Unfair contract terms: how the new regime will affect the sports industry

By Martin Ross and Mark Lebbon

Amendments to Australia’s unfair contract terms (UCT) regime commenced on 10 November. These amendments significantly expanded the reach of the laws and introduced significant penalties for non-compliance.

The UCT regime is contained in the Australian Consumer Law (ACL) provisions of the Competition and Consumer Act 2010 (Cth)^[1] and applies to all industries, including the sports industry. Participants in the sports industry need to ensure that any standard form contracts they use comply with the provision of the UCT regime; this may include business as usual contracts but also other contracts more specific to the sports industry, such as terms of entry, liability waivers and ticketing conditions.

Key changes

The key changes to the UCT regime under the ACL include:

Broader application to cover more contracts

From 10 November 2023, the UCT regime applies to contracts for the supply of goods or services or a sale or grant of an interest in land that are standard-form contracts where:

• (small business contract) at least one party has:
  • fewer than 100 employees (previously fewer than 20 employees); or
  • less than $10 million in annual turnover during the previous financial year (this is a new qualifying criteria); or
• (consumer contract) at least one of the parties is an individual whose acquisition of what is being supplied is wholly or predominantly an acquisition for personal, domestic or household use or consumption.

The changes to what is considered a small business contract significantly expand the scope of the UCT regime to include an even broader range of contracts.

Introduction of significant civil penalties

Significant penalties for contraventions of the UCT regime now apply.

The maximum penalty for corporations for a contravention is the greater of:

• $50 million;
• three times the amount of the benefit obtained and reasonably attributable to the breach, if that can be determined; and
• if the value of the benefit cannot be determined, 30% of the corporation’s adjusted turnover during the breach turnover period.

The maximum penalty for an individual is $2.5 million.

Unfair terms and the sports industry

The UCT regime will apply to numerous contracts entered into in the sports industry.

Case law and ACCC enforcement action have highlighted numerous types of clauses that can be unfair. These include clauses providing for unilateral variations (including price variation), automatic renewal, termination for convenience, termination payments, broad and unlimited liability, excessive liability limitation or exclusion, unilateral determination and entire agreement.

A review undertaken in Queensland focused specifically on terms that may be unfair in the terms of entry of sporting stadia. ^[2] That review highlighted a number of clauses that would likely be unfair under the ACL.

Confiscation of recording equipment

The following two provisions were included in a stadium’s terms and conditions, primarily for the purpose of protecting intellectual property rights and preventing unauthorised recordings:

Items may be confiscated at the discretion of management as per the ‘Confiscated Items Policy’.

Any recordings or recording devices which are confiscated will become the property of the owner.

The ‘Confiscated Items Policy’ gave stadium management the right to confiscate property without returning it or compensating the consumer. While protecting intellectual property rights may have been a legitimate interest of stadium management, confiscating and taking ownership of recording devices such as phones and non-broadcast cameras was not seen as reasonably necessary to protect those interests.

Liability exclusion

The following provision sought to limit liability for any loss or damage:

Entrants voluntarily assume all risk of damage and loss, personal injury (fatal and non-fatal)… whatsoever and however arising (including by negligence).

Terms that seek to limit liability for any loss or damage, even in the event of negligence of the stadium or its employees, are likely to be unfair. This is consistent with recent cases concerning UCT.

What you have to do: our key tips

All organisations involved in the sporting industry, whether large or small, should take steps to ensure they comply with the amended UCT regime. This will include:

• considering how template documents (both consumer facing and business to business) are used and whether or not they are used in a manner that would make them standard form contracts and therefore potentially subject to the UCT regime;
• assessing whether their standard form contracts comply with the UCT regime; and
• as with other areas of competition law (such as the cartel and misleading and deceptive conduct prohibitions), including the UCT regime as a key part of staff and executive training and risk management decisions.

Hall & Wilcox has significant experience working with businesses to minimise regulatory risk under the UCT regime of the Australian Consumer Law. Please contact Martin Ross or Mark Lebbon if you require assistance with unfair contract compliance.

Listen to our podcast, where our experts outline the key changes to the UCT regime, or check out our Unfair contract terms regime resource centre.

[1] The unfair contract terms regime in respect of financial products and services is set out in the Australian Securities and Investments Commission Act 2001 (Cth).
[2] The review is extracted in the ‘Unfair contract terms: A guide for businesses and legal practitioners’ published by the Commonwealth of Australia in March 2016.