Terms and conditions in Australia, a clause-by-clause guide

You have a draft or a template of Terms and Conditions in front of you, or you are about to write one, because a customer or platform has asked for it, or because you are finally putting your selling arrangements on a proper footing. The temptation is to take a template you found online, swap in your business name, and publish. That approach usually produces a document that fails exactly when it matters most: when a customer disputes a charge, a refund or a delivery date.

Terms and Conditions, also called Terms of Service, Customer Terms or Terms of Trade, are the contract between you and each customer. They bind once the customer accepts them, whether by signing, by clicking at checkout, or by placing an order that incorporates them. They supplement what would otherwise be left to a handshake or to terms implied by law, and they set the ground rules for price, delivery, refunds, liability and disputes. This guide walks through the clauses that matter, what each one should do, and the traps that make terms unenforceable.

The clauses that do the work

Who the contract is between

State the full legal name of the entity that actually contracts, with its ABN or ACN, not just the trading name. If you trade through a company but the terms name only the business, a customer may struggle to enforce against the right entity and a director can end up personally exposed. Identify the customer by their legal name as well, and specify who is entitled to place orders under the agreement.

What you are actually selling

The scope clause is where most disputes start. Spell out the goods or services, what is included and excluded, how supply happens (shipped, on-site, remote), and what the customer must provide. A practical checklist:

Deliverables: what is produced or supplied, in what quantity, and to what specification.
Exclusions: anything not included, so there is no surprise when it is billed separately.
Customer responsibilities: what you rely on the customer to do or provide, and that their delays shift timelines.
Assumptions: the facts your price depends on, such as volumes, sites or data quality.

When the customer accepts your terms

This is the incorporation clause: how your terms become part of the deal. It matters more than any other, because if the customer never agreed to your terms, the rest of the document applies to nothing. Workable mechanisms include a signed proposal or order form that references and attaches the terms, a clickwrap tick box at checkout, or purchase orders that incorporate a dated version of the terms by reference. Passive browsewrap, where the terms sit in a footer link the customer never sees, is the classic failure mode, because terms only bind if the customer had reasonable notice of them before contracting. For online acceptance, the Electronic Transactions Act 1999 (Cth) confirms that a transaction is not invalid merely because it was concluded electronically, and that a signature requirement is met by a method that identifies the person and indicates their intention. Keep a version number and date on the terms so you can prove which version applied to which order.

Price, deposits and when you get paid

Set out how prices are calculated, whether quotes expire, deposit and progress payment requirements, invoice timing, due dates and accepted payment methods. Three choices drive most of the value here:

Late payment: a fee or interest charge is enforceable only if it is a genuine pre-estimate of your loss, not a punishment. In Paciocco v Australia and New Zealand Banking Group Ltd (2016) 258 CLR 525, the High Court confirmed that a fee that is extravagant or unconscionable compared with the greatest loss that could conceivably follow is an unenforceable penalty. Keep the amount modest and disclose it up front.
Security: for high-value orders or trade credit, reserve the right to require a deposit, a personal guarantee, or a security interest registered on the Personal Property Securities Register (PPSR).
Recurring billing: if you take direct debits, make the customer's authority explicit and give them a clear way to cancel.

Delivery, deadlines and changes

State your lead times and what happens when they slip because of supply shortages, customer delays or changed requirements. Include a simple variation process so that a change to scope triggers a documented adjustment to price and timeframe. A clause that lets either side change an order at any time without a process is a dispute generator; tie changes to written approval.

Cancellation, rescheduling and termination

Explain when customers can cancel or reschedule, any cut-off times, and the fees that apply. For ongoing services, set the initial term, how renewal happens, and how either party ends the agreement, whether for convenience on notice or for breach. Watch the balance: a term that lets you terminate at will but gives the customer no exit is the kind of one-sided clause that attracts attention under the unfair contract terms rules below.

Refunds, returns and the consumer guarantees

Your refund terms must sit inside the consumer guarantees in the Australian Consumer Law (ACL), which is Schedule 2 of the Competition and Consumer Act 2010 (Cth). The ACL gives consumers non-excludable guarantees that goods are of acceptable quality and fit for their common purposes (s 54), and that services are supplied with due care and skill and achieve any result the customer made known (ss 60-61). Section 64 voids any term that purports to exclude, restrict or modify those guarantees, so a blanket "no refunds" rule is void to the extent it cuts across them. You can still have a process: conditions for returns, timeframes, and goodwill refunds beyond the legal minimum, as long as the guarantees are preserved. For goods and services not ordinarily acquired for personal, domestic or household use, s 64A lets you cap liability for a guarantee failure to repair, replacement or re-supply, provided it is fair and reasonable to rely on that cap.

