Your business has grown to the point where quotes and email threads no longer feel like enough. A bigger client has asked for "your terms" before they will sign, or your website has started taking bookings with no written contract behind the checkout. The decision in front of you is which document to use: a service agreement signed by both parties, or a set of terms and conditions accepted online. What hangs on that choice is how you get paid, what risk you carry, and what you can recover when a job goes wrong.
Two documents, one underlying question
A service agreement is a one-to-one contract. It is usually a standalone document prepared for a specific client, setting out the scope of work, milestones, fees and tailored commercial terms, and it is signed or otherwise accepted by that client. Terms and conditions are one-to-many. One standard set of rules is published on your website or app and accepted by every customer in the same way, usually by ticking a box or completing a purchase.
The question hiding behind "service agreement or terms and conditions" is not which single document to adopt. It is which of your customer relationships are bespoke enough to need their own signed contract, and which can be governed by a standard rulebook. Most businesses end up with both: website terms for the self-serve transactions, and a service agreement for the jobs that matter.
Two assumptions tend to derail the decision. The first is that one document covers everything. It does not: terms and conditions cannot carry a negotiated scope for a one-off project, and a service agreement is overkill for a $40 booking. The second is that terms of trade are the same thing as terms and conditions. They are not. Terms of trade are payment terms for business-to-business invoicing, setting timeframes, late fees and what happens on non-payment, and they often sit alongside the other two documents.
Whether your customer is a consumer or a business
Who your customer is
The first question is whether your customer is a consumer or a business, because the Australian Consumer Law (the ACL), which sits in Schedule 2 of the Competition and Consumer Act 2010 (Cth), draws a bright line between them.
Under s 3 of the ACL, a person acquires services as a consumer if the price is $100,000 or less, or if the services are of a kind ordinarily acquired for personal, domestic or household use. Consumers get the benefit of the consumer guarantees, including that services are provided with due care and skill, fit for their stated purpose and completed within a reasonable time.
The critical point for your drafting is s 64: any term that purports to exclude, restrict or modify the consumer guarantees is void. You cannot contract your way out of a guarantee for a consumer, and you cannot make a consumer sign away a refund they are entitled to. For business customers the position is different. Section 64A lets a supplier of services that are not ordinarily acquired for personal, domestic or household use limit liability for a failure to comply with a guarantee to re-supplying the services or paying the cost of having them supplied again. In other words, the more your customers look like businesses, the more of your liability you can lawfully cap, and the more room a negotiated service agreement has to allocate risk:
- Consumers: guarantees cannot be excluded (s 64), and refund and remedy rights apply regardless of what your terms say.
- Businesses: liability for a guarantee failure can be capped to re-supply (s 64A), and commercial terms can be negotiated.
- Small businesses: still protected against unfair terms in standard form contracts, so a one-size-fits-all terms and conditions document aimed at them needs the same care as consumer terms.
How standardised your offering is
The second factor is how much your work looks the same from one customer to the next. This is the factor that most cleanly separates the two documents:
- Option A: a signed service agreement, right for bespoke or higher-value work where scope, milestones, deliverables and risk allocation are specific to the client. Consulting projects, design and development jobs, trades work and marketing retainers.
- Option B: terms and conditions, right for standardised, repeatable transactions where every customer gets the same thing. Subscriptions, SaaS accounts, online bookings, digital products and memberships.
If every job is different, terms and conditions cannot do the work, because the scope that makes each job different has to live somewhere. If every transaction is identical, a service agreement is a heavier process than the risk justifies. The middle path used by most firms is a master service agreement with a scope schedule for each project, or website terms plus a short statement of work for implementation or premium add-ons.
How the terms will be accepted
A contract only protects you if it is actually incorporated into the deal, and the two documents are accepted in different ways, with different legal consequences.
A signed contract is the strongest form of acceptance. In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, the High Court confirmed that a party who signs a document known to contain contractual terms is bound by them, even if they have not read the document. That is why a service agreement signed before work starts is the most reliable way to lock in scope, price and liability limits.
Online acceptance is weaker and needs care. In eBay International AG v Creative Festival Entertainment Pty Ltd [2006] FCA 1768, the Federal Court found that a condition on festival tickets was not incorporated into contracts made through channels where the condition was never drawn to the purchaser's attention, and that asserting it could be enforced in every case was misleading. The lesson is that terms buried behind a link, printed small on a ticket, or displayed only after purchase may simply not form part of the contract. What matters in practice for each document is:
- Service agreement: e-signature or email acceptance that refers to the final version, including schedules, before work starts.
