Someone has just sent you a client agreement to sign, or asked you to send yours. It might be a template a colleague handed you years ago, a set of terms a client pasted into an email, or a draft from a bigger firm that runs to thirty pages. Before you sign it or send it out, it is worth knowing which clauses actually do the work, and which ones are quietly exposing you.
A client agreement is the contract that sets the terms on which you will provide services to a client. It does not need to be signed and stamped to bind anyone: if a client receives your terms and then instructs you to proceed, or pays a deposit, they can be taken to have accepted them. The agreement replaces the default rules of contract law with your own allocation of risk, so the drafting choices inside it decide what happens when the work goes wrong, the client stops paying, or the relationship sours.
The clauses that set the commercial deal
Defining the work: what is in and what is out
The description of services is the clause that most client disputes turn on. It sets the parameters of the engagement: what you will deliver, by when, and what you will not do. A clause that says "marketing services" or "advisory services as required" leaves almost everything open to argument. When a client believes you promised more than you delivered, the scope clause is where the fight happens.
A well-drafted scope clause covers:
- Deliverables: the specific outputs, reports or milestones the client receives.
- Exclusions: the work you are not doing, stated explicitly rather than left to inference.
- Assumptions: the information, access or approvals you need from the client to do the work.
- Client responsibilities: the things the client must provide or do, and the effect on timing if they are late.
- Variations: how additional work will be agreed and priced, so scope creep becomes a paid conversation instead of a dispute.
The drafting choice that matters most is precision in plain language. If a client can read the clause and know exactly what they are entitled to expect, it will do its job. Two legal points constrain what you can promise. First, if you supply services to a consumer in trade or commerce, the Australian Consumer Law (the ACL), which is Schedule 2 of the Competition and Consumer Act 2010 (Cth), guarantees that the services will be rendered with due care and skill (s 60) and will be reasonably fit for any particular purpose the client has made known (s 61). Second, any term that purports to exclude, restrict or modify those guarantees is void (s 64). You can draft the scope clause carefully, but you cannot draft your way out of the minimum standards the law implies for consumer clients.
Getting paid: amounts, timing and method
Payment is the clause that keeps the business running, and it needs to answer three questions: how much, when, and how. State the price, whether it is a fixed fee, an hourly rate, or both. State when invoices fall due, for example within 14 days. State any limits on method of payment, such as no personal cheques or no Amex. If you quote by email and attach your terms, refer to the quote in the agreement so the price forms part of the contract. Say whether fees are plus GST and whether out-of-pocket expenses are invoiced on top or included.
The drafting choices to get right:
- Deposits and upfront payment: you can ask for payment upfront, but a term that keeps the full fee no matter how little work was done will be hard to defend if the engagement ends early.
- Late payment: an interest clause is standard, but a rate set so high it looks punitive rather than compensatory may be challenged.
- Price variation: a term that lets you raise the price without the client's consent, and without giving them a way out, sits squarely on the list of terms that may be unfair under the ACL.
The trap here is the unfair contract terms regime. If your client agreement is a standard form contract, offered on a take-it-or-leave-it basis, and the client is an individual acquiring services for personal, domestic or household use, or a small business with fewer than 100 employees or turnover under $10 million, then a term is void if it is unfair. A term is unfair when it causes a significant imbalance in the parties' rights and obligations, is not reasonably necessary to protect your legitimate interests, and would cause detriment to the client if relied on (s 23, s 24). The regime now carries civil penalties, so proposing or relying on an unfair term in a standard form contract can attract substantial fines. A payment term that only ever works in your favour is a liability, not an asset.
The clauses that manage the risk
Disputes: an agreed path before court
Most client relationships will survive one disagreement. A dispute resolution clause gives you a process for working through it before it becomes a court case. The common shape is: a written notice of the dispute, a meeting between senior representatives of each side, genuine negotiation, then mediation with a named provider, and only then court or arbitration.
The drafting choice that matters is certainty. In United Group Rail Services Ltd v Rail Corporation New South Wales [2009] NSWCA 177, the Court of Appeal held that an agreement to undertake "genuine and good faith negotiations" was valid and enforceable, but the mediation clause in the same contract was void for uncertainty because it named a mediation centre that did not exist. The lessons: name a real provider, describe the process in enough detail that a court can enforce it, and include a severability clause so one defective step does not take down the rest of the agreement.
Where the parties have agreed to mediate, a court will usually stay proceedings so the mediation can happen first. That was the effect of Aiton Australia Pty Ltd v Transfield [1999] NSWSC 996, where the court stayed the action to hold the parties to their agreed process. That is the point of the clause: it forces the conversation to happen before costs escalate. But keep the process proportionate. A clause that demands months of negotiation and mediation before any access to a court can be its own source of friction, and for a small claim it may not be worth it. Consider exempting urgent disputes, such as non-payment or breaches of confidentiality, from the staged process.
