You are looking at your standard terms for the first time in months, or you have just been handed a template that is meant to cover everything your business sells. Either way, this is the moment to check whether the document will actually hold up when it matters.
Your terms and conditions are the rules of every sale: what you will deliver, what you will be paid and when, and what happens when something goes wrong. They bind the customer to the deal you have actually agreed and replace the unstated assumptions that would otherwise govern the transaction. They cannot displace the Australian Consumer Law (the ACL), which sits in Schedule 2 of the Competition and Consumer Act 2010 (Cth) and applies automatically to consumer transactions, and they do not take the place of a privacy policy. What they can do is decide who wins when scope grows, payment stalls or a deliverable disappoints.
When your terms actually bind: notice and acceptance
Terms only work if they form part of the contract. A customer who never saw them is not bound by them, no matter how carefully they were drafted.
For a signed document the position is straightforward. The High Court confirmed in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 that a person who signs a contractual document is bound by it even if they have not read it. For unsigned sales, including most online checkouts, the terms must be brought to the customer's attention before or at the time of the deal, with reasonable notice of what they contain.
Practical steps that make incorporation provable:
- Notice before the sale: link the terms in your quote or proposal and state that the quote is subject to them. On a website, require a mandatory "I agree" tick box before checkout.
- Acceptance you can evidence: a signature, an emailed "I accept", a ticked box, or a deposit paid after the terms were shown. Payment alone is weaker evidence unless it is clearly tied to acceptance.
- Readable drafting: short sections, plain language and headings that match what a customer would search for, such as payment, refunds and cancellation.
The readability point is not cosmetic. When a court assesses whether a term is unfair under section 24 of the ACL, it must consider whether the term is expressed in reasonably plain language, is legible, is presented clearly and is readily available. A dense, buried clause is harder to enforce on every front.
Key clauses to keep in mind
Most disputes turn on eight clauses. Here is what each one should do, and where the drafting usually goes wrong.
What is in scope, and what is not
Scope creep is the most common source of friction in service businesses. The scope clause should state what is included, what is not, and how extra work is handled:
- Included work: deliverables, milestones, hours, and the number of revision rounds.
- Excluded work: anything the customer might assume is included, stated expressly.
- Variations: a simple rule such as "additional work will be quoted separately and performed only after written approval".
- Refusals: a right to decline unreasonable or out-of-scope requests without breaching the contract.
Pricing, invoicing and getting paid
Late payment disputes usually start with an ambiguous payment clause. Make the commercial terms explicit:
- Pricing basis: fixed fee, hourly rate or usage-based, and what each figure includes.
- Invoicing and due dates: when invoices issue and when payment is due, for example 7 or 14 days, or upfront.
- Deposits: whether a deposit is required before work starts and whether it is refundable if the customer cancels.
- Late payment: interest on overdue amounts and recovery costs, where appropriate. An extravagant rate can be challenged as a penalty, so the figure should be defensible.
- Suspension: a right to pause work while an invoice is overdue, and clarity on when work resumes.
It is also worth deciding in advance how milestone payments, partial payments and disputed invoices are handled, because each of those is a moment where a customer can stall payment.
Consumer law and refunds
If you sell to consumers, your terms must work with the ACL rather than against it. Section 64 of the ACL voids any term that excludes, restricts or modifies the consumer guarantees, so a blanket "no refunds" clause is unenforceable. Worse, section 29(1)(m) of the ACL makes it an offence to make a false or misleading representation about the existence or effect of a guarantee, so a "no refunds" statement is itself a compliance risk.
The clean approach is to set out your voluntary policies, such as change-of-mind returns, and to state that nothing in the terms limits the customer's rights under the ACL. Marketing promises matter too: section 18 of the ACL prohibits conduct that is misleading or deceptive or likely to mislead or deceive, so a claim such as "guaranteed results" has to be capable of being true in the ordinary course.
Delays and events beyond your control
A delivery clause should say whether timeframes are estimates and what happens if the customer delays the job by not providing information or availability. It should also deal with events outside either party's control.
Australia has no statutory force majeure regime, so the clause has to do the work itself: define the events (such as supplier failure, illness, extreme weather or platform outages), require notice, and state what happens if the disruption continues, such as a right to suspend or terminate after a set period. Most force majeure clauses carve out payment obligations, so your invoices keep running even while performance is paused.
Limiting your liability
A limitation of liability clause is the most valuable and the most frequently misdrafted part of the terms. It is not about avoiding responsibility; it is about setting a boundary so that one failed delivery does not end the business:
- Exclusions: indirect or consequential loss, where appropriate to your model.
- Cap: total liability capped at fees paid in a defined period, for example the last 12 months.
- Carve-outs: matters you should never limit, such as fraud, wilful misconduct, personal injury and the consumer guarantees.
