The clauses that decide who wins when a commercial contract goes wrong

A counterparty has sent you a Word document called "Services Agreement" or "Supply Agreement" or "Master Terms". It is twenty-odd pages. You have read the scope clause and the price, and you suspect the rest is the part that matters most. You are about to sign, or you are about to send your own version back, and you want to know which clauses are actually load-bearing.

A commercial contract is the operating manual for a relationship that has gone sideways. While the relationship is working, the document sits in a drawer. The moment something fails — a missed milestone, a data breach, a payment dispute, a falling-out between founders — the document is the only thing that decides who pays for the failure and who walks away clean. The clauses below are the ones that, in our experience, decide that question. They are not the only clauses in the agreement, but they are the ones a reviewer should slow down on.

What the parties have actually promised to do

The scope clause (sometimes called "services", "deliverables", "the works", or sitting in a schedule at the back) is the only clause that describes the bargain. Everything else allocates risk around it. If the scope is vague, every other protection in the contract starts to wobble — you cannot enforce a service level against undefined services, and you cannot terminate for non-performance if no one can say what performance was.

Push for objective tests, not subjective ones. "Delivered in accordance with Schedule 2" beats "delivered to the Customer's satisfaction".
Tie scope to a dated specification. A schedule that says "as agreed from time to time" gives the counterparty a moving target.
Watch the entire-agreement clause downstream. If scope sits in emails or a separate quote, the entire-agreement clause may cut those out.

The trap is signing a scope that describes the category of work (e.g. "marketing services") rather than the work itself. When a dispute arises about whether something was in or out, the court has nothing to anchor on.

How and when money moves

The payment clause is doing more than telling the customer when to pay. It is setting up the supplier's right to suspend, terminate, recover interest, and sue for debt rather than damages — which is a much easier action to run. A weak payment clause turns every late invoice into a damages claim.

Specify invoicing triggers (milestone, monthly in arrears, on acceptance) rather than "from time to time".
Set a payment period in business days, not calendar days, and state the time zone.
Include an interest rate on overdue amounts. If you don't, you fall back on statutory rates that may not cover your actual cost of capital.
For supply into government or large corporates, check whether your invoice has to follow a portal process — clauses that say "payment within 30 days of invoice" are meaningless if their system takes 25 days to approve the invoice for entry.

The variant the customer will push for is a right to set off any amount they say you owe them against any amount they owe you. That clause sounds neutral and is not — it lets them stop paying based on a unilateral assertion.

What each party is responsible for if something goes wrong

This is the indemnity and liability cluster, and it is where most of the negotiating leverage in a commercial contract sits. An indemnity is a promise to cover the other party's losses on a defined trigger. A limitation of liability caps what either side can recover. Together they decide, in advance, who carries the loss when things break.

An indemnity should specify what triggers it (breach of warranty, IP infringement, breach of confidentiality, third-party claim), and not be a free-floating "indemnify for any loss arising in connection with this agreement". The broader the trigger, the more it eats the rest of the contract's risk allocation.
The liability cap should be a real number tied to fees paid, not "unlimited" and not "the fees paid in the preceding 12 months" without thinking about whether that figure actually covers a realistic worst case.
Carve-outs from the cap are the negotiation. Customers want unlimited liability for IP infringement, confidentiality breach, indemnities, and personal injury. Suppliers want everything inside the cap except wilful misconduct.
Watch consequential loss exclusions. The phrase "consequential loss" does not have a settled meaning across Australian decisions, so list the categories you mean to exclude (loss of profits, loss of revenue, loss of business opportunity, loss of goodwill, loss of data) rather than relying on the label.

The classic trap: a supplier signs an uncapped indemnity for IP infringement and a cap of "fees paid" for everything else, and treats the document as low risk because the cap "looks" tight. The IP indemnity has just made the cap irrelevant.

What stays confidential, and for how long

Most commercial contracts run a confidentiality regime as a clause, not a standalone agreement. The clause should define what is confidential, what is excluded (already public, independently developed, required by law), what the receiving party can do with it, and how long the obligation lasts after termination.

A perpetual confidentiality obligation is common for trade secrets and rare for everything else. For ordinary commercial information, a survival period of three to five years post-termination is typical.
Carve-outs for disclosure to professional advisers, regulators, and (for listed entities) the ASX are standard. Carve-outs for AI tools and cloud subprocessors are not yet standard and should be considered when the receiving party is a tech-enabled service.
Where one party is a small business and the other is a regulated entity (financial services, telco, energy), the confidentiality clause may interact with the Privacy Act 1988 (Cth) if personal information is being handled — the contract is not a substitute for the underlying privacy obligations, but it should not contradict them either.

The drafting choice that matters most: who owns the information at the end. A confidentiality clause that obliges return or destruction on termination, with a written certificate of destruction, is much stronger than one that simply says the obligation continues.

