Unfair Contract Terms

Key Pain Points & Issues

Approaching Implementation

29838794_1

King & Wood Mallesons / www.kwm.com 2

Katherine Forrest

Katherine Forrest is a

partner at King & Wood

Mallesons in the Banking &

Finance team

Simone Baxter

Simone Baxter is the

Practice Leader of the

RAMS Legal Team at

Westpac

Suanne Russell

Suanne Russell is the

Practice leader of the

Business Banking

Team at Westpac

King & Wood Mallesons / www.kwm.com

Unfair Contract Terms

3

Quick refresher: A term is unfair where -

Significant imbalance in rights and obligations

Not reasonably necessary to protect legitimate business interest

Transparency must be taken into account

UCT rules do not apply to main subject matter or upfront price

King & Wood Mallesons / www.kwm.com

Pain points & Issues

4

With only 2 months to go key issues that you could be facing:-

• Finding the right balance

• Obligations to act reasonably, in good faith etc

Possible solutions taking into account operations, systems,

training and commercial interests

Getting it done on time

• Capturing rollovers

King & Wood Mallesons / www.kwm.com

Instant termination

5

Company may, at any time, terminate this agreement by

notice to Distributor (whether or not Distributor is in default

under this agreement).

Some context:

Agreement provides right to distribute products

Distributor has financial obligations to Company in

separate arrangements

King & Wood Mallesons / www.kwm.com

Variation of Manual

6

You acknowledge and agree that:

a) the Franchise Manual forms part of this Agreement

b) you must comply with and follow all requirements, rules,

policies, procedures and other requirements set out in

the Franchise Manual

c) a breach of the Franchise Manual is a breach of this

Agreement

d) We may vary the Franchise Manual from time to time

King & Wood Mallesons / www.kwm.com

Variation

7

Example 1

The Lender may vary one or more of:

• the interest rate or discount rate (yield rate) or base rate and any margins;

• the default margin;

• the frequency with which interest is debited; and

• the existing fees and charges and their frequency and time for payment,

• and it may introduce new fees, margins and charges.

All of these changes can be made without your consent. The Lender will notify you of the changes as follows:

• any change in the interest rate except where the interest rate is linked to an external reference rate ,or any margin, or in

the amount of existing fees or charges and their frequency and time for payment – the Lender will notify you either by

advertisement in a national newspaper or in writing or any other method allowed under any applicable law or code on or

before the day the change takes effect; or

• any change to the frequency with which interest is debited, or the introduction of any new fee, margin or charge (other

than a government charge) – the Lender will provide written notice to you at least 30 days before the change takes effect,

except that such notice is not required where you cannot reasonably be located.

Example 2

Supplier may vary these terms and conditions at any time (including the introduction of new terms and conditions). Supplier may

do this at any time but must (where the change is not required to comply with relevant law) give you 30 days notice by email or

other electronic communication) of any change that is materially adverse to your interests.

King & Wood Mallesons / www.kwm.com

Inertia Term Extensions

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You must give us not less than 120 days prior written notice of your

intention to terminate the Services at the end of the Term.

If you fail to give notice required under the above clause, or if you

give that notice but have not complied with the Termination

Procedures at the end the Term, then the term of this Agreement

will be automatically extended for a further period of 12 months.

King & Wood Mallesons / www.kwm.com

Limitation of liability

9

Except to the extent required by law, Contractor and its related companies will not be

liable to you in contract, tort or otherwise (whether negligent or not), for any loss or

damage of any kind at all (including consequential loss or damage and including

business interruption) caused directly or indirectly out of:

a) the provision or use of, or inability to use the Service or any part of it;

b) any defect, malfunction, default, error, omission, loss, delay or breakdown in the

Service;

c) any suspension of the Service;

d) any loss suffered by you arising directly or indirectly out of, or in connection with,

your use of the Service (including but not limited to, the fault or negligence of the

Contractor relating to the use of, or maintenance of, the Service or otherwise);

e) any error or omission made by you with respect to the use of the Service and the

transmission of instructions relating to the Service; or

f) any other act, matter, thing or condition beyond the control of the Contractor.

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Questions?