Business contracts, a clause-by-clause guide to what should be in yours

A business contract usually arrives on your desk in one of three ways: a template you are about to fill in, a counterparty's draft marked "for review", or a set of online terms you are told to accept before the work starts. Whichever way it gets there, the same question applies. Does this document actually protect the deal you think you have made?

A business contract is the written record of who does what, for how much, and by when, together with what happens if any of it goes off track. It binds the parties to those terms and, properly drafted, sits on top of the informal dealings that led up to it, the emails, quotes and handshake agreements, so that a later disagreement is resolved by reference to the document rather than to memory. Australian law can enforce an oral agreement, and a signature is not always required for a contract to exist: the courts generally look for offer, acceptance, consideration (something of value passing each way), an intention to be legally bound, capacity, and enough certainty to work out what was promised. Writing is not legally essential, but it is the difference between a contract you can prove and a contract you can argue about.

The clauses that carry the deal

There is no single template that suits every business, but most commercial agreements are built from the same blocks. Working through them in the order a dispute would actually test them is the most useful way to review a draft.

Who the contract binds and how it is signed

Get the parties right first. Use each party's full legal name, ABN or ACN, and registered address, and make sure you are contracting with the entity that will actually perform and pay. A contract with a trading name like "Smith's Plumbing" that is really Smith Pty Ltd can be hard to enforce against the company when it matters.

Trading names: name the legal entity, not the brand, and record any trustee capacity (for example "as trustee for the Smith Family Trust") if the party operates through a trust.
Execution: if a company is signing, s 127 of the Corporations Act 2001 (Cth) provides that a company executes a document by the signature of two directors, or a director and a company secretary, and a proprietary company with a sole director can sign alone. Signatures can be electronic: the Electronic Transactions Act 1999 (Cth) recognises a reliable electronic method of signing, so platform-based e-signatures are generally fine.
Authority: check that the person signing is actually authorised. The assumptions in s 129 of the Corporations Act protect a party that deals with a company in good faith, but a person who signs on behalf of a company without authority can leave you with a document that binds no one.

What exactly is being delivered

Ambiguity about scope is the most common source of contract disputes. If the deliverables are not defined, they cannot be delivered, and "quality" means whatever the other side says it means.

Deliverables and exclusions: name the outputs, milestones, location and inclusions, and state what is not included. A schedule or statement of work keeps the body of the contract clean and lets you update each project.
Standards: if the work has to meet a benchmark, define it, whether that is a specification, an industry standard, or a sign-off process.
Variations: build in a written change mechanism. Every change in scope should trigger a written variation that records the price and timeline impact before the extra work starts. This single clause is what turns scope creep from a margin loss into an invoice.

How the price is calculated and when it is paid

State the pricing structure plainly, whether fixed fee, hourly, retainer or a hybrid, and what it includes. Then set the payment mechanics: invoicing cycle, due dates, and treatment of GST and expenses.

Late payment: a late fee can be charged, but it must not be a penalty. Australian courts will strike down a fee that is out of all proportion to the legitimate interest of the party charging it, as the Federal Court confirmed in Paciocco v Australia and New Zealand Banking Group Ltd [2015] FCAFC 50. A modest, disclosed interest or administration charge is enforceable; a fee designed to punish is not.
Expenses: list which out-of-pocket costs are billable and require pre-approval, so there is no surprise line item at the end of the month.
GST: say who bears GST and on what basis, and confirm each party's ABN if you rely on the margin scheme or input tax credits.

When things happen, and what happens if they are late

Set the start date, milestones and completion date, and then deal with the realities that push them out. If the client has to supply content, access or decisions before you can proceed, make those dependencies explicit, because the clock should not run against you while you are waiting.

Relief for delay is not automatic. Australian law has no general doctrine of force majeure, so if you want protection from events outside either party's control, the clause has to be written in, and it should say what happens when the event hits: extension of time, suspension, or termination without liability.

Who owns the intellectual property

Decide the default position on IP before the work starts. Pre-existing IP should stay with its owner, and new IP created for the engagement needs a stated home, whether that is the client, your business, or a split based on what each side brought to the table.

Licences: if the client needs ongoing rights to use your materials, grant a licence with a defined scope rather than handing over ownership.
Moral rights: for creative work, remember that moral rights sit with the individual creators under the Copyright Act 1968 (Cth), not with the company that commissions the work. If you need to use, alter or credit their work freely, the contract should carry written moral rights consents, not just an assignment of copyright.
Trademarks and branding: if the engagement involves a name or logo, say who owns it and who can use it, so brand assets do not become disputed deliverables.

Keeping confidential information and data safe

Define what counts as confidential information, who it may be disclosed to (advisers and subcontractors bound by equivalent obligations, for example), how long the duty lasts, and what happens to the material when the relationship ends, including return or destruction.

