Commercial Property Blog

Legal Tips and Traps

It’s just not fair! The effects of the Unfair Contract Regime

Posted by Andrew Grima on 6 Oct 2017

Last year the Unfair Contract Regime (Unfair Regime) was introduced to apply to standard form Contracts.

I do not wish to go into detail rehashing the ins and outs of the legislative regime - many of you can do a Google search and find out this for yourself – or read our articles on this topic.

But in my opinion, the Unfair Regime has far reaching effects - probably more than some of you realise.

I spend lot of my time reviewing leases on behalf of my tenant clients - whether they be franchisors, small businesses, national companies or subsidiaries of multinationals.

One of the thresholds for the Unfair Regime to apply to a regime is if one of the parties has less than 20 employees. This may apply to either a landlord or tenant in a leasing transaction. There are many instances of this test applying - for example, the landlord may be a small private investor, a land holding company, a superannuation fund or a property trust. Such landlords may have less than 20 employees. On the other side, the tenant may be a small business - drive through any industrial estate across your city, or take a look at your office block or local shopping village!

In my view, the Unfair Regime will, in time, become a useful tool for people wanting to avoid certain clauses in a Lease on the basis of them being unfair. There is limited commentary and judicial review on this point at present and on the regime generally in so far as it applies to leases. Time will only tell as to whether I am correct in my assumption.

However, if you are a landlord and you’re relying on an older style lease document, you should consider reviewing the same to see whether certain clauses are now out-of-date and would fall under the ambit of the Unfair Regime. 

I am happy to assist you in this review. If you are a tenant, I am also happy to assist you and advise you in relation to your current lease negotiations to ensure your lease is fair: