The following examples contain some small business contract terms that may raise concerns under the unfair contract terms law.

1. EXAMPLES
UNFAIR CONTRACT TERMS

2. UNFAIR CONTRACT TERMS
EXAMPLE 1: LENDER’S LEGITIMATE INTEREST
▸ A small business seeks finance which is secured by a
mortgage over the home of the business.
▸ The contract contains a term under which a default by the
small business borrower results in the small business being
liable to pay large and excessive default fees. This may result
in a transfer of equity from the small business to the lender.
▸ This term is likely to be unfair as it imposes an unfair cost on
the small business that appears to exceed the amount
required to protect the lender's legitimate interests.

3. UNFAIR CONTRACT TERMS
EXAMPLE 2: AUTOMATIC ROLLOVER
▸ A small business enters into a fixed-term lease. At the end of the
lease term, unless it elects to purchase the goods or has made
arrangements to return the goods, the small business is
automatically entered into another fixed-term lease. To exit this
new lease contract, early termination fees apply.
▸ The term is likely to raise concerns under the unfair contract terms
law as it allows the lessor to automatically renew the contract
without the small business giving its consent.
▸ The term would be less likely to raise concerns if the small business
were able to immediately end the new lease without consequence.

4. UNFAIR CONTRACT TERMS
EXAMPLE 3: RIGHT TO UNILATERALLY VARY THE CONTRACT
▸ A small business enters into a loan contract. Under a term of the
contract, the lender has the right to vary any term or condition of the
contract, including interest or fees, if notice is given in writing. The
small business does not have the right to end the contract, even if the
lender increases its fees significantly (e.g. by 20%).
▸ The term is likely to raise concerns under the unfair contract terms law
as it allows the lender to unilaterally increase the price.
▸ If an additional term were included stating that, if the price or services
change, the small business is able to immediately cancel the contract
without consequence, the original term would be less likely to raise
concerns.