- Terms and conditions: a visible link at the point of purchase or sign-up, an active tick box with no pre-ticked boxes, and a recorded timestamp and version.
- Both: keep a copy of what the customer accepted and when, because that record is what you produce if a dispute turns on whether your terms applied.
What you need to control
Every business has a short list of things it wants the contract to control: what is in scope and what is not, who owns the intellectual property, how liability is capped, and how either side can end the relationship. The difference between the two documents is how much detail each can carry.
Scope and variations belong in a service agreement, because they are specific to the job. IP clauses belong everywhere. In Australia, ownership of the code, designs or content you create does not automatically pass to the client who pays for the work, so the contract has to say who owns what and who gets a licence to use it. If the client supplies materials, you need a licence to use them to deliver the services.
Liability caps need the most care, because of the unfair contract terms regime in Part 2-3 of the ACL. If your contract is a standard form contract, which s 27 presumes it to be unless the other party proves otherwise, and it is a consumer contract or a small business contract, then any term that is unfair is void under s 23. The factors in s 27 include whether one party had all or most of the bargaining power, whether the contract was prepared before any discussion, and whether the other party had an effective opportunity to negotiate.
The stakes rose on 9 November 2023, when the reforms in the Treasury Laws Amendment (More Competition, Better Prices) Act 2022 (Cth) took effect. Proposing an unfair term, or applying or relying on one, is now itself a contravention, and the penalties in s 224 of the ACL reach $100 million for a company and $2.5 million for an individual. Terms that get scrutinised include liability caps that exclude everything, unilateral variation clauses, automatic renewals and one-sided indemnities.
How you get paid
The payment terms should match how the work is actually sold. State whether fees are fixed, hourly, milestone-based or subscription, when invoices issue, when payment is due, and what happens on late payment. Keep the wording consistent across the service agreement, the website checkout and your invoices, because the version a customer sees at the point of payment is the one they will hold you to.
Deposits, cancellation fees and late fees need to be defensible. A charge that is out of proportion to the actual cost or loss it compensates may be struck down as a penalty, and a disproportionate fee in a standard form contract can also be an unfair term. If you invoice business customers on credit, terms of trade give you the payment timeframes, late fees and consequences of non-payment that keep cash flow predictable.
Whether you handle personal information
If your business collects personal information, your customer terms need to line up with the Privacy Act 1988 (Cth). The Act applies to APP entities, and under s 6D a business is generally outside it while its annual turnover for the previous financial year was $3 million or less, unless one of the exceptions applies, for example for health service providers or credit reporting bodies.
If the Act applies to you, APP 1 requires you to have a clearly expressed and up-to-date privacy policy, and the way you collect, use and disclose personal information in practice must match what the policy and your customer terms say. A service agreement and website terms that promise one thing while your onboarding collects another are a compliance problem waiting for a complaint.
How an Artificer Legal lawyer would help you choose
The choice is not one an online template can make for you, because it depends on facts only you know: who your customers are, how standardised your work is, and how the terms will actually be accepted. An Artificer Legal lawyer would start by mapping your customer relationships against the factors above, and stress-test the assumptions, including the assumption that your website terms cover your bespoke work, or that a liability cap drafted for consumers will survive contact with a business client.
We would model the downside before it happens. That means checking your standard form contracts against the unfair contract terms regime, making sure your liability caps are drafted so they work with the consumer guarantees you cannot exclude, and confirming your acceptance flows produce the evidence a court would need. Then we would draft the documents the chosen path needs: the service agreement with its scope schedule, the website terms and conditions, the terms of trade where you invoice on credit, and the privacy policy that matches your data practices.
The question that decides the rest
The decision between a service agreement and terms and conditions is really a decision about which of your relationships deserve a signed, tailored contract and which are served by a standard rulebook, and most businesses need both. The mistake that costs the most is not picking the wrong document. It is picking a document and never proving it was accepted, or drafting terms that the ACL will not let you rely on.
Ask yourself one question about each product or service you sell: is this one-to-many or one-to-one? If the answer is one-to-many, you need terms and conditions with a defensible acceptance step. If it is one-to-one, you need a signed service agreement that carries the scope, the IP position and a liability cap that matches the law. In either case, check the standard form contract against the unfair contract terms regime before you rely on it, because since November 2023 the penalty for getting that wrong is no longer just a void clause. That is where a lawyer earns their keep, and it is the difference between documents that sit in a drawer and documents that work when a dispute arrives.