- The checkbox you almost certainly skipped
- What terms and conditions actually are
- When a term never made it into your contract
- The sale item that turned out to be faulty
- The subscription that kept charging you
- The business software you clicked through
- Drafting terms and conditions that hold up for your business
- When you probably don't need a lawyer yet
- The terms you agree to deserve a second look
The checkbox you almost certainly skipped
A new phone, a streaming subscription, an app download, a software trial, a Christmas sale checkout. At some point a small checkbox appears and everything stops until you tick it. "I agree to the terms and conditions." Most people tick it without reading a word, because reading the fine print would take longer than the purchase itself.
You are not alone in that. A widely reported Deloitte survey found that more than 90% of consumers accept terms and conditions without reading them.
You might be reading this because you clicked through a deal that did not turn out the way it was advertised, or because you run a business and want to know whether the terms and conditions on your own website would survive a challenge. Both questions come back to the same underlying issue: if you did not read the agreement, does it still count?
What terms and conditions actually are
Terms and conditions are a contract. More precisely, they are a standard form contract: a set of terms drafted by one party and offered to the other on a take-it-or-leave-it basis. When you click "I agree", you accept the offer and a contract is formed on those terms.
The general rule is that you are bound by a contract you enter into, even if you did not read it. That principle was applied recently by the Full Federal Court in Carnival plc v Karpik (The Ruby Princess) [2022] FCAFC 149. A passenger sued the cruise operator over the Ruby Princess COVID-19 outbreak, and the court had to decide whether she was bound by the terms of her passage contract, including a clause requiring disputes to be heard in a US court and waiving class actions. She had not read the terms, but the Full Court held she was bound by them, because the cruise line had taken reasonable steps to bring them to her attention before she booked.
So the starting answer is straightforward: clicking "I agree" can bind you to terms you have never read. But there are two sets of limits on that rule, and they matter in practice. The first is about how a term becomes part of a contract at all. The second is about what Australian law simply will not let a contract say, no matter how clearly it is written.
When a term never made it into your contract
For a term to bind you, the other party needs to have taken reasonable steps to bring it to your attention before or at the time the contract was formed. Unusual or onerous terms need even more.
The classic Australian example is Oceanic Sun Line Special Shipping Co Inc v Fay [1988] HCA 32. A passenger booked a Greek cruise from a travel agent in Sydney and paid for it. The ticket, which contained detailed conditions including an Athens-only jurisdiction clause and a limit on liability, was only handed over after he arrived in Greece. The High Court held that those conditions were not part of the contract at all. The contract had been formed when the passenger paid, at a time when he had no opportunity to see, let alone read, the terms.
The lesson cuts both ways. As a consumer, a genuinely buried or unusual term may not bind you at all. As a business, it is the warning about how you present your own terms: a clause that is onerous, unexpected, or hidden in a way that gives the customer no real opportunity to see it is the clause most likely to fail.
The sale item that turned out to be faulty
Suppose you buy a marked-down appliance in a sale, tick the checkbox, and the item arrives damaged or stops working within weeks. The store points to its terms and conditions, which say all sales are final and no refunds are given.
That clause is void. The Australian Consumer Law (the ACL), which sits in Schedule 2 of the Competition and Consumer Act 2010 (Cth), gives every consumer a set of guarantees that apply automatically to goods and services. Goods must be of acceptable quality (s 54), reasonably fit for any disclosed purpose (s 55), match their description (s 56), and match any sample or demonstration model (s 57). Services must be provided with due care and skill (s 60), be reasonably fit for their purpose (s 61), and be supplied within a reasonable time (s 62).
Under s 64 of the ACL, any term that purports to exclude, restrict or modify those guarantees is void. A "no refunds" term cannot remove your right to a repair, replacement or refund for goods that fail a guarantee, and it does not matter that the goods were on sale. The terms and conditions you agreed to cannot contract out of the ACL.
The subscription that kept charging you
Now suppose the trap is not a faulty product but a subscription. You sign up for a free trial of an app, and buried in the terms is a clause saying the trial automatically converts to a paid annual plan and renews every year unless you cancel in writing at least 30 days before the renewal date. A year later you notice the charges.
