made outside the contract.
Be clear. Use clear and simple language.
Be transparent. Draw key terms to the customer’s attention during sign-up and any renewal.

What it means for your marketing

Contracts may not feel like marketing, but in a modern practice your terms are often presented through your marketing channels: the booking engine, the checkout page, the membership sign-up and the email that confirms a package. That is where patients first see them.

Website and online booking

If your booking flow requires patients to tick “I agree to the terms“, those terms are a standard form contract. Review them for clauses that are broader than you need, such as a right to change the practitioner, time or inclusions without allowing the patient to cancel without penalty. Make sure cancellation and deposit terms are shown clearly before the patient commits, not only in a linked document.

Treatment packages and payment plans

Packages and plans often include terms on expiry, transfer, refunds and what happens if treatment is stopped for clinical reasons. Terms that let the practice keep the full amount in all circumstances, or that let the practice change inclusions while the patient stays locked in, deserve a careful look. Remember that the package price itself is excluded, but the conditions around it are not.

Memberships and subscriptions

Skin, wellness and dental membership plans are classic standard form contracts. Look at auto-renewal, notice periods, price increase rights and exit fees. Unilateral variation rights without a matching right to exit are a common concern under the ACCC’s “counter-balancing terms” tip. From 1 July 2027, additional subscription disclosure and exit rules are due to apply under separate legislation.

Paid ads and promotions

Promotions often come with fine print. If an ad promises a deal but the terms behind it allow the practice to withdraw or change the offer after the patient has paid a deposit, that is both a contract fairness question and a potential misleading advertising issue.

Email and SMS

If you change your terms, tell patients clearly. The ACCC’s transparency tip applies to renewals as well as sign-up. A variation may also bring an older contract under the new rules.

In-clinic paperwork

Paper financial consent forms and cancellation policies at reception are standard form contracts too. They should match what is on your website.

Common mistakes we see

Copied templates. Terms adapted from another industry, or another clinic, with clauses that do not fit how the practice actually operates.
Blanket non-refundable deposits. Deposits described as non-refundable in every circumstance, including when the practice cancels or a clinician decides the treatment is not suitable.
One-way variation clauses. “We may change these terms at any time” with no right for the patient to leave without penalty.
Disclaimers that override what was said. Clauses stating that nothing said before signing forms part of the agreement, which the ACCC flags as a concern.
Consumer guarantee limits. Terms that try to exclude remedies the ACL gives consumers.
Forgetting the other direction. Signing supplier contracts with automatic rollovers and broad termination fees without realising small business protections may apply to you.

A practical checklist

Collect every set of standard terms you give patients: booking terms, financial consent, deposit and cancellation policy, packages, payment plans, memberships, gift vouchers.
For each term that favours the practice, write down the legitimate interest it protects. If you cannot, consider removing it.
Narrow broad clauses so they go no further than reasonably necessary.
Add counter-balancing rights where the practice can change the service, practitioner, price or inclusions.
Remove any wording that tries to limit consumer guarantees or exclude what staff have told patients.
Check that deposit and cancellation terms deal fairly with practice-initiated cancellations and clinical unsuitability.
Show key terms clearly in the booking or sign-up flow, before the patient commits.
Make sure online, paper and verbal versions of your terms match.
Keep a dated record of each version of your terms and when it was introduced.
Review your own supplier contracts, including your agency agreement, for rollovers and one-sided terms.
Get independent legal advice on any term you are unsure about.

How this fits with other rules

Australian Consumer Law, misleading conduct. The unfair contract terms rules sit alongside the general ACL bans on misleading conduct. A term can be unfair, and the way it is advertised can be misleading, at the same time. The ACL maximum penalties that apply to these contraventions were raised in November 2022 and the fixed amount was doubled in March 2026.

Unfair Trading Practices Act 2026. New ACL rules on unfair trading practices, drip pricing and subscription contracts are due to start on 1 July 2027. Subscription-style memberships will need specific disclosures and an easy exit method from then.

National Law and Ahpra. Ahpra’s advertising rules cover how you advertise a regulated health service. They do not replace consumer contract law, and consumer law does not replace your professional obligations. Where the same document does both jobs (for example, a consent form that also sets out fees and cancellation terms), keep the contract terms consistent with what you tell patients clinically.

Frequently asked questions

Are non-refundable deposits now illegal?

Not automatically. The question is whether a particular term is unfair, and the test for that has not changed. A deposit term that goes no further than reasonably necessary to protect a legitimate interest, and is clearly disclosed, is treated very differently from one that lets the practice keep money in every circumstance.

Does the law apply to the price of my treatments?

A term that sets the upfront price payable is excluded from the unfair contract terms rules. Terms about fees that arise later, such as cancellation fees or charges for changes, are not the upfront price and can be tested.

Our terms were written years ago. Do the changes apply?

The changes apply to contracts made or renewed on or after 9 November 2023, and to terms varied or added on or after that date. In most practices, patients accept terms fresh for each booking or plan, so older templates are likely being used in new contracts.

Can my practice rely on these protections against suppliers?

Possibly. A small business contract covers a party that employs fewer than 100 people or has turnover under $10 million, where the contract is in standard form. Many practices meet that threshold.

What happens if a court finds a term unfair?

The court can declare the term void, and can make orders to vary or refuse to enforce contracts, redress loss, and on the regulator’s application stop similar terms being used in other contracts. Penalties can also be imposed for proposing or relying on the term.

Need a hand?

Your terms are often the last thing a patient reads before they book, and the first thing they read when something goes wrong. Our compliant content team can make booking, package and membership pages clear and consistent with your terms, and our clinic websites service can rebuild booking flows so key terms are shown before patients commit. We do not draft legal contracts, so we will work alongside your lawyer on the terms themselves.

This article is general guidance based on the published rules, not legal advice. Final responsibility for your patient terms and advertising sits with your practice and, for health advertising, the registered practitioner, and complex situations may need independent legal advice.