You've built your online store or service offering, picked a payment gateway, and set up shipping. Now someone drops a template terms-and-conditions document in front of you and asks you to customise it. Or your web developer has added a checkbox labelled "I agree to the terms and conditions" and you realise you haven't actually written any. Either way, you're now the person who has to make sure this document is correct — and you probably don't know where to start.
Terms and conditions for an online business are a contract between you and anyone who buys from you. They govern the transaction from the moment a customer places an order through to delivery, dispute, and refund. They don't displace consumer law — nothing in your terms can override the guarantees and protections the Australian Consumer Law (ACL) automatically gives your customers — but they do fill in everything the ACL leaves to the parties to agree on. A well-drafted set of terms also reduces the number of conversations you need to have when something goes wrong, because both sides already know what the rules are.
Essential clauses to include
What you are actually supplying
The most fundamental clause in any set of terms is a clear description of what is being sold. For goods, this means specifying whether the product description on your website forms part of the contract, and what happens if a product is unavailable or discontinued before dispatch. For services, it means defining the scope — what is included, what is not, and what constitutes completion or delivery.
Ambiguity here is where most disputes begin. If a customer believes they have purchased ongoing support and you believe you sold a one-off setup, you have a scope problem that no other clause can fix. Draft this section with your worst-case customer misunderstanding in mind.
Traps to watch for:
- Incorporating website content by reference without controlling what that content says — product pages change, and the version at time of purchase may differ from what a customer finds later.
- Failing to address digital goods or downloadable content separately if your business supplies them.
- Leaving service scope vague and relying on a verbal scope confirmation that isn't recorded.
Price, GST, and payment terms
State your prices clearly and specify whether they include GST. If your pricing is displayed across the website rather than repeated in the terms, say so explicitly — and include a mechanism for what happens if a price error occurs on your site before an order is confirmed.
Set out which payment methods you accept. If you use a third-party processor such as a buy-now-pay-later provider, note that customers using those services are also bound by the processor's own terms. You are not responsible for those terms, and you should not inadvertently assume responsibility for them by failing to acknowledge they exist.
Also address:
- Whether payment is required in full before dispatch or access.
- Your process for handling failed payments or disputed charges.
- Any fees that apply for returned payments or chargebacks (noting these must be reasonable, not punitive — see the cancellation clause below).
Cancellation rights and fees
Cancellations need to be handled carefully because your drafting is constrained by the ACL on two sides.
First, any cancellation fee you charge must be a genuine pre-estimate of the loss your business suffers as a result of the cancellation — not an arbitrary round number designed to deter cancellations. The ACCC's position is that charges imposed when a customer cancels should reflect the business's actual losses. A clause that simply states "a 25% fee applies to all cancellations" without any connection to genuine costs is the kind of provision that can attract scrutiny under the unfair contract terms regime.
Second, since 9 November 2023, proposing, using, or relying on an unfair contract term in a standard form contract has attracted penalties under the ACL. An unfair term is broadly one that creates a significant imbalance in the parties' rights, is not reasonably necessary to protect a legitimate interest, and would cause detriment if relied upon. Excessive or one-sided cancellation fees are a common target.
Your cancellation clause should address:
- The notice period required for a customer to cancel without penalty.
- How refunds (if any) are calculated when a cancellation occurs partway through a service.
- What happens if you need to cancel — not just when the customer does. If you cancel on a customer, they are entitled to a full refund with no deductions.
Delivery and risk
For product-based businesses, delivery terms carry significant commercial weight. The key question is: at what point does risk in the goods pass from you to the customer? Most online businesses treat this as happening on dispatch, but that position needs to be clearly stated — because if you say nothing, a dispute about a lost parcel leaves both parties pointing at each other.
Set out in your terms:
- The delivery methods and carriers you use, and whether the customer can request a specific carrier at their cost.
- The geographic areas you deliver to.
- Estimated timeframes, with a disclaimer that these are estimates only and not guaranteed delivery dates.
- What happens if a customer provides an incorrect address, or requests a redirect after dispatch.
- Who bears the cost and responsibility for failed delivery — including redelivery fees.
Include a clause limiting your liability for delays caused by circumstances outside your control (carrier delays, natural events, customs holds for international shipments). This is sometimes called a force majeure clause, though that label is not required. The key is that the clause should be specific enough to be meaningful — a list of genuinely unforeseeable events — rather than a blanket exclusion of all delay liability.
For service businesses, the equivalent clause deals with access: whether you need physical or system access to the customer's premises or platforms, under what conditions, and who is responsible for ensuring that access is available when you need it.
Returning goods and your refund policy
This clause has less flexibility than most business owners assume.
Under Schedule 2 of the Competition and Consumer Act 2010 (Cth), the ACL gives consumers automatic guarantees about the quality of goods and services. Under s 64 of the ACL, any contract term that purports to exclude, restrict, or modify those guarantees is void. That means you cannot write a "no refunds" clause and have it hold up. Customers are entitled to a remedy — replacement, refund, or repair — when goods fail to meet the consumer guarantees, regardless of what your terms say.
You may offer a more generous policy on top of the ACL baseline — for example, a 30-day change-of-mind return policy. If you do, the terms should specify the condition goods must be returned in, who pays return postage, how refunds are processed, and what timeframe applies. Change-of-mind returns are not required by the ACL; they are a commercial choice.
If you provide a warranty against defects — a written promise to repair, replace, or refund if a product proves defective — you must comply with reg 90 of the Competition and Consumer Regulations 2010 (Cth). That regulation requires your warranty document to include specific prescribed text — a statement that your goods or services come with guarantees that cannot be excluded under the ACL and setting out the consumer's entitlements. The prescribed text differs depending on whether you are warranting goods, services, or both. Getting this wording wrong means your warranty document does not comply, even if your product replacement process is faultless.
