# LAW-0001 — Unfair contract term (subscription fee variation)

## (a) Classification

Classification: unfair

## (b) Controlling statute and section

The test for whether a term is unfair is set out in **section 24** of the **Australian Consumer Law** (Schedule 2 to the *Competition and Consumer Act 2010* (Cth)).

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## Working

The hypothetical assumes a **consumer contract** and a **standard-form contract** to which the unfair contract terms regime in Part 2-3 of the Australian Consumer Law applies (see, for example, sections 23, 26 and 27 of the ACL).

### Section 24 test

Under section 24 of the Australian Consumer Law, a term of a consumer contract (or small business contract) is **unfair** only if **all** of the following are satisfied:

1. the term would cause a **significant imbalance** in the parties’ rights and obligations arising under the contract;
2. the term is **not reasonably necessary** to protect the **legitimate interests** of the party advantaged by the term; and
3. the term would cause **detriment** (financial or otherwise) to a party if it were applied or relied on.

In deciding whether a term is unfair, the court must also take into account the extent to which the term is transparent, and the contract as a whole (section 24(2)). Section 25 lists kinds of terms that may be unfair (illustrative, not exhaustive).

If a term is unfair, section 23 makes it void.

### Application to the clause

The clause gives the supplier a **unilateral** power to increase the monthly fee **at any time**, in **any amount**, at **sole discretion**, and **without notice**, while denying the consumer **any right to terminate** if the fee is varied.

Against the section 24 limbs:

- **Significant imbalance:** The consumer bears open-ended price risk and ongoing payment obligations; the supplier bears none of the corresponding constraints (no cap, no notice, no need for justification). Denying termination when the price changes removes the consumer’s ordinary contractual protection against unacceptable changes. That combination strongly favours a finding of significant imbalance.

- **Reasonably necessary / legitimate interests:** A supplier may have legitimate interests in adjusting prices for ongoing services (for example, reflecting cost changes), but those interests are typically protected by narrower variation mechanisms—reasonable notice, limits on frequency or magnitude, objective criteria, or a **right for the consumer to exit** without penalty if they do not accept the new price. A term that permits unlimited, immediate, undisclosed increases **and** forbids exit goes well beyond what is reasonably necessary for those interests.

- **Detriment:** If relied on, the consumer could be required to pay an arbitrarily higher fee indefinitely or face breach/enforcement consequences, with no practical ability to refuse the new price by leaving the contract. That is clear financial (and practical) detriment.

On balance, the clause satisfies the section 24 test and is **unfair**. (If found unfair, it would be void under section 23.)

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## Approach note

Closed-book analysis using the stated assumptions (consumer + standard-form contract). Classification turns on the three-limb unfairness test in ACL s 24, applied to the combined effect of unlimited unilateral fee variation without notice and the express denial of a termination right.