- The common law baseline: there is no general right to cancel
- The one thing the clause does well
- The contracting-out carve-outs are narrower than they look
- Why the clause looks imported
- The 2026 unfair trading reforms: mechanics, not refunds
- The one context where the clause has genuine teeth
- What to draft instead
- The takeaway
Open almost any set of subscription software terms drafted on US paper and you will find a clause near the front declaring that the services are non-cancellable and that all fees are non-refundable. It reads as though the words themselves create the position. Australian suppliers copy the clause because the US templates carry it, and because it feels like the sort of thing a software business ought to say. The question worth asking is whether it is actually necessary under Australian law, or whether it is an imported term answering statutory questions asked somewhere else.
The short answer is that it is not necessary. At common law there is no general right to cancel a contract for services and claim fees back, so a clause saying the services are non-cancellable largely restates the default. The Australian Consumer Law (ACL) does not give customers a refund for change of mind either, so a scoped change-of-mind policy is the only part of the clause that does genuine work. Everything broader than that collides with the ACL: it is void to the extent it cuts back the consumer guarantees, it can itself be a misleading representation, and in a standard form contract it is a strong candidate for the unfair contract terms regime.
The common law baseline: there is no general right to cancel
Australian contract law follows the English tradition, and in that tradition a contract for services binds both parties for its term. A customer who signs up for a twelve month software subscription and later decides they no longer want it cannot simply walk away and demand their money back. Termination without agreement arises only in defined situations: repudiation or serious breach, frustration, or an express termination right in the contract.
The High Court restated the position in Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61. A right to terminate for breach depends on whether the term broken is essential, or whether the breach is serious enough to deprive the innocent party of substantially the whole benefit of the contract. Ordinary breaches give rise to damages, and the contract continues.
A clause saying the services are "non-cancellable" simply describes that position, and it adds nothing of its own. The only cancellation rights such a clause could ever switch off are rights the parties themselves create, or rights the statute confers. The first category is a drafting choice. The second is where the imported clause runs into trouble.
The one thing the clause does well
The ACL does not require a business to refund a customer who simply changes their mind. The consumer guarantees in sections 54 to 62 of the ACL are triggered by a failure to comply with a guarantee; buyer's remorse is not such a failure. A term that says, in substance, that the supplier does not offer refunds for change of mind is lawful, and it is the only part of the US-style clause that does real work.
The difficulty is that the imported form rarely stops there. It says the services are non-refundable, full stop. That formulation sweeps the statutory remedies in with the change-of-mind cases, and that is what makes it a problem.
Where the broad clause fails
It is void to the extent it cuts back the guarantees
Section 64 of the ACL provides that a term is void to the extent that it purports to exclude, restrict or modify the consumer guarantees, the exercise of a right they confer, or liability for a failure to comply with them. For services, those rights include requiring the supplier to remedy a failure, terminating the contract, and recovering compensation for the reduction in value of the services, as well as damages: sections 60 to 62 set the guarantees and section 267 sets the remedies. A term that purports to make all of that "non-cancellable and non-refundable" is void, and section 64(2) confirms that express exclusion is enough to trigger the section.
Software may not even be services. In Australian Competition and Consumer Commission v Valve Corporation (No 3) [2016] FCA 196, Edelman J held that the supply of computer games through Steam was a supply of goods, not services, and the Full Court dismissed the appeal in Valve Corporation v ACCC [2017] FCAFC 224. Where software is goods, the goods remedies apply: a consumer who suffers a major failure can reject the goods and obtain a refund under sections 259 and 263. A clause drafted around "services" being non-refundable may not even be aimed at the right category.
Saying it can be a misleading representation
The sharper practical risk is conduct. Section 18 of the ACL prohibits misleading or deceptive conduct, and section 29(1)(m) specifically prohibits false or misleading representations concerning the existence or effect of a consumer guarantee or a consumer's right to a refund or replacement.
In ACCC v Jetstar Airways Pty Ltd [2019] FCA 797, Jetstar admitted contraventions of sections 18 and 29(1)(m) where its booking flow represented that Starter and Plus fares were not refundable when consumers may have had refund entitlements under the consumer guarantees, and where its conditions of carriage stated that the services were not subject to statutory guarantees. Penalties and declarations followed. The regulator's concern was the impression created, because intention to mislead is not an element of either section.
