Contract terms and conditions, a clause-by-clause guide

At some point every Australian business sits down with a set of terms and conditions. It might be a template downloaded from the internet, a draft your lawyer has marked up, or the document your website asks customers to tick a box against before they check out. The urge is to skim it, change the business name and get back to work, but this is the document that decides what happens when a customer will not pay, when a supplier delivers late, or when a dispute ends up in court.

A set of terms and conditions is the written rulebook for a commercial relationship. It sets out who does what, when payment is due, what each side can expect, and what happens if something goes wrong. It binds both parties, and where it is properly incorporated it supplements, and in practice displaces, whatever was said in earlier emails, phone calls and conversations. The same document can do this job in several ways: as a standalone services agreement, as a terms of trade attached to every quote and purchase order, or as website terms that customers accept online.

The clauses your terms and conditions need

The clauses below are the working parts of most Australian terms and conditions. Not every business needs every clause, but a document that misses one of these areas leaves a gap that a dispute will eventually find.

Who the parties are and what the words mean

Start with who the contract binds. State each party's full legal name, not just its trading name, together with its ABN or ACN and an address for notices. The person you deal with day to day is often not the entity that signs, and a clause that names the wrong entity can leave you without a remedy against anyone.

Definitions: define the words the rest of the document depends on, such as "Services", "Deliverables", "Business Day" and "Confidential Information", so the clauses read cleanly and mean the same thing to both sides.
Trap: if you contract against a sole trader's personal ABN, you are contracting with the individual personally, which matters if the business is later sold or wound up.
Check: confirm the person signing has authority to bind the entity, particularly for larger customers where a manager or procurement officer may be signing beyond their level.

What you are supplying and what you are not

Scope is the clause disputes most often turn on. Set out exactly what you will supply, what is excluded, and any assumptions the price is based on, such as access to the customer's systems or information being provided by a particular date. If the customer expects more than the contract promises, a tight scope clause is what lets you charge for the extras rather than absorb them.

Variations: state that changes must be requested in writing and priced before the work starts, and what happens to timelines when the scope moves. A variation process that requires a signed quote for anything beyond the original scope is the single best protection against scope creep.
Trap: a vague scope clause is construed against the party that drafted it, and courts can imply obligations the contract never stated.
Drafting minimum: list exclusions expressly, including things customers commonly assume are included, such as travel, third-party software licences or data migration.

How the price is calculated and when you get paid

This is the cash-flow clause. Set the fees, how and when invoices are issued, payment due dates, and any deposit or staged payment structure. For repeat dealings these terms usually live in a terms of trade document that is incorporated into every quote and purchase order, so confirm the incorporation language points at the right version.

Late payment: an interest rate that is a genuine pre-estimate of the cost of late payment is generally enforceable, while an extravagant rate risks being struck down as a penalty rather than recovered.
Suspension: a right to suspend work or delivery while amounts are overdue protects you without ending the relationship, but draft it with a notice step so it does not read as a trap for the customer.
UCT risk: under the unfair contract terms regime discussed below, a payment clause that applies strict consequences to the customer but none to you can be challenged if the contract is a standard form one.

Delivery, acceptance and what happens on delay

How and when you deliver, and how the customer signals the work or goods are acceptable, determines when risk passes and when payment is due. State the delivery method and any milestones, and set an acceptance process with a deadline, after which the goods or services are taken to be accepted.

Deemed acceptance: a clause that treats the goods or services as accepted if the customer raises no issues within a set number of business days protects you from open-ended rejection.
Customer delay: deal expressly with delays caused by the customer, such as late information, approvals or access, and make clear the customer pays for any resulting idle time or rescheduling.
Force majeure: a force majeure clause sets out what happens when neither party is at fault, such as a natural disaster, pandemic or failure of a key supplier. Without one you are left with the common law of frustration, which rarely rescues a party from mere delay.

