There is usually a moment when a business owner first reads their own terms and conditions properly. A customer has disputed a charge, a supplier has demanded you sign their T&Cs before the next order ships, or a web developer has handed over a template with your business name in the header and asked you to fill in the blanks. That moment is the right one to ask what the document is actually for.
Terms and conditions set the ground rules between your business and everyone it deals with. They bind each customer who buys from you, each user who signs up to your website, and each supplier who works on your behalf, and they replace the informal deal done by email and handshake. Done well, they allocate risk before it materialises, set clear expectations about price, delivery, warranties and payment, and give you a process to follow when something goes wrong. Done badly, they can do more harm than having no document at all, because a court or regulator can strike down exactly the clauses you were relying on.
The commercial clauses
Making the terms part of the deal
A contract only exists once the customer accepts your terms, and the way acceptance is captured decides whether the whole document is enforceable. If a customer never saw your terms before committing, they were never part of the deal, no matter how carefully drafted.
- Timing: present the terms before the customer pays, signs or starts work. Terms buried in a footer link, or emailed after payment, may never be incorporated.
- Conspicuousness: on a checkout page, the link to your terms should sit next to the acceptance checkbox, not at the bottom of a help page. For quotes, say in the quote itself that it is subject to your terms.
- Evidence: keep a record of acceptance, whether that is a signed quote, a completed checkout or a logged "I agree" click. If a dispute goes to court, this record is what proves the terms applied.
What you are actually supplying
The scope clause is the quiet workhorse of the document. It describes the goods or services you will provide, and equally important, what you will not. For a service business, list the inclusions, the exclusions, the milestones, the assumptions, and anything the customer must do to let you perform. For goods, specify quantities, specifications, and what happens if the product changes.
The drafting choice that matters most is precision. "Website design services" invites argument about how many revisions are included. "Three rounds of revisions to the approved homepage and checkout designs, with additional rounds quoted at $150 per hour" does not. Vague scope is the most common source of the "that's not what we asked for" dispute, and the clause is where you win or lose it.
What it costs and when you get paid
The payment clause covers the price, taxes, deposits, due dates and accepted payment methods. It should also state when payment is required, what happens if it is late, and whether you can stop work until you are paid.
- Late fees: a late-payment charge or interest rate should be a genuine estimate of what late payment costs you, not a punishment. A court can refuse to enforce a fee it regards as a penalty.
- Surcharges: if you pass on card fees, set the surcharge at what it actually costs you to accept the payment rather than a flat markup.
- Price changes: if you reserve the right to raise prices, give notice and tie the increase to something identifiable, such as a published rate. A right to change prices at any time without notice is a clause a court may find unfair.
Your payment terms should also match your marketing. A pricing clause that lets you charge more than the price displayed on your website risks breaching the prohibition on misleading or deceptive conduct in s 18 of the Australian Consumer Law, which sits in Schedule 2 to the Competition and Consumer Act 2010 (Cth).
Delivery, risk and when ownership passes
For goods, this clause states the lead time, the shipping method, who pays freight, and the moment risk passes from you to the customer. Risk and ownership are different things. You can hand the goods to a courier and pass risk at that point while retaining ownership until you are paid, if the clause says so. For services, the equivalent is the customer's obligations: site access, information, approvals and anything else you need from them to perform on time, plus the consequence if they do not provide it.
The trap here is silence. If your terms say nothing about when risk passes, disputes about goods lost in transit fall back on default rules and on whoever can prove what happened. State the point clearly: "risk passes when the goods are delivered to the carrier" is a sentence that saves real money.
How the deal can be changed
A variation clause sets out how changes to scope, price or timelines are approved and documented. The drafting minimum is that variations must be in writing and signed or confirmed by email by an authorised person, and that the new price or timeline is agreed before the work is done.
The variant the other side will push for is informal variation, usually by saying "that's fine, just get it done". If your terms allow oral changes, you lose the written record that the whole clause exists to create. A clause that requires written variation does not stop you agreeing to changes; it just makes sure everyone remembers what was agreed.
Ending the deal
The termination clause covers how long the contract runs, whether it renews, and how either side can end it early. It should give you the right to terminate for breach, non-payment and insolvency, and usually the right to suspend work while a payment dispute is resolved.