Valve is the same story in software: its terms and support materials misrepresenting the consumer guarantees contravened sections 18 and 29(1)(m). The retail analogue is the long line of "no refund" signage cases, including ACCC v Target Australia Pty Ltd [2001] FCA 1326 and the Westco Jeans and Toys 'R' Us proceedings, where unqualified no-refund statements were treated as misrepresentations of statutory rights.
The compliant formulation is the scoped one: no refunds for change of mind, with an express statement that consumer guarantee rights are not affected. For more on the Jetstar outcome, see the non-refundable fine print that cost Jetstar $1.95 million.
Unfair contract terms
In a standard form contract, a blanket non-cancellable, non-refundable term is also exposed under the unfair contract terms regime in sections 23 to 26 of the ACL. Section 24(1) asks whether the term causes a significant imbalance, whether it is reasonably necessary to protect the supplier's legitimate interests (with the burden on the supplier), and whether it would cause detriment if relied on. Section 25 gives examples of the kinds of terms that may be unfair, including a term that permits one party but not the other to avoid or limit performance, to terminate, or that penalises one party for termination.
The exemption in section 26 for terms that define the main subject matter or set the upfront price is real but narrow. It protects a transparent commitment to a twelve month term at a stated price, and it leaves a forfeiture-of-all-fees clause buried in fine print exposed. In ACCC v Chrisco Hampers Australia Ltd [2015] FCA 1204, terms in a standard form consumer contract that restricted cancellation and refunds were declared unfair. Since the November 2022 reforms, proposing or relying on an unfair term also attracts pecuniary penalties under section 23(2A) to 23(2C). The regime now reaches small business contracts as well as consumer contracts, which matters for software sold to sole traders and small operators.
The contracting-out carve-outs are narrower than they look
Two provisions allow some contracting out, and neither supports a blanket clause.
Section 64A applies only to goods and services not of a kind ordinarily acquired for personal, domestic or household use. It permits a term limiting liability for a guarantee failure to re-supply: replacement or repair for goods, supplying the services again for services. Even then, the limitation fails if reliance on it is not fair or reasonable, and it cannot reduce the remedy below re-supply. For consumer software and SaaS, section 64A does not apply at all.
Section 139A permits terms excluding the services guarantees for recreational services, but only for liability for death or personal injury. It has nothing to do with software subscriptions.
Why the clause looks imported
The clause was written for the United States and the United Kingdom, where statutes create cancellation and refund rights.
In the United States, state automatic renewal laws, the Restore Online Shoppers' Confidence Act and the Federal Trade Commission's negative option regime impose affirmative duties about how subscriptions renew and how easily they can be cancelled. US templates therefore carry elaborate cancellation and refund sections because US law requires the machinery.
In the United Kingdom, regulation 13 of the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 gives consumers a fourteen day cooling-off cancellation right for distance contracts, and the Consumer Rights Act 2015 gives repeat performance and price reduction remedies for services.
Until now, Australia has had no general federal cooling-off or click-to-cancel right for online subscriptions. The only statutory cooling-off in the ACL is for unsolicited consumer agreements, in sections 69 to 89, covering door-to-door and telemarketing sales. Even there, section 89 voids any provision that restricts the consumer's right to terminate during the cooling-off period. For an ordinary online software subscription, there has been no statutory cancellation right for the broad clause to disclaim. The clause has been imported to answer a statute Australia never enacted, and it collides with the statutes Australia did enact. That changes, in part, from 1 July 2027.
The 2026 unfair trading reforms: mechanics, not refunds
From 1 July 2027, the Competition and Consumer Amendment (Unfair Trading Practices) Act 2026 applies. It received Royal Assent on 6 July 2026 and is the closest Australia has come to the US and UK subscription rules. It requires the opposite of what the imported clause asserts.
Alongside a general ban on unfair trading practices towards consumers (new Part 2-4, section 28B) and a drip pricing display duty (section 48A), the Act inserts a subscription regime (new Division 4A of Part 3-1, sections 48B to 48H). A subscription contract is defined broadly: it catches indefinite recurring supply, fixed terms that auto-continue, free trials that convert to paid plans, and introductory discounts that convert to a higher rate. Software subscriptions and auto-renewing annual plans all fit. Three duties then attach:
- Disclosure at sign-up (s 48D). When making the offer, the supplier must disclose that the contract is a subscription, the liabilities, the period, the renewal, any notice required to end it, and how to end it.
