The government is handing regulators a faster way to punish unfair contract terms. For builders, the contracts in the firing line are the ones you use every day.

The crackdown on unfair contract terms is about to get faster and harder to ignore, and the contracts most builders use every day sit right in the middle of it.

On 29 June 2026, the Treasury review of Australia’s unfair contract terms regime was tabled in Parliament, and the government used the moment to announce it is going further. It will give the competition and corporate regulators, the ACCC and ASIC, the power to issue infringement notices for unfair contract terms. That is a faster enforcement tool that sits below a full court case, letting regulators act on breaches without launching lengthy proceedings. The review found the existing reforms have largely worked, and the government’s response was not to ease off but to add another lever.

For builders, trades and suppliers, the significance is simple. Including an unfair term in a standard form contract has been illegal since November 2023, with company penalties now up to $100 million. What changes now is enforcement. A regime that until recently relied on slow, expensive court action is being fitted with a quicker mechanism, and the contracts it targets are the subcontractor agreements, supply terms, trade credit arrangements and client building contracts that the residential construction industry runs on.

If you have a standard set of terms you hand to subbies or clients, and you have not reviewed them since 2023, this is the moment to do it.

What counts as an unfair contract term?

A term is unfair when three things are all true. It causes a significant imbalance in the rights and obligations of the two parties. It is not reasonably necessary to protect the legitimate interests of the party it benefits. And it would cause detriment, financial or otherwise, to the other party if it were applied or relied on.

All three have to be present. A term that is simply tough, or commercially one-sided in the way that normal negotiation produces, is not automatically unfair. The law is aimed at terms that load the deck in one direction without good reason and leave the other party worse off.

The legislation also sets out a list of the kinds of terms that can be unfair. Several of them will look familiar to anyone who has read a construction contract. A term that lets one party but not the other avoid or limit their obligations. A term that lets one party but not the other vary the contract, including changing fees or scope. A term that penalises one party but not the other for breaking or ending the contract. None of these are automatically unfair, but they are the clauses regulators look at first.

Why this lands on builders specifically

The trigger for the whole regime is the phrase “standard form contract.” That is the contract you draft once and reuse. The party on the other side gets it on a take it or leave it basis, with little or no real opportunity to negotiate the terms before signing.

That describes most of the paperwork in residential construction. The subcontractor agreement you issue to every trade. The supply terms a manufacturer hands you. The trade credit application you sign to open an account. The fixed contract you put in front of a client. Where one side wrote it and the other side either signs it or walks, you are almost certainly looking at a standard form contract.

The law presumes a contract is standard form if one party says it is, unless the other party can prove otherwise. And the 2023 changes closed a common escape route. Letting the other party make minor or insubstantial changes, or pick a term from a menu of options you set, does not stop a contract from being standard form. Builders and trades who have argued “but they could have negotiated” are finding that argument no longer works when the only thing on offer was a tweak around the edges.

The expansion most operators do not know about

Here is the change that matters most, and the one almost nobody in the industry has clocked.

The protections now apply to any contract where at least one party is a small business, defined as a business that employs fewer than 100 people, or has an annual turnover of less than $10 million for the previous year. Either limb is enough.

Before 2023, the threshold was far narrower. It only caught businesses with 20 or fewer employees, and only where the contract price sat under $300,000, or under $1 million for contracts running more than a year. The price cap is gone entirely for general contracts, and the headcount limit jumped from 20 to 100.

Run those numbers against the residential sector and the conclusion is obvious. The overwhelming majority of Australian building businesses, trades and suppliers sit under 100 employees and under $10 million in turnover. That cuts two ways. It means most builders are now protected when they sign someone else’s one-sided standard terms. It also means most builders are now the party on the hook when their own standard contracts contain an unfair term against a small subbie or supplier.

You can be the protected party in your supplier’s contract and the exposed party in your subcontractor’s contract on the same afternoon.

The penalties are no longer theoretical

Under the old regime, the worst case for including an unfair term was that a court might declare it void if someone challenged it. There was no penalty for putting it in the contract. Businesses had little reason to clean up their terms, because the only downside was losing a clause they may never have needed to enforce.

The 2023 reforms changed that completely. Including an unfair term in a standard form contract, or applying or relying on one, is now a contravention that carries civil penalties. For an individual, the maximum is in the millions per contravention. For a company, the first limb of the maximum penalty was $50 million, and in March 2026 it doubled to $100 million, alongside alternative measures based on three times the benefit gained or a percentage of turnover.

Those headline figures are maximums aimed at the worst systemic conduct, not the fine a small builder would expect for one clumsy clause. But the direction is unmistakable. Regulators and Parliament have moved unfair contract terms from a low-stakes technicality to a penalty-backed prohibition, and the regulator has made it an enforcement priority every year since the reforms began.

What enforcement actually looks like

The regulators have not been idle, and the early cases tell you which terms draw attention.

