Terms and conditions apply, your legal duties when using the phrase

"Terms and conditions apply" is one of the most common phrases in Australian retail. It appears on website banners, sale signage, radio ads, checkout pages and competition entry forms. It tells the customer the offer comes with rules: who can take it up, what is excluded, when it ends, how to redeem it and what happens if they forget to cancel.

The phrase itself, however, does no legal work. If the headline is misleading, or the customer cannot see the terms before they commit, or a term is unfair, those four words will not save you. Courts and regulators look past the phrase to the terms behind it.

If your business advertises promotions, runs a website or an app, sells over the phone or at a counter, or uses standard form agreements, the Australian Consumer Law (the ACL), which is Schedule 2 of the Competition and Consumer Act 2010 (Cth), imposes four practical duties on you:

Accuracy: your headline must be true on its own, not rescued by fine print
Notice: customers must be able to see and understand the terms before they commit
Fairness: standard form terms must not be unfair
Currency: your terms must stay consistent with what your team actually promises and does

This article walks through each duty, what happens if you breach it, and a checklist you can use before your next promotion goes live.

Who must comply with these duties

The ACL's core protections apply to anyone acting in trade or commerce. For practical purposes, that is any business promoting, supplying or selling goods or services in Australia, whether online, in a shop or through an agent. There is no size threshold before the misleading conduct rules apply to you.

The unfair contract terms regime is narrower. It covers standard form contracts with consumers and with small businesses. A contract is presumed to be a standard form contract, and it is the business that prepared the contract that must prove otherwise. Since 9 November 2023, the test has been broadened: a contract can still be standard form even if the customer could negotiate minor changes, choose between a few preset options, or had someone else negotiate a different contract on their behalf. The ACCC's guidance on unfair contract terms sets out how the test now operates.

Whether a contract is a small business contract turns on the size of the customer's business and the upfront price payable under the contract, with a higher price cap where the contract runs for more than 12 months. A lawyer can confirm whether a particular contract falls within the current thresholds, because getting this wrong means you are either missing exposure or assuming the regime applies when it does not.

A consumer contract is one where the customer is an individual acquiring goods or services for personal or household use, rather than for their own business.

Duty 1: Keep the headline honest

Section 18 of the ACL provides that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. Read alongside the rest of the ACL, the practical rule is that the advertisement itself, including the headline claim, must not create a false impression that the fine print cannot fix. Section 29 goes further and bans specific false or misleading representations about goods and services, including representations about price and about the existence or effect of consumer guarantees.

In practice this means:

Selected items: if only some styles or sizes are 50 per cent off, the claim must say so next to the headline, not in a footnote at the bottom of the page
Caps and limits: minimum spends, limited stock, maximum quantities and geographic restrictions are material qualifiers and need to be prominent
Price transparency: surcharges, delivery fees and add-ons cannot be buried; the customer should be able to work out the real price from the ad
Free trials: if the trial rolls into a paid plan, say so plainly, and make the renewal price and cancellation window clear before sign-up

The Big Day Out ticketing dispute shows what happens when a business asserts a condition it cannot deliver. In eBay International AG v Creative Festival Entertainment Pty Ltd [2006] FCA 1768, the promoter's ticket conditions said tickets resold for profit would be cancelled and the buyer refused entry. The Federal Court found the claim misleading: the condition had not been drawn to the attention of purchasers in every sales channel and did not apply to every purchase, so the promoter could not represent it as an absolute rule. Only assert what your terms actually say, and only against customers who had notice of them.

Duty 2: Give customers notice before they commit

Courts enforce terms only where the customer had reasonable notice of them before the contract was formed. A term buried in a footer link, added after purchase, or printed so small it cannot be read is unlikely to be part of the contract. The unfair contract terms regime reinforces this point: for a term to be transparent under s 24 of the ACL, it must be expressed in reasonably plain language, be legible, be presented clearly and be readily available to the affected party.

Online, that means:

Place the link near the button: put the terms link next to the payment or create-account button, not only in the site footer
Capture acceptance: use a checkbox or an "I agree" step for purchases and sign-ups, and record the timestamp and the version of the terms accepted
Summarise the key conditions: put the material qualifiers next to the headline claim (for example, "selected styles only" or "auto-renews monthly, cancel anytime")
Design for mobile: terms must be readable on small screens; avoid tiny fonts and hard-to-scroll PDFs

In store and by phone:

Point-of-sale visibility: display key conditions on signage, menus or order forms at the counter
Staff scripts: train your team to state material limitations, such as non-refundable deposits or cancellation windows, before the customer commits
Accessible copies: offer a short-form summary plus a QR code or printed copy of the full terms

Duty 3: Keep the terms fair

Since 9 November 2023, proposing, using or relying on an unfair term in a standard form consumer or small business contract is itself a contravention of the ACL, not merely grounds for the term to be struck out. The ACCC has confirmed that penalties now apply from that date for unfair contract terms.

