What to check before you sign a supplier's terms
A supplier's terms are written by the supplier, for the supplier. Before you sign, check four things. Are you protected as a small business? What does the law guarantee you whatever the terms say? What do the terms quietly take away? And can the supplier take the goods back?
Most owners check the price and the delivery date. The expensive clauses sit further down, and they are usually the ones nobody reads until something goes wrong.
First: are these standard form terms?
This decides whether the strongest protection applies at all.
A standard form contract is a pre-written contract used for all customers. The customer can't change any, or most, of the terms. The ACCC lists the factors a court weighs:
One party has all or most of the bargaining power
The contract was prepared before any discussion
You could effectively only accept or reject it as presented
You had no real opportunity to negotiate
The terms don't take your business's specific features into account
The supplier uses the same or very similar contract with others
The terms attached to a quote, a supplier portal's click-through and a trade credit application are almost always standard form. So is the software subscription you accepted with a tick box.
Getting a discount or a better delivery date doesn't change that. The question is whether the terms themselves were open for discussion. If you asked for a clause to change and were told "that's our standard contract", keep the email.
Then: are you a small business under this law?
Since 9 November 2023, a small business is protected against unfair terms in any new or varied standard form contract. You qualify if you have fewer than 100 employees, or less than $10 million in annual turnover. Either one is enough.
There is no contract value ceiling. A $2,000 cleaning contract and a $2 million supply agreement sit under the same test.
This is not the small business test in workplace law, which is fewer than 15 employees. A 40-person business is large for unfair dismissal and small for unfair contract terms. The two tests share a name and nothing else.
An unfair term is void. It doesn't bind you, and the rest of the contract carries on without it. And since the 2023 reforms, a supplier who uses one can be penalised. We covered that from the other side, the terms you send, in can you be fined for an unfair contract term.
The test a term has to fail
A hard term is not the same as an unfair one. The ACCC sets out three questions, and a term has to fail all three. Is it a term that:
Causes a significant imbalance in the rights and obligations of the parties
Is not reasonably necessary to protect the legitimate interests of the supplier
Would cause you financial or other harm if it were enforced
Transparency counts too. A term is transparent if it is in reasonably plain language, clear, and not hidden. A one-sided term buried in schedule 4, in 7-point type, starts from a weaker position than the same term on page one.
Some terms are outside the test altogether. The rules don't apply to the upfront price or the terms defining the main subject matter. Nor do they reach terms required or permitted by another law.
That last point matters in practice. You can't argue that the price itself is unfair. You can argue about a clause that lets the supplier change the price after you've signed.
The clauses to read first
Skip to these before anything else. The ACCC's examples of terms that may be unfair share one shape: the supplier can do something you can't.
Avoid or limit their responsibilities
End the contract
Penalise you for breaching or ending it
Change the terms
None is automatically unfair. But each is worth reading twice, and each has a fairer version you can ask for.
| Clause | What the supplier's version often says | What to ask for instead |
|---|---|---|
| Variation | The supplier may change prices or terms by notice or by updating its website | Written notice ahead of any change, and a right to exit without penalty if you don't accept it |
| Termination | The supplier may end for convenience; you may end only for its breach | Mutual termination rights on the same notice |
| Automatic renewal | The contract rolls over for the same term unless you cancel in a narrow window | A reminder before the window opens, and a rollover to month-to-month rather than a new full term |
| Limitation of liability | The supplier's total liability is capped at a month's fees | A cap tied to what a failure would actually cost you, and no cap on data, confidentiality or injury |
| Indemnity | You cover the supplier's losses "arising from" your use of the goods or services | An indemnity limited to your own breach or negligence, and mutual |
| Suspension | The supplier may suspend supply at its discretion | Suspension only for unpaid invoices, after notice and a chance to pay |
| Assignment | The supplier may transfer the contract to anyone | Transfer only with your consent, or to a buyer of the whole business |
Two of these have been named by the regulator directly. The ACCC has flagged automatic renewal terms binding customers to subsequent contracts as a concern for small business. It has also flagged terms requiring a small business to indemnify a trader in an unreasonably broad range of circumstances.
Those two ACCC statements date from 2017, before the 2023 reforms. The current guidance covers the same ground more generally.
