Unfair contract terms – the what, why and how

Mario Dreosti , 3 June 2024

The ACA has launched a valuable new resource to assist members with their understanding of contracts. Mario Dreosti discusses the longstanding challenges of unfair contracts and negotiation, the recent changes to the Unfair Contracts Act, and the genesis of the new ACA discussion paper.

To start with, a broad generalisation – architects don’t like contracts.

Sure, there are some of us who end up spending more time feeling like a lawyer than a designer, and there is a significant portion of our work that we call contract administration, which relates to our role in the delivery of the building contract. But I suggest that most of us do not embrace or enjoy the details of a written contract.

I use an anecdotal example to reinforce this position. I recently attended an event that included a question and answer session with an invited lawyer about the fact that a suite of government work was seeing architects, to their surprise, novated to various building contractors. After a series of questions and duly considered responses by the lawyer, he looked somewhat quizzically at the audience and said:

“Did any of you read the contract that came with the tender documents?

Because this is what it said…”

The challenges of contracts

Perhaps it is this aversion to the reading of contracts that has seen us evolve into the recipients of so many heavily modified and bespoke contracts for the delivery of our services. Perhaps by not reading them over a period of years the modifications have steadily grown to a point where sometimes they match the pages of the standard contract itself.

In many other instances of daily life, the person or entity delivering a service or product gets to define the terms under which they will do that. In our industry it is typically quite the opposite. In our industry we are typically advised the scope of work required and the contract terms under which this will be delivered. When we do cast aside our yellow trace and read the contract terms, we often recoil with despairing questions such as:

“Is that even enforceable?”

“Can I be insured for that?”

“Are they allowed to do that?”

Sometimes there is just a deep sense that the one-sided terms of an amended contract are simply ‘unfair’.

The problem is that we are not lawyers, and we don’t have the answers to most of those questions. While many of us have access to contract review through our insurance providers, this review is focused on answering one of these queries and sometimes leaves us in a position where we have received advice but are still not able to influence the contract – and still be engaged.

Changes to Unfair Contracts Act

In this context, the recent changes to the Unfair Contracts Act are very important to the majority of architectural practices. These changes took effect in November 2023 and mean that businesses under 100 people or less than $10 million turnover are now covered by the Act.

Since November 2023, there has been the opportunity for a party to a contract to say “that is unfair” and for that claim to be supported in a court of law.

Once again though, we are not lawyers so we are not aware of the case law that will start to evolve around adjudication of unfair contracts, and at this early stage, there is limited case law anyway.

New Unfair Contract Terms Discussion Paper

All of the above is why the ACA SA Committee decided to engage a recognised contract expert to provide a resource for our members, which helps us to answer some of those questions in the context of the Unfair Contracts Act.

Phillip Greenham is recognised by a wide variety of eminent institutions, publications and colleagues as one of Australia’s foremost construction lawyers. He has provided an experience- and opinion-based review of many of the typical amended terms that we architects see across multiple contracts.

The resource is not intended as an article to read and become a contract law expert, nor is it intended as legal or insurance advice for specific individual situations.

The resource is intended as a relatively comprehensive reference point to provide some additional context and advice around where a typical amended term is enforceable, particularly in the context of Unfair Contracts; where it is likely to be insurable under typical policies; and therefore what level of real alarm it should cause.

The resource will assist us non-lawyer contract recipients to form a view as to whether we need to talk further for specific legal or insurance advice or whether we can make our own commercial judgement.

If we do make our own commercial judgement, there is also advice around some practical ways of improving the wording of typical terms.

The commercial reality for most architects is that until there is a plethora of supportive case law, the ability to have clauses completely deleted or significantly amended is slim, and so practical advice around small and potentially achievable wording changes is another valuable element of the resource.

We hope that the majority of small business members who do not have inhouse counsel and who will fall into the remit of the Unfair Contracts Act find this a valuable reference point to first enlighten them, and then refer as they navigate future terms.


Download the Unfair Contract Terms Discussion Paper today!!


Mario Dreosti is the ACA SA Vice-President and the managing director at Brown Falconer, working across Australia from studios in SA and WA. Long-term client relationships and a history of contribution to industry representation and government advisory roles have led to Mario’s particular expertise in coordinating teams and managing complex outcomes across a broad range of project sectors. Along with his current role at the ACA, Mario is a Past President of the Australian Institute of Architects, SA Chapter.