A term is unfair if it would cause a significant imbalance in the parties' rights and obligations, is not reasonably necessary to protect the business's legitimate interests, and would cause detriment if relied on. The business bears the burden of proving the term is reasonably necessary, and the court must consider the transparency of the term and the contract as a whole. Terms that define the main subject matter of the contract or set the upfront price are not subject to the unfairness test.

Common red flags in small business terms include:

Unilateral rights: you can change prices or terms at any time, but the customer cannot exit
Automatic renewals: renewal that is hard to cancel or poorly disclosed at sign-up
Cancellation fees: charges that do not reflect the loss you actually suffer
Broad disclaimers: attempts to exclude all liability, including the consumer guarantees
One-sided clauses: termination, suspension or indemnity rights without limits or triggers

Consumer guarantees cannot be excluded at all. Under s 64 of the ACL, any term that purports to exclude, restrict or modify the guarantees is void, and the ACCC makes the same point in its guidance on contracts: the terms and conditions of a contract cannot take away the consumer rights that always exist under the law.

Duty 4: Keep your terms consistent and current

A business that runs a promotion with one set of rules, then points customers to a different set of terms at checkout, has created the exact gap that s 18 catches. Your promotional terms, website terms and general terms of trade should not conflict, and customers should not receive different rights depending on how they buy unless that is a deliberate, disclosed difference.

Practical steps:

Version control: time-stamp updates, archive past versions and keep records of which version each customer accepted
Review ownership: assign someone to review terms when a promotion ends or a policy changes, and make sure your sales team does not quote old conditions
Renewal changes: if you change ongoing terms, such as subscription prices, give customers clear notice and a fair way to cancel before the change takes effect
Privacy: if you collect personal information during sign-up or redemption, your terms should link a privacy policy that reflects what you actually do with that data, and the policy needs to comply with the Privacy Act 1988 (Cth)
Marketing: if you send promotional emails or SMS, make sure you have the customer's consent, identify your business and offer an easy opt-out, as required by the anti-spam rules for commercial electronic messages

What happens if you get it wrong

The maximum penalties under the ACL are significant. For a body corporate, the maximum pecuniary penalty for false or misleading representations under s 29, and for unfair contract term contraventions, is the greater of $100 million, three times the value of the benefit obtained, or 30 per cent of the company's adjusted turnover during the breach period. For individuals, the maximum is $2.5 million.

A breach of s 18 does not itself carry a pecuniary penalty, but courts can make declarations, injunctions and compensation orders, and the ACCC regularly pleads s 18 alongside s 29, which does attract penalties. The scale of exposure is not theoretical: in October 2024 the Federal Court ordered Qantas to pay $100 million in penalties for misleading consumers, in a proceeding brought by the ACCC.

For unfair terms, the consequences are layered. The term is void and unenforceable, the contract continues to bind the parties without it, and the ACCC or a state regulator can seek declarations and orders preventing you from using the same or substantially similar terms in future contracts.

A practical compliance checklist

Run through these checks before your next promotion goes live:

Audit live promotions: for each current offer, list the material qualifiers: eligibility, exclusions, caps, expiry, renewal and cancellation
Check prominence: confirm each material qualifier appears next to the headline claim, not only in the fine print
Verify the terms exist: make sure every "terms and conditions apply" actually points to specific, current terms the customer can reach before checkout
Test the acceptance flow: buy your own product on a phone and confirm the terms link is visible before payment and that acceptance is recorded
Review for unfair terms: scan standard form contracts for the red flags above, especially unilateral variation and automatic renewal clauses
Check the guarantees: remove any language that excludes or limits consumer guarantees
Align your documents: reconcile promotional terms, website terms and terms of trade so customers get consistent rights
Keep records: archive versions, timestamps and the privacy and marketing consents you collect

When a lawyer should review your terms

A lawyer adds the most value at three points. First, a review of your standard form contracts for unfair terms, because the burden of proving a term is reasonably necessary sits with you, and a clause that looked fine in a template may fail that test in your context. Second, drafting or redrafting the terms themselves, including liability caps, cancellation provisions and renewal mechanics, so they reflect your actual risk profile. Third, checking whether a particular contract or promotion falls within the unfair contract terms regime, which turns on the standard form and small business tests and the current thresholds.

The fine print test

The mistake that costs Australian businesses most is treating "terms and conditions apply" as a disclaimer. It is not. It is a promise that specific terms exist, are available and are fair, and the promise is judged against everything the customer saw before they committed. Before your next promotion goes live, run the fine print test: could a reasonable customer, reading only the advertisement and the summary next to it, understand the real deal on price, eligibility and what happens at renewal? If not, fix the advertisement rather than the fine print, because that is the part a court or regulator will read first.