Which law governs and where disputes are heard

Governing law and jurisdiction are usually the last two clauses in the document and the first two that matter when things break. Governing law sets the substantive rules. Jurisdiction sets the forum. They are different choices and people routinely conflate them.

For two Australian counterparties, pick a single state's law (typically the state where the supplier is based, unless the customer has more leverage). Cross-border, governing law becomes a genuine commercial negotiation.
"Exclusive jurisdiction of the courts of New South Wales" is stronger than "non-exclusive". Non-exclusive lets the other side sue you anywhere.
A multi-step dispute resolution clause (notice → senior executive meeting → mediation → litigation or arbitration) slows down hostile counterparties and forces a structured conversation before anyone is in court. The trap is making the steps a precondition to filing — if the clause says "no party may commence proceedings until mediation has concluded", an interlocutory injunction may become harder to get.
Mediation under the Resolution Institute or ACDC rules is cheap and quick. Arbitration is private but expensive and final. Litigation is public and appealable. The right choice depends on whether you ever expect to need urgent court orders (e.g. to restrain a breach of confidence) — if so, keep a carve-out for injunctive relief regardless of the dispute resolution path.

Termination — for breach, for convenience, and what survives

Termination clauses are where contracts most often get drafted lazily. A clean termination regime says: who can terminate, on what trigger, with what notice, and what happens afterwards.

Termination for cause should require a notice-and-cure period (usually 14 or 30 days) for breaches that are capable of remedy, and immediate termination for breaches that aren't (insolvency, change of control, material breach of confidentiality).
Termination for convenience is the customer's friend and the supplier's enemy. If the customer can terminate for convenience on 30 days' notice, the supplier's commitment is effectively a 30-day deal. Suppliers should resist or price for it.
Survival is the clause that decides whether your indemnities, confidentiality, and liability cap continue to operate after termination. Without a survival clause, there is real ambiguity. List the surviving clauses explicitly.

Other clauses worth thinking about, depending on the deal

Service levels and credits — if the contract is for ongoing services, a measurable SLA with a financial consequence for breach is what turns a relationship clause into an enforceable one.
Data and IP ownership — where work creates IP, the default position under Australian law is that the creator owns it. If the customer expects ownership, the contract has to say so.
Subcontracting and assignment — controls on whether either party can substitute the counterparty they signed with. Important if you chose this supplier specifically.
Force majeure — what happens when neither party can perform because of an external event. Post-pandemic, these clauses are negotiated harder; vague references to "acts of God" are no longer enough.
Unfair contract terms compliance — if one party is a small business (fewer than 100 employees or under $10 million in turnover) and the contract is a standard form, the unfair contract terms regime in the Australian Consumer Law and the ASIC Act applies, with penalties for the larger party from 9 November 2023. Standard-form templates need a review against this regime, not a copy of last year's draft.

How Artificer Legal would approach this document for you

When we review a commercial contract for a client, we work in roughly this order. First, the scope and payment clauses, because the rest only makes sense once the bargain is clear. Second, the indemnity and liability cluster — this is where the most money sits and where the most concessions are usually available. Third, termination and survival, because they decide what the document is worth after the relationship ends. Fourth, confidentiality, governing law, and dispute resolution. The boilerplate at the back is read last and rarely changed, but we check the entire-agreement clause, the variation clause, and the notices clause because all three can quietly defeat earlier negotiation.

We push back on uncapped indemnities, on consequential loss exclusions that use the label without listing the categories, on termination-for-convenience without a corresponding wind-down fee, and on jurisdiction clauses that send disputes to a forum the client cannot reach. We insist on a real number for the liability cap, a survival list, and a payment-default trigger that gives our supplier clients the right to suspend. We negotiate the order that gives away the least: scope and payment are non-negotiable from our side, then indemnities are traded against caps, then termination is traded against transition assistance.

If you have a draft on your desk and you are not sure which clauses to push on, that is the conversation we are usually being asked to have.

The liability cap and its carve-outs price the risk

If we had to pick one, it would be the limitation of liability — specifically the interaction between the cap and the carve-outs from the cap. More commercial disputes resolve at a number set by that clause than by any other part of the agreement. A weak cap turns a small breach into an existential claim. A well-drafted cap, with carefully chosen carve-outs, lets both parties price the risk of the deal honestly and walk away whole when something goes wrong.

The clauses above are not the whole document, but they are the parts a reviewer should slow down on. Scope and payment define the bargain. Indemnities and the liability cap allocate the risk around it. Confidentiality, governing law, and dispute resolution decide what happens when the relationship breaks. Termination and survival decide what is left when it ends. A contract that has each of those clauses thought through is a contract that does its job — sitting in the drawer until it needs to come out, and saying clearly who carries the loss when it does.