17.78 Copyright owners generally oppose limitations on contracting out because this challenges freedom of contract, with possible unintended consequences. Contractual terms are said to provide clarity and certainty for copyright users about how they may deal with copyright materials. In particular, if a new general fair use exception were introduced, contractual terms may be able to ‘reduce the risk of misunderstanding and provide legal certainty where an exception cannot’.
17.79 From this perspective, copyright users should be able to effectively agree that they will pay for uses covered by free-use exceptions in the Copyright Act, for example, under the libraries and archives exceptions. Any restrictions on permissible uses should, in theory, be reflected in the price paid to the copyright owner.
17.80 At the same time, copyright users may gain benefits under the contract that they might otherwise not have, for example, access to the whole of the work for the making of copies or for the purposes of communication or adaptation. A contractual term is not ‘necessarily unfair’ if it prohibits something allowed under a copyright exception irrespective of the context of the provision, which includes the benefits of the contract as a whole and the circumstances in which the contract was made.
17.81 In contrast, copyright users considered that contracting out has the potential to render exceptions under the Copyright Act meaningless. Copyright users, it was argued, are often not in a good position to negotiate the terms on which copyright materials are licensed. Contracting out puts at risk the public benefit that exceptions are intended to provide.
17.82 New limitations on contracting out might apply to all exceptions, or only some exceptions—for example, those that serve certain important public interests, or which are fundamental to the copyright balance.
17.83 In Copyright and Contract, the CLRC concluded that agreements were being used to exclude or limit copyright exceptions and that this practice ‘undermines the copyright balance established by the Copyright Act’. The CLRC recommended that the
traditional fair dealing defences and the provisions relating to libraries and archives which permit uncompensated copying and communication to the public within specified limits, and which embody the public interest in education, the free flow of information and freedom of expression, should be made mandatory.
17.84 The CLRC also considered that ‘exceptions introduced in recent years relating to technological developments should also be made mandatory’—specifically provisions allowing for temporary reproductions in the course of a communication.
17.85 The UK Hargreaves Review recommended, in 2011, that the UK Government should change the law to make it clear that no exception to copyright can be overridden by contract. In its response to the Hargreaves Review, the UK Government noted that the recommendation on contracting out reflected ‘longstanding concerns that contracts may in some circumstances undesirably restrict the uses permitted by copyright law’.
17.86 The general principle that contracts should not be allowed to erode the benefits of permitted acts was accepted. The UK Government stated, however, that because European law provides that some permitted acts may not override contract terms, ‘a blanket ban on contract overriding copyright’ was not possible.
17.87 The UK Government announced that, ‘to the extent that is legally allowed, the Government will provide for each permitted act considered in this document that it cannot be undermined or waived by contract’. This, it was said, may include a prohibition on licensing override of permitted acts, or restricting the terms on which licensing may affect permitted acts.
 IASTMP, Submission 200.
 See Copyright Council, Response to report of Copyright Law Review Committee on Copyright and Contracts (2003).
 Copyright Law Review Committee, Copyright and Contract (2002), 142.
 Ibid, 266, 274, referring to Copyright Act 1968 (Cth) ss 40, 41, 42, 43, 43A, 48A, 49, 50, 51, 51AA, 51A, 52, 103A, 103B, 103C, 104, 110A, 110B, 111A.
 Referring to Copyright Act 1968 (Cth) ss 43A, 111A. The Australian Government has not responded to the CLRC report.
 I Hargreaves, Digital Opportunity: A Review of Intellectual Property and Growth (2011), 51.
 UK Government, Modernising Copyright: A Modern, Robust and Flexible Framework (2012), 17.
 For example, exceptions permitting libraries, educational institutions and archives to make copyright material available, for the purpose of research or private study, through dedicated terminals on their premises must be ‘subject to purchase or licensing terms’: Directive 2001/29/EC of the European Parliament and of the Council on the Harmonisation of Certain Aspects of Copyright and Related Rights in the Information Society (entered into force on 22 June 2001).
 UK Government, Modernising Copyright: A Modern, Robust and Flexible Framework (2012), 19.