The ACL constrains the drafting. For goods and services supplied to consumers, liability for a failure to comply with a guarantee cannot be limited at all. Section 64A of the ACL permits a limited carve-out for business-to-business supply: where goods or services are not of a kind ordinarily acquired for personal or household use, liability for a guarantee failure can be limited to replacement, repair or resupply, provided it is fair and reasonable in all the circumstances.
For standard form contracts, the unfair contract terms regime in Part 2-3 of the ACL adds another layer. A term that causes a significant imbalance in the parties' rights, is not reasonably necessary to protect your legitimate interests and would cause detriment is void, and proposing or relying on such a term is itself a contravention that can attract a penalty. The regime covers consumer contracts and small business contracts, which include standard form contracts where at least one party employs fewer than 100 people or has an annual turnover under $10 million. A cap set far below your actual exposure, or an exclusion drafted so broadly it swallows the whole deal, is exactly the kind of term a court or regulator will look at first.
Termination, suspension and cancellation
The termination clause should say how either side ends the relationship and what happens afterwards:
- Your rights: termination for non-payment, material breach, insolvency or abusive conduct.
- Suspension: a right to suspend access or services while investigating a serious issue.
- Customer rights: cancellation notice periods and any fees for late cancellation, particularly for bookings and scheduled services.
- Aftermath: what happens to work in progress, prepaid amounts and handover materials.
If you run subscriptions or memberships, renewal and cancellation terms deserve particular care. An automatic renewal clause that is buried or surprising is a common source of complaints and is vulnerable under the unfair contract terms regime.
Intellectual property and use rights
For agencies, developers and creative businesses, the product is intellectual property, so ownership must be explicit:
- Retained ownership: you keep the IP and grant the customer a licence to use it for the agreed purpose.
- Assignment: ownership transfers to the customer, and on what condition, such as full payment.
- Use rights: whether the customer may modify, resell or sublicense the deliverables.
- Portfolio rights: your right to show the work in your portfolio, and whether that can be refused.
Disputes and governing law
A dispute resolution clause will not prevent every disagreement, but it stops small issues escalating. A staged process, such as negotiation between managers, then mediation, then court, usually works. A bare promise to negotiate in good faith can be difficult to enforce, so the clause should commit to identifiable steps rather than an attitude. Specify the governing law and the venue, which matters if you deal with customers in several states or internationally.
Optional clauses worth adding when they fit
The clauses above cover the core of a standard set of terms. Depending on how you sell, a few extras are worth adding:
- Automatic renewal and price escalation: worth including if you run subscriptions or memberships, so renewals and price increases are agreed in advance rather than assumed.
- Confidentiality: add where your work exposes you to customer pricing, strategy or data, or where the customer sees your methods.
- Non-solicitation: relevant for service businesses whose staff build client relationships, so a departing employee cannot take the client with them.
- Indemnity and insurance: consider for higher-risk work such as events, construction or advice, where a third-party claim against the customer could otherwise land on you.
- Entire agreement and precedence: if a quote, proposal and your standard terms all form part of the deal, state which document wins when they conflict.
Where legal counsel is usually required
A lawyer's review of standard terms is not about making the document longer. It is about testing each clause against the way you actually sell and against the ACL.
A legal practitioner typically starts by checking incorporation of the differnt sets of terms into a coherent singular document; meaning how your quotes, proposals and checkouts present the terms. We would then review the liability exclusions against sections 23, 24, 64 and 64A of the ACL, push back on caps or carve-outs that will not survive, and add the clauses most businesses skip, such as the variation rule, the suspension right and the precedence clause. For online businesses we would check that the privacy policy required by Australian Privacy Principle 1 of the Privacy Act 1988 (Cth) is in place and consistent with the terms. The review is also the moment to align the document with your actual refund practice, so the terms do not contradict the way your team operates on a normal Tuesday.
Where limitation of liability clauses go wrong
If a dispute ends up in front of a court or regulator, the limitation of liability clause is usually where it is decided. A clause drafted to exclude everything will often end up excluding nothing: it is void where it touches the consumer guarantees, vulnerable under the unfair contract terms regime in a standard form contract, and likely to be read down against the party that drafted it. The version that works is the one calibrated to your real risk. It caps liability at a figure your business can absorb, excludes the losses that genuinely belong with the customer, and keeps the carve-outs the law will not let you remove.
That calibration is the difference between terms that protect the business and terms that merely look protective. Good terms give the customer clear notice before the sale, capture acceptance you can prove, match your actual practices, and handle scope, payment, liability and termination in plain language. Reviewed against the ACL whenever your business model changes, they do what they are for: they set expectations up front so that when a dispute does arrive, it does not start from scratch.