Where a client agreement lands in front of you
You will usually meet a client agreement from one of two directions. A client sends over their standard terms and asks you to sign before the work begins, or you are about to start a new engagement and realise a short email confirming the quote is the only record you have. This is the moment the document starts deciding what you get paid, what you are responsible for, and what happens when the job turns out differently from what either side expected.
A client agreement is the written record of the terms on which you supply services to a client: the scope of the work, the price, what each side must do, and what happens if something goes wrong. It binds your business and the client. If you work without one, the engagement runs on whatever terms can be implied by law, and if the client is a consumer, on the consumer guarantees in the Australian Consumer Law (the ACL), which sits in Sch 2 to the Competition and Consumer Act 2010 (Cth). A written agreement lets you set the commercial terms yourself rather than accept the defaults.
The clauses that do the work
What you will actually do
The scope clause is the description of the services you will provide: the deliverables, the timeline, and the milestones. Its most important drafting choice is to describe outcomes rather than activities, and to list what falls outside the engagement.
- Deliverables: the reports, designs, builds or other outputs the client can expect.
- Timelines and milestones: when each stage lands, and whether dates move if the client is late with inputs.
- Exclusions: the work you are not doing, such as ongoing maintenance, rework beyond an agreed number of revisions, or out-of-scope features.
A vague scope is the most common source of client disputes. When the client can point to a different reading of what was promised, they will resist paying, and you will be arguing about what "done" means instead of about the quality of your work.
How much you get paid and when
The payment terms set the price, the schedule, and what happens if the client does not pay.
- Price and GST: the fee for the services, plus GST on taxable supplies if you are registered.
- Schedule: a deposit, milestone payments, or payment on completion, and when invoices fall due.
- Late payment: interest and the right to suspend work. In Australia there is no automatic entitlement to interest on a late invoice; the agreement must create it.
- Cancellation: what the client owes if they cancel partway through, such as fees for work already done plus a proportion of the agreed price.
If a client stops paying, a suspension clause lets you stop work while preserving your right to payment for what you have already delivered. Without it, your only option is to keep working while the invoice sits unpaid, or to walk away and lose the value of the work done.
What your client has to supply
A client obligations clause sets out what the client must provide for the services to happen: information, materials, access to systems, approvals, and decisions on the questions that only they can answer. The drafting trap here is the one-sided deadline. If the agreement binds you to a date but gives the client no deadline for approvals, a slow client becomes your problem. A client delay provision fixes this by saying that if the client is late with inputs, your deadlines extend and additional fees may apply.
The promises each side makes
Warranties are the promises each party makes about the state of things when the agreement is signed. Your side might warrant that the services will be provided with due care and skill. The client's side might warrant that the information they give you is accurate and complete, that they have authority to enter the agreement, and that they are not insolvent.
One limit applies before you draft a warranty clause. If the client is a consumer rather than a business, the ACL gives them guarantees that your services will be provided with due care and skill and be reasonably fit for any purpose you know they have, and s 64 of the ACL makes void any term that tries to exclude those guarantees. A warranty clause can repeat or refine those promises for business clients; it cannot override them for consumers.
Who owns what you create
The IP clause decides who owns the copyright in the reports, designs, code or other material you create for the client. The default rule is not what most clients assume. Under s 35 of the Copyright Act 1968 (Cth), the author of a work owns the copyright unless the agreement says otherwise. If you are a consultant or contractor, you own what you create unless you assign it to the client or licence it to them.
The drafting choices that follow are whether ownership of the deliverables passes to the client on payment of the final invoice, whether you keep a licence to use the work in your portfolio or for other clients, whether the client's pre-existing material is licensed back to you for use in the job, and how moral rights are dealt with so the client can use the work without infringement concerns. An IP clause that assigns "all intellectual property" without defining what that captures can accidentally grab the client's own background material, or leave you without the rights you need to reuse your own work.
Keeping client information confidential
A confidentiality clause defines what information is confidential, what each party may do with it, and what happens to it at the end of the engagement. It should cover the client's business information and also the material you bring to the job, such as your methods and templates. Typical features are a ban on disclosure to third parties except as needed to deliver the services, return or destruction of confidential material on termination, and carve-outs for information that is already public or that must be disclosed by law.
Confidentiality terms are contractual. Separately, if the information includes personal information about individuals, you may owe obligations under the Privacy Act 1988 (Cth) that sit outside the agreement.
Who carries the loss
The liability clause caps how much you can owe if something goes wrong. The usual shape is a cap on total liability equal to the fees paid under the agreement, an exclusion of indirect and consequential loss, and carve-outs for things that cannot sensibly be capped, such as fraud, breach of confidentiality, or liability under an indemnity.
