The ACCC and the ASIC clearly state that some terms are unfair in contracts. The right to vary a contract unilaterally is considered an unfair term. The right to unilaterally vary a contract means that only one of the party would be able to make changes to the provisions of a contract as they see fit. In addition to this some of the other terms that are considered to be problematic are that of the early termination fees issues with respect to contract termination, the limited or no liability clause, the right to terminate agreement with no cause etc.
According to the section 20 (1), a person in trade should not engage in a conduct that is considered as being unconscionable. The case based on which unconscionable contract is understood is that of the Commercial Bank of Australia v Amadio (1983) 151 CLR. Now in this case, three questions were asked to understand if there was unconscionable conduct.
Primarily, it is to be understood if one of the parties suffers a disadvantage compared to the other party in the contract and if this disadvantage is to such an extent that it would cause considerable inequality between them. If such is the case, then it could be said that the party which has an advantage has acted in unconscionable conduct. Secondly, the question brought under consideration is that of whether the party that is stronger is aware of the special disadvantage that is afforded to them because of the unconscionable actions in the contract and thirdly, knowing that they are getting a benefit, should the stronger party enter into a contract with the weaker party. Furthermore, the conduct in question could be held unconscionable even if there is no proper victim at hand. The Australian Competition and Consumer Commission v Lux Distributors Pty Ltd (2013) ATPR 42-429, suggests that the action must be found to be unfair and unreasonable and in most situations would also hold some moral pejorative.