In June 2025 the ACCC accepted an enforceable undertaking from Mable Technologies, an online support services platform, over terms that included a penalty fee of $5,000 imposed in certain circumstances, an arrangement that automatically deemed a service log approved unless disputed within 24 hours, and terms letting the company change fees and conditions without reasonable notice. In March 2026 a further undertaking from Aidacare, a healthcare equipment provider, covered terms that imposed short timeframes for reporting defects, restricted the customer’s right to reject faulty goods, and broadly limited the supplier’s liability. On the financial side, ASIC has taken the operator of CashnGo to the Federal Court over alleged unfair terms as part of a broader case, with civil penalties being sought and a hearing listed for August 2026.

Read those terms again with a construction contract in mind. Penalty clauses. Deemed acceptance after a short window. The right to change pricing without notice. Tight defect reporting windows. Broad liability carve outs. These are not exotic. They appear in subcontractor and supply agreements across the country, often copied from an old template nobody has reviewed in years.

What the review found, and what happens next

The review’s verdict was that the 2022 reforms have been broadly successful. Civil penalties have improved deterrence, more businesses are reviewing and amending their standard form contracts, and the expanded thresholds have brought genuinely vulnerable small businesses inside the protections. Contacts and reports to the regulators about unfair terms have risen since the reforms began, which Treasury reads as a mix of more awareness and more confidence to challenge bad clauses.

The infringement notice powers the government has committed to are the practical upshot. Until now, if the ACCC or ASIC wanted to act on an unfair term, the main options were a negotiated undertaking or a full court case. Infringement notices sit in between: a faster, lower level response for breaches that do not warrant litigation, backed by set penalty amounts. The review recommended the regime otherwise be left stable and reviewed again in five years. For builders, the takeaway is not that the law is changing shape. It is that the law already on the books is about to be easier for regulators to enforce.

What to actually do about it

This is not a reason to panic, and it is not a reason to lawyer up over every clause. It is a reason to do one practical thing you have probably been putting off: read your own standard terms with fresh eyes.

Pull out the documents you reuse. Your subcontractor agreement. Your supply or trade terms. Your standard client contract. Then look for the clauses that only run one way. Can you vary the price or the scope, but the other side cannot? Can you terminate freely while they are locked in or penalised for leaving? Have you limited your liability broadly while accepting none of theirs? Are you imposing deadlines or deemed acceptances that the other party has no realistic way to meet or dispute?

A clause that runs one way is not automatically unfair. Plenty of one sided terms are reasonably necessary to protect a legitimate interest, and that is a defence built into the test. But every one way clause is worth a second look, because that is exactly where the imbalance, the lack of necessity and the detriment can line up into a term that crosses the line.

The same discipline protects you in the other direction. When a head contractor or supplier hands you their standard terms, you are now very likely a protected small business. A term that would have been simply unfortunate a few years ago may now be unenforceable, and naming it as a potential unfair term is a genuine lever in a dispute. Lawyers and ombudsman services report that businesses move quickly to fix a clause once it is identified as a possible unfair term, precisely because the penalty regime gives the point real weight.

The builders who handle this well will not be the ones who panic. They will be the ones who treat their standard contracts as living documents, review them every year or two, and make sure the terms they issue would survive the three part test if anyone ever asked. In a market where margins are tight and disputes are expensive, a clean contract is not red tape. It is one of the cheapest forms of protection you can buy.

Frequently asked questions

Are unfair contract terms illegal in Australia?

Yes. Since 9 November 2023, including an unfair term in a standard form contract with a consumer or small business is a contravention of the law, and it carries civil penalties. Including the term is itself the breach. You do not have to enforce or rely on it.

Do unfair contract term laws apply to subcontractor agreements?

They apply where the agreement is a standard form contract and at least one party is a small business, meaning fewer than 100 employees or less than $10 million in annual turnover. Most subcontractor agreements in residential construction meet both tests, so yes, they are commonly covered.

What makes a contract term unfair?

A term is unfair when it causes a significant imbalance in the parties’ rights, is not reasonably necessary to protect the legitimate interests of the party it benefits, and would cause detriment to the other party if applied or relied on. All three must be present.

What is the penalty for an unfair contract term?

For a company, the first limb of the maximum penalty was doubled to $100 million in March 2026, with alternative measures based on the benefit gained or company turnover. For an individual the maximum runs into the millions per contravention. These are maximums aimed at serious systemic conduct.

Which businesses are protected by the unfair contract terms regime?

Consumers, and small businesses that employ fewer than 100 people or have an annual turnover under $10 million for the previous income year. The pre-2023 limits of 20 employees and a contract price cap no longer apply to general contracts.

For more practical guidance on protecting your building business, explore The Good Builder website or subscribe to our weekly newsletter. And listen to The Good Builder Podcast wherever you get your podcasts.

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This article is intended for general information purposes only and does not constitute legal, financial, or professional advice. Laws, regulations, and industry requirements vary by state and territory and change over time. Builders and trades professionals should seek independent advice relevant to their specific circumstances before making business, legal, or financial decisions.

Author: TGB Editorial