Warranties, refunds and the consumer guarantees

The Australian Consumer Law (the ACL), which sits in Schedule 2 of the Competition and Consumer Act 2010 (Cth), applies automatic guarantees to supplies to consumers, and section 64 of the ACL makes any term that tries to exclude, restrict or modify them void. Under section 3 of the ACL, a person is a consumer if the goods or services cost $100,000 or less, if the goods are of a kind ordinarily acquired for personal, domestic or household use, or if the goods are a vehicle or trailer used principally to transport goods on public roads.

Business customers: the guarantees also apply to business buyers who fall within that definition, so do not assume a customer with an ABN has no guarantee rights.
B2B carve-out: for goods and services that are not ordinarily acquired for household use, section 64A of the ACL lets you limit liability for a failure to comply with the guarantees to repairing, replacing or resupplying, or paying the cost of doing so, provided the limit is fair and reasonable in the circumstances.
Refunds: a refund and returns policy cannot override the guarantees. It should sit alongside them and describe them accurately, because a policy that misrepresents your obligations can itself breach the ACL.

How much you can be liable for

A limitation of liability clause sets the ceiling on what you can be ordered to pay if things go wrong. The drafting choices are the cap, usually a multiple of the contract value or a fixed dollar figure; what is excluded, such as consequential loss, loss of profits or loss of data; and what survives the cap, such as indemnities, IP obligations and confidentiality.

Misleading conduct: you cannot contract out of the consumer guarantees, and a term that tries to exclude liability for misleading or deceptive conduct will not stop a regulator or a court from examining the conduct itself.
Unfair contract terms: since 9 November 2023, the unfair contract terms regime has made it illegal to propose, use or rely on an unfair term in a standard form contract with a consumer or small business. A term is unfair if it causes a significant imbalance in the parties' rights, is not reasonably necessary to protect the legitimate interests of the party relying on it, and would cause detriment. The regime covers contracts with consumers and with businesses that employ fewer than 100 people or have turnover under $10 million, and a term is presumed not to be reasonably necessary unless the business proves otherwise.
Penalties: contraventions attract penalties under section 224 of the Competition and Consumer Act 2010 (Cth) of up to the greater of $100 million, three times the benefit obtained, or 30% of adjusted turnover for a corporation, and $2.5 million for an individual, so a one-sided liability clause is not a minor drafting issue.
Calibration: a cap should reflect your insurance cover and the size of the deals you do, not a number copied from a template.

Who owns the intellectual property

Decide who owns what before the work starts. Existing IP stays with the party that brought it, and IP created under the contract is usually assigned to the customer once the invoice is paid, with a licence back to you to use your own tools, processes and pre-existing material. For software and productised services, consider licence terms and use restrictions rather than an outright assignment, and state what happens to the IP if the contract is terminated part way through.

Confidentiality and privacy

A confidentiality clause covers commercial information such as pricing, customer lists, trade secrets and business plans: what counts as confidential, how it must be stored and marked, who can see it, and what happens to it at the end of the relationship. A separate clause should deal with personal information collected under the contract, because handling that information is regulated independently of the contract itself.

Privacy Act: where the Privacy Act 1988 (Cth) applies, the Australian Privacy Principles govern how you collect, use and disclose personal information, and your privacy policy needs to match what your terms promise.
Small business exemption: most businesses with annual turnover of $3 million or less are exempt under section 6D of the Privacy Act 1988 (Cth), but the exemption does not apply to health service providers that hold health information, businesses that disclose or collect personal information for a benefit, contracted service providers to the Commonwealth, credit reporting bodies, or companies related to a larger group.
Note: the privacy regime is still being reformed, so the exemption list and your obligations should be re-checked each time your terms are reviewed.

When the contract can end

Set out when the contract can end: for convenience on notice, for a material breach that is not remedied within a set period, and on the other party's insolvency. State the consequences, including handover obligations, payment for work done to date, return of confidential information, and which clauses survive termination.

One-sided drafting: a termination clause that lets you end the contract at will but gives the customer no equivalent exit is a classic target of the unfair contract terms regime, so pair each of your rights with a workable right for the other side.
Suspension: a right to suspend for non-payment, safety concerns or customer default keeps the contract alive while protecting you, and is usually easier to justify than immediate termination.

