Why Unilateral Variation Clauses in Consumer Contracts are Unfair

Abstract

Economic and behavioural analyses of law provide a means of exploring the reasons why unilateral variation clauses are likely to be unfair. The Australian Consumer Law includes a prohibition on unfair contract terms but, somewhat surprisingly, energy suppliers are permitted still to include such clauses in their standard form consumer contracts. We argue that terms allowing consumers to 'opt out' of the contract in the face of burdensome changes do not provide sufficient protection for the interests of consumers against the potential misuse of the variation power by suppliers. This is because consumers may have few alternatives available to them at the time or may consider that the costs ass..