Scenario: the renewal you didn't see coming
Say you sign a 24-month contract for a phone system at $1,200 a month. Clause 14.2 says it renews for another 24 months unless you give written notice at least 60 days before the end date.
Twenty-three months in, you have found a better system and started planning the move. You email the supplier to cancel. The reply points to clause 14.2. The window closed a fortnight ago, and the contract has renewed.
That missed date is another 24 months at $1,200. On the supplier's reading, you now owe $28,800 for a system you are about to stop using. Cancelling early may trigger a termination fee as well.
Could you argue the renewal term is unfair? Possibly. A full-term rollover with a hidden notice window is close to the kind of term the ACCC named. But an argument is not a refund, and it starts after the money is owed.
The cheaper fix happens on the day you sign:
1. Find the notice window. Not the end date. The last day you can give notice.
2. Put it in the diary twice. Once when the window opens, and once a fortnight before it closes.
3. Ask for the rollover to be monthly. Most suppliers agree when asked before signing. Few offer it.
Scenario: the liability cap worth one month's fees
Say your business runs on a managed IT service at $2,000 a month. The terms cap the supplier's total liability at "the fees paid in the month before the claim".
A botched update takes your booking system down for three days in your busiest week. You lose the bookings, refund deposits and pay staff overtime to recover. On the cap, the most you can recover from the supplier is $2,000.
This is where the consumer guarantees come in, and where they stop.
A services contract under $100,000, including GST, is covered by the guarantees. The supplier has to provide the service with acceptable care and skill. A term that tries to exclude that has no effect.
But the law does allow one kind of limit for business purchases. Section 64A of the Australian Consumer Law, in the Competition and Consumer Act 2010, lets a supplier limit its liability. That applies to goods or services not ordinarily bought for personal, domestic or household use. For services, the limit can be to supplying them again, or paying the cost of that. It doesn't apply where relying on the limit would not be fair or reasonable.
So a clause limiting the supplier to "fixing it or refunding the fee" is not automatically void in a business contract. The practical protection is in the negotiation, not the statute:
Ask for a cap set at 12 months of fees, not one
Ask for carve-outs from the cap for data loss, confidentiality breaches and injury
Ask what insurance the supplier carries, and whether the cap matches it
A supplier who carries $10 million of professional indemnity cover and caps you at $2,000 is keeping most of that cover for itself.
Three rewrites worth asking for
These are the clauses where a small change of wording moves the most risk. Ask for them before you sign, in writing.
Price and term changes
What the supplier sends:
The Supplier may vary these Terms, including the Fees, at any time by publishing the varied Terms on its website. Continued use of the Services constitutes acceptance.
What to ask for:
The Supplier may vary the Fees or these Terms by giving the Customer at least 30 days' written notice. If the Customer does not accept a variation, it may end this agreement without penalty before the variation takes effect.
The change is small. You get told, you get time, and you get a way out. That is exactly the balance the unfair terms test looks for.
Automatic renewal
What the supplier sends:
This Agreement renews automatically for successive periods equal to the Initial Term unless either party gives written notice at least 60 days before the end of the then-current term.
What to ask for:
At the end of the Initial Term, this Agreement continues month to month. Either party may end it by giving 30 days' written notice. The Supplier will remind the Customer in writing 90 days before the Initial Term ends.
Indemnity
What the supplier sends:
The Customer indemnifies the Supplier against all losses, costs and claims arising from or in connection with the Customer's use of the Goods.
What to ask for:
Each party indemnifies the other against losses caused by its breach of this Agreement or its negligence, reduced to the extent the other party contributed to the loss.
"Arising from or in connection with" is the phrase to watch. It can make you responsible for the supplier's own faulty goods, simply because you were using them.
What the law guarantees, whatever the terms say
Consumer guarantees aren't only for households. A business purchase is covered when at least one of these applies:
| Covered when | Not covered when bought |
|---|---|
| It costs less than $100,000, including GST | For resupply |
| It's commonly bought for personal, domestic or household use | For use or transformation in production or manufacturing |
| It's a vehicle or trailer used mainly to carry goods on public roads | To repair or treat other goods |
Where they apply, the basic rights can't be taken away by anything a business says or does. A supplier term claiming to exclude them doesn't.