Capping your liability
Every service provider wants to limit how much they can owe if something goes wrong, and every client wants the opposite. The clause resolves that tension, usually with a cap, for example liability limited to the total fees paid, and an exclusion of consequential loss such as the client's lost profits. These are legitimate drafting choices in a business-to-business agreement, but they have statutory limits:
- Consumer guarantees: if your client is a consumer, any term that excludes, restricts or modifies the ACL guarantees is void (s 64). The guarantees of due care and skill and fitness for purpose apply to services, and you cannot contract out of them.
- A narrow carve-out for business clients: for services other than those ordinarily acquired for personal, domestic or household use, a term can limit liability for a failure to comply with a guarantee to re-supplying the services or paying the cost of having them re-supplied. That limitation is only available where it is fair and reasonable to rely on it, having regard to factors such as the parties' relative bargaining power and what the client knew about the term (s 64A).
- Misleading or deceptive conduct: s 18 of the ACL prohibits misleading or deceptive conduct in trade or commerce. A limitation clause cannot immunise you against a claim under that section, because the obligation arises under statute regardless of what the contract says.
The drafting choices that matter are the size of the cap and the carve-outs. A zero-dollar cap, or a blanket exclusion of every kind of loss, will usually not survive scrutiny, and in a standard form contract it can itself be attacked as an unfair term. Carve out the things you cannot and should not limit: fraud, wilful misconduct, breaches of confidentiality, and the consumer guarantees. Then check your insurance, because a liability cap that sits above your professional indemnity cover protects nothing.
Ending the engagement
Termination is the clause people skip because they assume the relationship will end amicably. It will not always. The clause should say how either side can end the agreement: for convenience, on written notice, typically 30 days; or for breach, where the other side has not fixed a material breach within a stated period after written notice. It should also say what happens on termination: payment for work done to date, return or destruction of confidential material, and which clauses survive, such as confidentiality, limitation of liability, intellectual property and dispute resolution.
At common law, a party can terminate where the other side has breached an essential term or repudiated the contract. An express clause can give you a cleaner route, but only if it is drafted so it does not narrow your rights: a clause that limits termination to the listed grounds can accidentally take away the common law right to terminate for a serious breach that is not on the list.
The traps here sit in the unfair contract terms regime. A term that lets one party, but not the other, terminate the contract is expressly on the list of terms that may be unfair (s 25), and a term that demands full payment on termination regardless of work performed can look like a penalty and may be challenged. Draft termination rights so they are roughly mutual, and tie payment on termination to work actually done or committed expenditure.
Optional clauses worth including
Not every client agreement needs every clause, but these earn their place when the trigger is present:
- Confidentiality: include it when the engagement will expose either side to trade secrets, client lists, pricing or strategy.
- Intellectual property: include it whenever you create copyright material, branding or other IP for a client, and state when ownership transfers, commonly on full payment.
- Force majeure: include it where delivery depends on events outside either party's control, such as natural disasters, supplier failure or prolonged outages, and say what happens to deadlines and payment.
- Insurance: include an obligation on each side to maintain appropriate cover, particularly professional indemnity in advice-based industries.
- Privacy and data: include it if you will handle personal information in the course of the work, so each side knows who controls the data and what happens to it at the end of the engagement.
Getting help: what an Artificer Legal review covers
A template pulled from the internet will get you part of the way, but the clauses above interact: the scope clause determines what the payment clause is worth, and both determine where the liability cap should sit. That is where professional help earns its keep. An Artificer Legal practitioner reviewing your client agreement would work through it in a particular order. First, the commercial terms: scope, payment and termination, because those are the clauses the relationship actually runs on. Second, the risk allocation: the liability cap and its carve-outs, checked against the consumer guarantees, the unfair contract terms regime and s 64A, and matched to your insurance. Third, the process clauses: dispute resolution, confidentiality, IP and privacy.
The clauses we would push back on are the ones that overreach: unilateral termination rights, one-sided variation powers, caps that try to exclude everything, and dispute resolution clauses that name a provider that does not exist. The variants we would insist on are mutual termination rights, carve-outs for the guarantees and for fraud, and a dispute clause a court can actually enforce. If you are on the receiving end of a client agreement, the review is the same in reverse: we would look first for the scope clause that overcommits you, and the liability and termination provisions that leave you carrying the risk.
Scope creep: the clause that decides most client disputes
The clause that most often decides who wins a client dispute is the description of services, and it is usually the least carefully drafted. Payment terms and liability caps get the attention because they carry dollar figures, but the argument that ends in court is almost always about what was promised: the client says the work was in scope, you say it was not, and the clause is vague enough for both to be right. Draft it as if you expect to have to prove what it means, and it will save you the cost of finding out.
In short: a client agreement binds when the client accepts your terms, which can happen by conduct. Its essential clauses are the description of services, payment, dispute resolution, limitation of liability and termination. Each one sits inside a statutory framework you cannot draft around, including the consumer guarantees, the unfair contract terms regime and the prohibition on misleading or deceptive conduct. Draft the commercial terms first, then the risk allocation, and have the whole agreement reviewed before it goes out in its standard form.