Limiting your liability
A limitation of liability clause narrows the circumstances in which your business can be held financially responsible. These clauses serve a legitimate purpose — they prevent a business from facing unlimited exposure from a single transaction — but the ACL places firm limits on what they can say.
Under s 64A of the ACL, you may limit your liability for a breach of consumer guarantee only where the goods or services you are supplying are not ordinarily acquired for personal, domestic, or household use. If you sell to consumers who are using your products at home or for personal purposes, s 64A does not give you the flexibility to cap liability below what the consumer guarantees require.
For the business-to-business portion of your customer base — buyers who are purchasing for business purposes — you have more room to negotiate and include caps. Common approaches include:
- Limiting total liability to the value of the order or a fixed dollar amount.
- Excluding liability for consequential, indirect, or economic loss.
- Specifying that liability is limited to re-supply of the goods or services.
Do not attempt to exclude all liability entirely, even in B2B contracts. Courts read broad exclusion clauses narrowly, and a clause that purports to eliminate all responsibility is likely to be cut down or disregarded.
Governing law and dispute resolution
Your terms should specify which state or territory's law governs the contract. For most Australian online businesses, this is the state where you operate. Governing law clauses do not remove customers' rights under the ACL — those apply nationally — but they do determine which courts have jurisdiction and which rules apply to any contractual interpretation dispute.
A dispute resolution clause tells a customer what to do before they escalate. A standard approach requires a customer to:
- Submit a written complaint to a nominated email address.
- Allow you a defined period (commonly 14 to 30 days) to respond and attempt to resolve the issue.
- Proceed to mediation or a court/tribunal only if the internal process fails.
This clause protects you from customers going straight to a tribunal or platform dispute process without giving you a chance to fix the problem. It also signals to customers that you take complaints seriously — which reduces the number of people who go straight to a chargeback.
Optional clauses worth considering
- Intellectual property ownership: If your business creates anything custom for a customer — design, code, written content — specify who owns it. The default position under Australian copyright law is not always what either party expects.
- Website terms of use: These govern visitors to your website, not just buyers. They cover acceptable use, disclaimers about website content, and ownership of any content posted. They apply to everyone who lands on your site, whether or not they buy.
- User-generated content: If customers can post reviews, images, or comments on your platform, you need a clause addressing who owns that content and what licence you have to use it.
- Variation of terms: If you want the ability to update your terms without issuing a new contract to every existing customer, you need a clause that sets out how changes are communicated and when they take effect.
- Account suspension and termination: For subscription or platform businesses, you need the right to suspend or terminate access and the process by which you exercise it.
Privacy policy — a separate but linked requirement
If your online business collects personal information from customers — names, addresses, email addresses, payment details — you need a privacy policy. This is a separate document from your terms and conditions.
Under the Privacy Act 1988 (Cth), organisations with an annual turnover of more than $3 million must have a compliant privacy policy. Smaller businesses may still be caught by the Act if they trade in personal information or provide health services. Regardless of your turnover, having a privacy policy is good commercial practice — it tells customers what you collect, why you collect it, how long you keep it, and to whom you disclose it.
Your terms and conditions should reference your privacy policy and link to it. Do not embed the substance of the privacy policy inside the terms; keep them as separate documents.
How Artificer Legal can help you get this right
The clauses described above are each straightforward to understand in principle. In practice, the drafting problems emerge at the intersections: where your business model creates unusual risk allocation; where the ACL constrains your preferred commercial approach; where a clause that looks protective actually creates a gap that leaves you exposed.
When Artificer Legal reviews or drafts online business terms, we focus on the clauses where the standard template language is most likely to cause problems in a real dispute. That means:
- The limitation clause: We test whether your cap is enforceable against the classes of customers you actually serve, and whether your s 64A analysis holds up.
- The cancellation and refund provisions: We check whether your fees and deductions are defensible as genuine pre-estimates of loss, and whether your policy survives an unfair contract terms challenge.
- The warranty against defects: We confirm your prescribed text is current — the mandatory wording under reg 90 is specific and has been updated, and older templates frequently contain outdated versions.
- The governing law clause and dispute process: We ensure the jurisdiction clause works for your business model and doesn't inadvertently limit your enforcement options.
For subscription businesses, we also negotiate the variation and termination provisions — the clauses that define your flexibility to change the product over time — against the risk that unilateral changes create unfair contract term exposure.
The refund and warranty provision
If there is a single clause that most often makes the difference between a terms-and-conditions document that holds up and one that doesn't, it is the refund and warranty provision — not because it is the most likely clause to be invoked, but because it is the clause most often drafted in a way that is simply void.
A "no refunds on change of mind" clause is fine and legal. A "no refunds" clause that purports to cover situations where goods are faulty is void under s 64 of the ACL. Many business owners, and many template documents, blur these two positions into a single clause that then cannot be enforced in any situation — including the one where enforcement was legitimate. The practical effect is that you lose the protection you were entitled to because you overclaimed in the provision.
Getting the refund clause right requires understanding exactly what the ACL baseline requires, drafting change-of-mind and warranty-against-defects provisions separately, and being precise about what each applies to. The rest of your terms and conditions set the commercial framework for your transactions. This clause sets the floor — and if it's wrong, the floor gives way.
In summary, effective online business terms and conditions cover your product or service scope, pricing and payment, cancellation fees (constrained by the unfair contract terms rules), delivery and risk allocation, your ACL-compliant returns policy, a properly prescribed warranty against defects where offered, and a clear limitation of liability that does not overclaim. Supporting documents — a privacy policy and website terms of use — sit alongside the terms rather than inside them. Every clause should be drafted with the ACL floor clearly in mind; no commercial drafting choice overrides it.