Run your own purchases through the table:
$18,000 of laptops for staff. Under $100,000. Covered
A $9,000 coffee machine for the office kitchen. Covered
$30,000 of stock you will resell. Bought for resupply. Not covered
A $140,000 office fit-out. Over $100,000, and not a household purchase. Probably not covered, so the contract terms are all you have
A delivery van, at any price. A vehicle used mainly to carry goods on public roads. Covered
The ACCC's own example shows how the production exclusion works. Grain costing $20,000 isn't covered when a farmer buys it to feed cattle, because it is used in producing the cattle.
The larger the purchase, the more the contract matters. Above the threshold, a warranty and a remedy clause are not extras. They are the only protection you get.
When the goods aren't yours yet
Many supply terms say the supplier keeps ownership until you pay. It's called retention of title.
Under retention of title, a supplier delivers on written credit terms with the promise that they'll get the goods back if unpaid. To rely on it against others, the supplier registers on the Personal Property Securities Register.
Say you take $40,000 of equipment on 60-day terms, with a retention of title clause. Until the invoice is paid, the equipment is not yours to sell or to offer as security. If your business runs into trouble before it's paid, a registered supplier can recover it.
There is a second check, and it runs the other way. business.gov.au recommends you search the PPSR. It shows whether a supplier is using the goods they're selling you as security for their own debt. Search it before you pay a large deposit, and before you buy second-hand equipment from another business.
What a supplier agreement should cover
business.gov.au lists what a supplier contract should document: the goods or services, price and payment terms, timeframes, delivery, quality standards, warranty periods, insurance, dispute resolution, termination, and exclusion clauses.
Use it as a gap check. If the supplier's terms say nothing about quality standards or warranty, that silence usually benefits the supplier. If there is no dispute clause, the first step in any disagreement is a lawyer's letter.
If a term looks unfair
Ask first. The ACCC suggests contacting the business and asking them to remove or change the term. Suppliers change terms more often than owners expect, especially before signing, and especially for a customer they want to keep.
Keep the request short and specific. Something like this works:
Before we sign, we'd like three changes: 30 days' notice of any price change, with a right to exit; month-to-month after the initial term; and a mutual indemnity limited to breach and negligence. Can you confirm?
A written request, and the reply, also answer the "could you negotiate?" question if it ever matters.
Then get help. The Australian Small Business and Family Enterprise Ombudsman helps small businesses resolve disputes with other businesses. That includes mediation and access to low-cost legal advice. Most states have a small business commissioner offering mediation too. The ACCC can also help you understand your options.
Before you sign: a checklist
Is it standard form? Pre-written, take it or leave it. Then unfair terms protection may apply.
Are you a small business? Under 100 employees or under $10 million turnover.
Read variation, termination and renewal. Who can change it, who can end it, when it rolls over.
Read liability and indemnity. What you can recover, and what you're promising to cover.
Check the consumer guarantees. Under $100,000 including GST, and not for resale or production.
Check retention of title. And search the PPSR before a large deposit.
Look for what's missing. Quality, warranty, dispute resolution.
Diary the renewal window. The last day for notice, not the end date.
Ask for changes in writing. It's cheaper than disputing them after.
When to call a lawyer
The contract is long-term or business-critical. Multi-year supply, exclusivity or minimum volumes need proper review.
The supplier is enforcing a term you think is unfair. That's a dispute now, not a review.
Large sums, data or safety are involved. Above $100,000 the guarantees fall away, and the liability cap and insurance carry the risk.
What this doesn't cover
Commercial and retail leases, which have their own state laws. See what to check before signing a commercial lease. Financial products and services, where the unfair terms rules sit with ASIC. Construction contracts and security of payment laws. And standalone NDAs, where whether unfair terms rules apply is not settled.
Verified 28 September 2026, against the contracts, consumer guarantees and unfair contract terms pages on accc.gov.au, the Competition and Consumer Act 2010 on legislation.gov.au, the supplier management page on business.gov.au, the retention of title page on ppsr.gov.au, and the disputes assistance page on asbfeo.gov.au.
The terms you sign are the ones you'll be held to. Upload the supplier agreement before you sign it. Every clause is scored, the one-sided ones are named, and fairer versions come back beside them.
Contractam provides contract analysis and information, not legal advice. For advice specific to your situation, consult a qualified Australian lawyer. Contractam analyses contracts under Australian law only. See our disclaimer.