Who carries the risk: warranties, liability caps and indemnities

Risk allocation is where terms get long, and where they get struck down. A structure that works:

Warranties: limit promises to what you can actually deliver, while preserving the consumer guarantees.
Liability cap: cap total liability at a sensible figure, commonly the amount paid in the last 12 months, and exclude indirect or consequential loss where permitted.
Indemnities: use them only where the customer controls the risk, such as their data, instructions or content, and keep them proportionate.

The trap is the unfair contract terms regime. Under s 23 of the ACL, a term of a standard form consumer or small business contract is void if it is unfair: it causes a significant imbalance in the parties' rights, is not reasonably necessary to protect the legitimate interests of the party advantaged by it, and would cause detriment. A contract is presumed to be a standard form contract where one party has all or most of the bargaining power or the terms were prepared in advance without real negotiation (s 27). A small business contract is one where at least one party employs fewer than 100 people or has turnover under $10 million (s 23(4)). Proposing or applying an unfair term now carries a pecuniary penalty of up to $100 million for a body corporate and $2.5 million for an individual (s 224 of the ACL). One-sided termination rights, broad indemnities and hidden fees are the usual casualties.

Intellectual property and customer content

State who owns the existing intellectual property each side brings, what happens to IP created during the engagement, and the licence the customer gives you to use their content (logos, copy, data) so you can deliver the work. If you build something for a customer, decide expressly whether ownership transfers on full payment or a licence is granted, because silence leaves it arguable either way.

Privacy and confidentiality

If you collect personal information, include a clause that points to your privacy policy and records the customer's agreement to it. For platform or software businesses, add provisions about data security, access, backups and deletion. A confidentiality clause keeps each side's non-public information, such as pricing, know-how and customer lists, inside the deal, with narrow exceptions for legal requirements and information already in the public domain. Keep the exceptions tight, or the clause becomes unenforceable in practice.

Disputes, governing law and notices

Nominate a governing law and a forum, for example the laws of New South Wales, so a dispute does not open with a fight about which state's law applies. Include an escalation pathway: a good-faith discussion between managers, then mediation, before court. Set out how official notices are given, and accept email if the address is kept current.

The boilerplate that keeps the contract working

A short set of administrative clauses stops the document falling apart:

Assignment and subcontracting: who can transfer rights and who can actually do the work.
Severability: an unenforceable clause is cut out rather than killing the whole contract. Under s 23(2) of the ACL, an unfair term is void but the contract continues to bind if it can operate without the term.
Force majeure: what happens when events outside either side's control, such as natural disasters or supply failures, prevent performance.
Entire agreement and priority: the terms are the whole deal, and if an attachment conflicts with the body, you state which one wins.

Optional clauses worth adding when they fit

When they fit your business, consider adding any of these:

Service levels and support windows: for software, platforms or managed services, define support hours, response times and maintenance windows, so "24/7 support" is never accidentally promised.
Auto-renewal and subscription management: for recurring billing, state the renewal cycle, notice period and how to cancel, and give advance notice of price changes.
Personal guarantees and security interests: for high-value trade credit, a director's guarantee or a PPSR-registered security interest converts an unsecured debt into something you can actually enforce.
Non-solicitation and restraint: if your staff deal directly with customers, restrict customers poaching your people and departing staff taking customers, drafted no wider than necessary.
Customer-supplied data indemnity: if you process customer data or content, have the customer warrant they own it and indemnify you for claims arising from it.

When to bring in a lawyer: how Artificer Legal reviews your terms

An Artificer Legal practitioner would start with the acceptance mechanism, because it decides whether the rest of the document ever applies. We would then read the terms against the unfair contract terms test in s 24 of the ACL, flagging one-sided termination, unhedged indemnities and hidden fees; check that the refund terms preserve the consumer guarantees rather than contradicting them; test the liability cap against your actual exposure and the s 64A limits; and confirm that online acceptance and version control would hold up if a customer ever disputed an order. We would also reconcile the terms with your quotes, proposals, website and invoices, because contradictions between documents are where customers win. The negotiation order matters too: scope and price first, then risk allocation, then boilerplate.

Acceptance decides whether any other clause applies

Of everything in a set of Terms and Conditions, the acceptance and incorporation clause is the one most often skipped and the one that decides who wins in a dispute. A carefully drafted liability cap, refund policy and governing law clause are worth nothing if the customer never agreed to the document that contains them. Design how customers accept your terms, whether by signed proposal, clickwrap tick box or order form incorporating a dated version, before you polish any other clause.

Terms and conditions work clause by clause: identify the parties, scope the supply, capture acceptance, set the payment and delivery rules, preserve the consumer guarantees, allocate risk within the unfair contract terms limits, and keep the boilerplate short. Drafted that way, the document does its real job, which is to make the deal clear enough that disputes do not need to start.