Two limits apply to what drafting can achieve. First, the ACL's consumer guarantees cannot be excluded, so the cap does not reach a consumer client's loss flowing from a failed guarantee. Second, "proportionate liability" is statutory, not contractual. Part VIA of the Competition and Consumer Act 2010 (Cth) lets a court apportion damages among wrongdoers in claims for misleading or deceptive conduct, and state equivalents do the same for negligence. You cannot draft a clause that gives you proportionate liability; the clause that protects you is the cap and the exclusions.
Watch the unfair contract terms regime as well. If the agreement is a standard form contract and your client is a small business, an unfair term is void under s 23 of the ACL, and since 9 November 2023 proposing or relying on an unfair term can attract penalties. A small business client for these purposes is one with fewer than 100 employees or turnover under $10 million. A liability clause that excludes everything, or a clause that lets only the client terminate, is the kind of term a court or regulator will look at closely.
- Cap: total liability limited to fees paid, or a fixed amount.
- Exclusions: indirect and consequential loss, and loss of profit, excluded.
- Carve-outs: fraud, wilful misconduct, breach of confidentiality, and indemnities.
- UCT watch: a cap that swallows the whole contract, or one-sided termination rights, may be unfair for small business clients.
How the engagement ends
The termination clause sets out who can end the agreement and what happens afterwards. Common features are termination for convenience with written notice, often 30 days, termination for cause where the other side breaches and does not fix it, and immediate termination on insolvency. The clause should also say what happens to work in progress: payment for services already performed, delivery of partial deliverables, and which obligations survive termination, usually confidentiality, IP and liability.
The trap is the one-sided version, where the client can end at any time for any reason but you can only end for serious breach, and nothing is said about payment for work done. If you are the supplier, the clause should protect your entitlement to payment for work completed before termination.
Which state's law applies
The governing law clause states which state or territory's law applies to the agreement and which courts will hear a dispute. Pick one jurisdiction and keep it consistent across the rest of your paperwork. A clause that states a governing law but says nothing about jurisdiction leaves open where a dispute will be heard, which is costly if a disagreement does arise.
Clauses worth adding for particular jobs
Not every client agreement needs every clause, but these are worth considering when the job calls for them:
- Change control: a formal process for approving out-of-scope work and its price, valuable for projects where the scope will evolve.
- Non-solicitation: stops the client poaching your staff for a set period after the engagement, useful where your team is the product.
- Force majeure: suspends obligations during events outside either party's control, such as a natural disaster or a major outage, worthwhile in longer engagements.
- Dispute resolution: an agreed mediation step before court proceedings, sensible in ongoing client relationships.
- Indemnity: the client indemnifies you where they use your deliverables in ways that create third-party risk, such as marketing material they publish.
How an Artificer Legal practitioner would review your client agreement
When we review a client agreement for a service business, we work through the clauses in the order they will bite: scope first, because it decides whether the job was done; then payment, because it decides whether you get paid for it; then IP, because it decides what you keep; and liability last, because it decides what you risk.
The clauses we push back on are the ones that look fair but are not. An uncapped liability clause, or one that excludes liability for everything including your own negligence, will not survive scrutiny and gives you false confidence. A blanket indemnity that makes you liable for the client's own use of your work is a common ask that should usually be narrowed. An IP assignment that grabs "all intellectual property" without limiting itself to the deliverables can capture the client's own material and create a dispute at the worst possible time.
The variants we insist on are a scope clause with the exclusions written in, a liability cap that matches the value of the job, payment terms with a suspension right for non-payment, and a termination clause that protects payment for work in progress. We also check standard form agreements against the unfair contract terms rules, because a clause that is void or that attracts a penalty is worse than no clause at all. If you are signing the client's form rather than using your own, the same review runs in reverse: we look for the terms that transfer risk to you, and we negotiate the ones that matter.
Why the scope of services deserves your attention first
Disputes with clients most often turn on the scope of services. It is the clause both sides skim at signing and quote in the argument later. When the client says the work was not what they asked for, or refuses to pay because something was left out, the argument resolves to what the scope clause says the job included. The fix is not clever drafting; it is writing down what you will do, what you will not do, and what the client must supply, in plain language, before the work starts.
Everything else in the agreement supports that starting point. Payment terms make sure you are paid for the work the scope describes, client obligations make sure you can do it, the IP clause decides who owns what you create, confidentiality protects the information you exchange, liability sets how much you risk, and termination and governing law decide how the relationship ends and where a dispute is heard. A client agreement that covers these bases will not prevent every disagreement, but it will mean that when one arises, the argument starts from what was actually agreed, which is the position you want to be in.