- Reminders while the contract runs (s 48E). The supplier must give subscribers prescribed information at prescribed times, the statutory hook for renewal and trial-ending reminders once the regulations are made.
- A straightforward way out (s 48F). The supplier must provide a way to end the contract that is easy to find and straightforward, and online where sign-up was online.
The reminder and cancellation duties apply to contracts meeting the consumer requirement or the small business requirement, the latter covering standard form contracts with subscribers who employ fewer than 100 people or turn over less than $10 million, so standard form SaaS terms sold to small businesses are in scope. Contraventions attract pecuniary penalties. The duties apply to contracts entered into on or after 1 July 2027, and to earlier contracts when they are renewed, extended or varied after that date.
Nothing in the new regime gives a subscriber a right to walk away from a fixed term, and nothing in it creates a right to a refund. Change of mind remains outside the statute, and the consumer guarantees remain the only route to a refund.
From 1 July 2027, a supplier who tells subscribers that the service cannot be cancelled will be contradicting a statutory duty to provide a straightforward way out. A blanket statement that fees are non-refundable will remain void to the extent it cuts back the consumer guarantee remedies under section 64, and misleading as to those remedies under sections 18 and 29(1)(m). The imported clause was written for statutes that create cancellation rights. The statute Australia has now enacted requires a workable exit instead.
The one context where the clause has genuine teeth
If the subscriber is not a consumer for ACL purposes, the consumer guarantees do not apply and the common law runs. A negotiated term committing both parties to a fixed term with no unilateral exit is then a legitimate allocation of risk, and it does real work. Three qualifications remain. Termination for repudiation or serious breach under the Koompahtoo principles, and termination for frustration, survive regardless. If the customer is a small business and the contract is standard form, the unfair contract terms regime applies to it anyway. And from 1 July 2027 the subscription duties in new Division 4A of Part 3-1 reach standard form contracts with small business subscribers, including the duty to provide a straightforward way to end the contract. The clause has genuine teeth only where the subscriber sits outside all three: a genuinely negotiated contract with a business that is neither a consumer nor a small business subscriber.
What to draft instead
For a subscription software agreement sold into Australia, the defensible structure is:
- A fixed term and renewal clause. State the term, the price, and the renewal mechanics plainly. This is the actual commercial commitment, and it is the part the section 26 exemption protects.
- A scoped change-of-mind policy. Say that the supplier does not offer refunds for change of mind, and say expressly that this does not affect consumer guarantee rights.
- A savings clause for the ACL. Nothing in the terms excludes, restricts or modifies the consumer guarantees or the remedies in sections 259 and 267.
- Preserved termination rights. Keep termination for breach, repudiation and frustration, and any statutory cooling-off rights, outside the clause.
- A cancellation pathway that meets the 2026 Act. From 1 July 2027, provide a way to end the subscription that is easy to find and straightforward, and online where sign-up was online; disclose at sign-up that the contract is a subscription, the renewal, any notice period and how to end it.
- Negotiated minimum terms for business customers. Where the subscriber is not a consumer, a minimum term with no unilateral exit belongs in the negotiated agreement with a business customer rather than in a standard form declaration.
The distinction between software as a product and software as a service decides which guarantees attach and what a customer can demand when something goes wrong; that is covered separately in how the ACL treats software as a good versus software as a service.
The takeaway
A blanket non-cancellable, non-refundable clause is not necessary under Australian law. At common law the customer already has no general right to cancel, and the ACL gives no refund for change of mind, so the only useful part of the clause is a scoped change-of-mind policy. In its usual imported form the clause is void to the extent it touches the consumer guarantees, it risks contravening the misleading conduct provisions, it invites an unfair contract terms challenge, and from 1 July 2027 it will sit against a statutory duty to provide a straightforward way out. The US and UK templates carry it because their statutes create cooling-off and cancellation rights. Australia's new unfair trading laws regulate how subscribers get out, and they leave the recovery of fees to the guarantees and the contract. Draft for the statute you actually have.