This is where the unfair contract terms rules bite. Under s 23 of the ACL, a term of a consumer contract or small business contract is void if it is unfair and the contract is a standard form contract. The contract continues to bind the parties without the unfair term (s 23(2)), so the offending clause simply drops out.
A term is unfair under s 24 if it would cause a significant imbalance in the parties' rights and obligations, it is not reasonably necessary to protect the legitimate interests of the party advantaged by it, and it would cause detriment if relied on. Transparency is a factor the court must consider, and a term is presumed not to be reasonably necessary unless the business proves otherwise. A one-sided auto-renewal clause that locks a customer into a long, expensive commitment without a clear reminder is the kind of term that can be challenged.
The stakes for businesses have risen sharply. Since 9 November 2023, proposing, applying or relying on an unfair term in a standard form consumer or small business contract is itself a contravention of the ACL, attracting significant penalties. What used to be a private argument about a void clause can now become a regulator's enforcement matter.
The business software you clicked through
The unfair contract terms rules do not only protect consumers. A contract qualifies as a small business contract if at least one party employs fewer than 100 people or has a turnover of less than $10 million (s 23(4) of the ACL). If your business falls within that definition, the same protections apply when you click through a supplier's standard form agreement.
If you sign up to a software platform, a payment gateway or a supplier agreement without reading the terms, you are still bound by what you accepted, subject to the same reasonable-notice and unfair-terms limits. Before you click, it is worth checking the clauses that cost money in practice: automatic renewals, unilateral price changes, limitation of liability, indemnities, and any clause that forces disputes into a particular forum. Those are the clauses that can turn an unread agreement into an expensive one.
Drafting terms and conditions that hold up for your business
If you are the business putting terms and conditions in front of customers, the law gives you a clear recipe for making them enforceable.
First, the content. A well-drafted set of terms typically covers payment terms, delivery of products, refunds and returns, a description of the goods or services, any warranties or guarantees, intellectual property rights, limits on liability, and a dispute resolution process. Tailor the terms to what your business actually sells, because a generic template will miss the traps specific to your products.
Second, the process of acceptance. To maximise the chance that your terms are part of the contract, require a positive act of acceptance, such as a checkbox or an "I agree" button, rather than relying on a link buried in a footer. Make the terms reasonably accessible before acceptance, so a customer can actually review them, and draw attention to anything unusual rather than burying it. Use plain language.
Third, and most importantly, stay inside the lines the ACL draws. You cannot exclude the consumer guarantees, and you cannot include unfair terms. The penalty for getting this wrong is no longer just an unenforceable clause. Since the 2023 reforms, it can be a fine, which is why it is worth having the terms reviewed before a dispute, not after one.
When you probably don't need a lawyer yet
Most everyday purchases are fine. You clicked through, the product arrived, the subscription works, and the terms will never be looked at again. For the vast majority of transactions, the unread terms and conditions are a non-event.
It becomes worth taking a closer look when something unusual is on the line: a term that seems one-sided or buried, an automatic renewal you did not notice, a liability limit in a contract that is critical to your business, or a dispute where the other side is relying on a clause you never knew existed. In those situations a quick check with a lawyer will normally give you an excellent steer on whether the term is enforceable, and most firms offer a free initial consultation, so finding out rarely costs anything.
The terms you agree to deserve a second look
The checkbox is a contract. Clicking "I agree" can bind you to terms you have never read, and courts will usually hold you to them if the other side took reasonable steps to bring them to your attention. But that is not the whole story. A term that was never reasonably brought to your attention may not be part of the contract at all, the consumer guarantees cannot be excluded no matter what the terms say, and an unfair term in a standard form contract is void and, since November 2023, potentially a costly contravention for the business that proposed it.
Whether you are the one clicking or the one drafting, the practical takeaway is the same. Know what your terms actually say before you rely on them, and if a term looks too one-sided to be true, it may be exactly the term that the law will not enforce.