Data deserves its own attention. If either side handles personal information, the Privacy Act 1988 (Cth) may apply: its Australian Privacy Principles generally bind businesses with annual turnover above $3 million, and some smaller businesses that handle particular kinds of data, such as health information. Even where the Act does not apply, a contract can still require the other side to handle data responsibly, notify you of breaches, and use the information only for the engagement.

Where liability stops

Unlimited liability rarely matches the fee being paid. A well-drafted agreement caps liability, usually at the fees paid under the contract, and excludes indirect and consequential loss, so that a modest project does not expose you to the other side's lost profits.

Consumer guarantees: the protections are narrower when you sell to consumers. Under s 64 of the Australian Consumer Law (the ACL, which is Schedule 2 of the Competition and Consumer Act 2010 (Cth)), any term that excludes, restricts or modifies the consumer guarantees is void. You cannot contract out of them, whatever the draft says.
Unfair contract terms: if you use a standard form contract, an unfair term is void under s 23 of the ACL, and penalties can apply. The regime now covers small business contracts, which means any contract where at least one party employs fewer than 100 people or has turnover under $10 million. "Take it or leave it" terms therefore deserve a compliance check, not just a red pen.
Indemnities: keep them narrow and tied to genuine risks, because a broadly worded indemnity can quietly transfer the other side's entire business risk to you.

How long the deal runs and how it ends

State whether the contract is for a fixed term, a project, or an ongoing arrangement, and then describe how it ends. Termination for convenience with notice gives you an exit when the relationship stops working; termination for cause, such as non-payment or breach, lets you walk away without notice.

Exit obligations: say what happens on termination: final invoices, handover of work, return or destruction of confidential material, and what happens to partially completed work and staged payments.
Renewals: watch auto-renewal and notice windows. A contract that rolls over automatically can lock you into terms you no longer want, so put every renewal date and notice period in a contracts register and diarise them.

What happens when things go wrong

A staged dispute clause sets out what happens before anyone sees a courtroom: informal discussion between the parties, then mediation, and only then litigation or arbitration. Keep the steps clear enough to be enforceable, and state the governing law and jurisdiction, usually the state or territory where the business operates.

Clauses to add when the situation calls for them

A handful of further clauses earn their place when the deal carries particular risks:

Restraint of trade: a non-compete or non-solicitation clause is only enforceable to the extent it protects a legitimate business interest and is reasonable in scope, geography and duration. Worth including when a departing contractor, employee or buyer could walk away with your client list.
Force majeure: include when your performance depends on supply chains, weather, utilities or third parties, and state what happens when the event occurs.
Survival: say which obligations, typically confidentiality, IP and indemnities, continue after the contract ends. Without a survival clause, they can fall away with the agreement.
Assignment and subcontracting: decide whether the other side can delegate the work or transfer the contract to someone else, and whether they need your consent first.
Insurance: require the other side to carry the cover the work needs, and to produce evidence of it, so you are not left holding a claim that their policy should have answered.

Getting an Artificer Legal review before you sign

A lawyer's review of a template or a counterparty's draft is usually the cheapest insurance a deal can buy. An Artificer Legal practitioner would check the parties and their authority to sign, tighten the scope definition, and test the liability cap and its carve-outs against the fee being paid. We would also check the terms against the ACL: whether the unfair contract terms regime applies, whether any exclusion clause runs into the consumer guarantees, and whether late fees or other charges risk being struck down as penalties.

Where the agreement engages workers described as contractors, we would check the relationship against the current tests, including the High Court's approach in ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2, and, since 26 August 2024, the Fair Work Act 2009 (Cth) definition that asks about the real substance, practical reality and true nature of the relationship. Getting the classification wrong can mean back-pay, superannuation and penalties, so the documentation has to match how the work is actually done.

The order of negotiation matters too. We would settle the commercial terms first, scope, price and timelines, then the liability and indemnity provisions, and only then the boilerplate. We would push back on unilateral variation rights, broad indemnities and unlimited liability, and insist on a written change mechanism before anything else.

The change mechanism is where most disputes start

Most contract disputes do not begin with a bad agreement. They begin with a change that was never priced, an extra deliverable that arrived by email, a "quick tweak" that took a week, and no record of who agreed to what or what it was supposed to cost. The clause that decides whether that becomes an argument or an invoice is the variation mechanism: a short provision requiring changes to be agreed in writing, with their price and timeline impact stated before the work proceeds. Every other clause in this article protects you when things go wrong; this one stops the things going wrong in the first place. If you take nothing else from this guide, make sure your contract answers the question "what happens when someone asks for more?".

That said, the full set matters: accurate parties and proper execution, defined scope, clear pricing, realistic timeframes, agreed IP and confidentiality positions, a liability cap that matches your risk, a termination pathway, and a staged dispute process. Check your standard terms against the ACL, keep a register of renewal dates, and revisit your base contracts at least annually. A contract that is reviewed while the relationship is still healthy is far cheaper than one that is argued about after it has broken down.