How disputes get resolved and which law applies

Agree on the process before a dispute exists. A short escalation clause, naming a contact person, a negotiation period and then mediation, resolves most commercial disagreements cheaply and keeps the relationship intact. State the governing law and the courts you will use, usually your home state or territory, and make sure the clause picks both expressly rather than leaving jurisdiction to be argued later.

Housekeeping clauses

These are the clauses that keep the document working. An entire agreement clause stops earlier emails and verbal promises from surviving alongside the signed terms. A notices clause sets out how formal communication happens, such as email to a nominated address. Assignment and subcontracting rules say whether either party can hand the contract to someone else. Severability keeps the rest of the contract alive if a court strikes one clause out, and a requirement that variations be in writing stops later verbal amendments from undoing your drafting. Confirming that the parties can sign electronically avoids hold-ups when the parties are in different states or time zones.

Optional clauses to add when they fit

These clauses earn their place in specific situations rather than in every document.

Retention of title and PPSA registration: if you sell goods and want to keep title until you are paid, the Personal Property Securities Act 2009 (Cth) applies, and your security interest generally needs to be registered within strict time windows to keep priority over other creditors if the buyer becomes insolvent.
Exclusivity and restraint: worth including in services, agency and distribution arrangements where the relationship justifies stopping the other party from dealing with your competitors, drafted narrowly so the restraint is enforceable.
Set-off: state whether either party may deduct amounts they claim are owed. Customers will often push for broad set-off rights, which can quietly undermine your payment terms.
Survival: list the clauses that continue after termination, such as confidentiality, IP, indemnities and warranties, otherwise termination can wipe out obligations you still need.
Change of control: gives you the right to end or renegotiate if the other party's ownership changes, which matters where the relationship depends on the people behind the business.

How Artificer Legal reviews and drafts your terms

A practitioner reviewing your terms reads them the way a regulator or a court would. The review works through the unfair terms checklist in section 24 of the ACL: significant imbalance, whether the term is reasonably necessary, the detriment it would cause, and whether the term is transparent. It checks that any guarantee exclusions comply with sections 64 and 64A of the ACL, tests whether your acceptance mechanics will hold up if a customer later denies agreeing, and looks at which entity actually signs.

Where a clause is commercially necessary but one-sided, an Artificer Legal practitioner will look for the least restrictive way to draft it rather than deleting the protection entirely, and will negotiate clauses in an order that protects your position: payment terms and liability cap first, then IP and termination, then the rest. If you are preparing terms for the first time, the review also confirms which document the terms belong in, whether a standalone services agreement, a terms of trade for repeat sales, or website terms for online customers, and how those documents should cross-reference each other.

Getting the terms into the deal

The drafting choice that most often decides whether a set of terms works is not any single clause but the way the terms become part of the contract. A carefully drafted document that is never actually agreed protects nobody. In eBay International AG v Creative Festival Entertainment Pty Ltd [2006] FCA 1768, the Federal Court found that a no-resale condition printed on a festival ticket did not bind purchasers who bought through channels where the condition was never drawn to their attention at the time of sale, and that representing the condition was enforceable against them was itself misleading conduct. The lesson is mechanical. Online, use a clear click-to-accept step with a link to the full terms before payment, and keep a record of which version each customer accepted. Offline, incorporate the terms by reference in the quote or purchase order before the deal is done, or have the agreement signed, and file the final version including schedules.

The essentials are the same across industries: identify the parties, fix the scope, price and payment terms, deal with delivery and acceptance, keep the consumer guarantees and the unfair contract terms regime in mind, and allocate IP, confidentiality, liability and termination expressly. Set the terms up so acceptance can be proven, review them when your business model or the law changes, and prefer tailored drafting over a generic template. A set of terms and conditions that is clear, current and actually agreed is one of the cheapest forms of insurance a growing business can buy.