- Auto-renewal: if you run subscriptions or ongoing supply, a term that renews automatically and charges the customer again needs clear upfront disclosure, or it risks being an unfair term. Give notice before renewal and make cancellation straightforward.
- What survives: specify which clauses survive termination, usually confidentiality, intellectual property, indemnities and dispute resolution. Otherwise those obligations can lapse the moment the relationship ends.
- Notice periods: keep them workable. A notice period that only the customer can rely on, or one that locks you in for years without an exit, is the kind of imbalance a court will look at closely.
The risk and compliance clauses
Consumer guarantees you cannot contract out of
If you sell to consumers, the Australian Consumer Law (ACL) gives them guarantees you cannot exclude, restrict or modify. Goods must be of acceptable quality, which means fit for the purposes goods of that kind are commonly used for, acceptable in appearance and finish, free from defects, safe and durable (s 54 of the ACL). Services must be rendered with due care and skill (s 60 of the ACL). Under s 64 of the ACL, any term that purports to exclude these guarantees is void.
The remedies are set out in s 259 of the ACL. For a major failure, the customer can reject the goods and get a refund, or recover compensation. For a minor failure, they can require you to remedy it within a reasonable time, and if you do not, they can have it fixed elsewhere and recover the cost. Your terms cannot rewrite this menu, but they can and should explain how you will handle it: how to notify a fault, what information you need, and how returns work. "No refunds" signs and clauses are not just unenforceable; they advertise the kind of conduct regulators pursue.
Your own warranty and how customers claim on it
If you offer an express warranty on top of the consumer guarantees, s 102 of the ACL requires the warranty document to comply with prescribed requirements, including mandatory wording set out in the Competition and Consumer Regulations 2010 (Cth) and your contact details. Supplying a warranty document that does not comply carries penalty exposure.
The drafting choice is to present the warranty as what it is: a promise that runs alongside the consumer guarantees, not instead of them. State the claim process, the timeframes, and who pays for return freight, and make clear that the warranty does not limit the customer's rights under the ACL. A warranty that reads like a replacement for statutory rights invites both customer complaints and regulator attention.
How far your liability goes
The limitation of liability clause is where most of the value in your terms sits, and where most of the mistakes are made. It caps your exposure, usually at the amount the customer paid, and excludes categories of loss such as lost profits or consequential damage. For goods and services bought for business use rather than personal use, the ACL lets you go further: under s 64A of the ACL you can limit liability for a failure to comply with most guarantees to repair or replacement of the goods, or re-supply of the services, provided it is fair and reasonable to rely on the term in the circumstances.
- The variant the other side pushes for: an uncapped liability clause, or one that makes you liable for the customer's lost profits. Push back with a cap tied to the fees, and remember the cap works both ways if you want it to.
- The trap for consumer sales: a liability cap that purports to exclude or limit consumer guarantees is void under s 64, and an unbalanced clause in a standard form contract with a consumer or small business can be declared unfair.
- The drafting minimum: carve out anything you cannot legally limit, including the consumer guarantees, liability for personal injury, and fraud. A clause that overreaches can be struck down in whole rather than trimmed.
Intellectual property, confidential information and privacy
If your business creates or receives intellectual property, the terms should state who owns what. Pre-existing IP stays with the party that owns it; newly created IP goes to whoever the commercial deal says it goes to, usually you for work you produce, with the customer receiving a licence to use it for the agreed purpose. If you use customer content, such as photos in a design portfolio, say so and get permission in the same clause.
Confidential information needs a clause that survives the relationship. Define what counts as confidential, allow disclosure where required by law, and require the other side to return or destroy it at the end.
If you collect personal information, link your privacy policy and describe how you handle data. Most businesses with annual turnover above $3 million must comply with the Australian Privacy Principles under the Privacy Act 1988 (Cth). Businesses below that threshold are generally exempt, unless an exception applies, for example where they provide health services. Your terms should point to a policy that is accurate about what you actually collect, because a privacy policy that promises less than your terms, or more than your processes deliver, creates its own problems.
When the world gets in the way
A force majeure clause allocates the risk of events outside either party's control: natural disasters, supplier failure, industrial action, public health events. It should list what counts as an event, require the affected party to notify the other side, and state what happens next, usually suspension of obligations until the event ends, with a right to terminate if it runs too long.
The drafting choice is scope. A list that is too short leaves you exposed to events nobody thought of, while "any event beyond a party's reasonable control" can be stretched to cover ordinary business difficulty. A middle path is a defined list followed by a general category, plus an obligation to take reasonable steps to work around the event.
Where disputes go and which law applies
A tiered dispute clause requires the parties to negotiate, then mediate, before either side can sue. It keeps small disagreements out of court and, if a dispute does run, it gives you a paper trail showing you tried to resolve it. Nominate a governing law, usually the law of your home state or territory, and a venue for any court proceedings.
Note that a governing law clause cannot strip consumers of their ACL rights, because the ACL applies throughout Australia regardless of which state's law the contract nominates. What the clause does is give you certainty about where and how a dispute is heard, which is worth having even though it does not override the consumer protections.
Optional clauses worth considering
These clauses only earn their place in some businesses, but when the trigger exists, they matter.
- Retention of title: include it if you supply goods on credit. It keeps ownership with you until you are paid, although its effectiveness against other creditors can depend on registration under the Personal Property Securities Act 2009 (Cth).
- Indemnities: include them where the real risk sits with the other side, such as a customer who supplies content for you to publish, or a platform user who posts material that infringes someone's rights.
- Insurance requirements: include them in trades, events and professional services, where the counterparty should carry specified cover at minimum limits, and ask for certificates of currency.
- Acceptable use and suspension: include them for websites, apps and platforms, defining prohibited conduct and giving you the right to suspend or terminate accounts that breach it.
- Survival: state expressly which clauses keep operating after the contract ends, typically confidentiality, IP, indemnities and dispute resolution.
How an Artificer Legal lawyer reviews your terms and conditions
When a client asks us to review or draft terms and conditions, we work through the document in a set order. First we check how the terms become part of the deal, because a beautifully drafted document that was never accepted is worthless. Then we read the commercial clauses against the client's actual sales process: how a quote is issued, what happens at checkout, how variations are handled in practice. Only then do we turn to the risk clauses.
The clauses we push back on are the ones that look protective but do not survive contact with the law: unilateral variation rights, automatic renewals that trap customers, broad indemnities, and liability caps that bear no relation to the fees charged. The variants we insist on are a liability cap that is defensible under s 64A for business customers, a clear acknowledgment of the non-excludable consumer guarantees, mandatory wording in any warranty against defects, and transparent language throughout, because transparency is a factor a court must consider in deciding whether a term is unfair under ss 23 and 24 of the ACL.
We also check who the document has to work for. Standard form contracts with consumers and small businesses are now a compliance issue as much as a drafting issue. An unfair term in a standard form contract is void, and since the 2022 reforms an unfair term also attracts civil penalties: up to $100 million for a company, or three times the benefit obtained, or 30% of adjusted turnover, and $2.5 million for an individual, with a separate contravention for each unfair term. That is a different risk profile from the one that existed a few years ago, and it is why a review is not just about wording.
Why the liability clause decides how a dispute ends
If there is one clause that separates terms that work from terms that do not, it is the limitation of liability clause. It fails in three distinct ways, and each failure is common. It purports to exclude the consumer guarantees, which makes it void under s 64 and hands a regulator a ready-made case. It is drafted so one-sidedly that a court declares it unfair under the ACL, which is now a penalties exposure as well as a drafting problem. Or it is omitted entirely, leaving your exposure open-ended when a single failure produces a claim for a customer's lost profits that dwarfs the original job. A clause that is capped at the fees, carved out to respect the consumer guarantees, and aligned with what s 64A permits for business customers, is the one that survives.
The rest follows from that discipline. Capture acceptance before the customer commits, describe precisely what you supply and what it costs, state when risk and ownership pass, keep the termination and variation rights workable, and review the whole document at least annually or whenever your pricing, products or delivery model change. The businesses that treat their terms and conditions as a living part of their operations, rather than a PDF they once downloaded, are the ones whose documents hold up when they are actually needed.