How to write terms and conditions for a small business

To write terms and conditions for a small business, list what you sell and how an order is formed, then write numbered clauses for price and payment, late payment, delivery, changes and cancellations, warranties, liability, intellectual property, privacy, complaints, termination and how the terms themselves change. Write each one in plain English, check it against the Australian Consumer Law, and put the document in front of the customer before they pay.

What terms and conditions have to do

business.gov.au describes terms and conditions as the document that sets out your and your customers’ rights and obligations, and lists the usual topics: payment terms, warranties and disclaimers, shipping, returns, website security, privacy and how disputes are handled. The Small Business Development Corporation in Western Australia adds a practical purpose: customers pay more promptly when the consequences of late payment are written down.

Think of the document as answers to the questions that cause disputes. What exactly did the customer buy? When is payment due and what happens if it is late? What if they cancel? What if something goes wrong? Who owns what gets made? Every clause should close one of those arguments before it starts.

Terms and conditions are usually a standard form contract: the customer accepts them as offered and cannot negotiate. That status matters, because Australian unfair contract terms law applies to standard form contracts with consumers and with small businesses. The question page on standard form contracts explains the test.

The sections, and what each must say

The table below this article lists fifteen sections with what to check in each, and maps them to the managed IT service agreement example on this site. That example is a negotiated business contract rather than off the shelf terms, but its twelve numbered clauses cover almost exactly the topics standard terms need, so it is a useful model of the wording.

Four sections deserve more words than the rest:

Price and payment. Say what the price includes, how it is paid, and when. The service agreement puts its fees in a table: an $8,400 monthly retainer plus GST, 40 included hours, $220 an hour beyond them in 15 minute increments, and invoices due in 14 days. If prices are displayed to consumers, business.gov.au notes the total must include all charges and taxes such as GST.

Late payment. Name the consequence. The example charges interest at 2 per cent a year above the Reserve Bank cash rate target, calculated daily, and separately allows suspension of service. A consequence stated in the terms is enforceable in a way a reminder email is not.

Delivery or service levels. Promise what you can measure. The example uses a four row severity table, where a critical fault gets a 15 minute response and a four hour resolution target, and it defines business hours so the numbers mean the same thing to both sides. It also says resolution targets are objectives, not guarantees, which is honest and protects the provider.

Liability. Cap what you can lawfully cap, and say what is excluded. The example caps liability at twelve months of fees and excludes consequential loss. For consumers, the SBDC puts the limit plainly: you cannot exclude liability for consumer guarantees. The limitation of liability clause page covers wording and the carve outs that usually sit beside a cap.

The consumer law limits

Two parts of the Australian Consumer Law shape what terms can say.

The first is the consumer guarantees. Goods must be of acceptable quality and match their description; services must be delivered with due care and skill and within a reasonable time. A customer is entitled to a remedy when a guarantee fails, and no clause can remove that right. A no refunds line is fine for change of mind, and misleading if it suggests a faulty product cannot be returned.

The second is the unfair contract terms regime. According to the ACCC, since 9 November 2023 unfair terms in standard form contracts are not only void but illegal, with penalties. The protection covers consumers and small businesses, which the law defines by fewer than 100 employees or turnover under $10 million. The terms that most often attract attention are those that let only one side:

• change the price, the goods or the terms after the contract is made
• end the contract or renew it automatically
• avoid or limit its own performance
• charge a penalty for the other side’s breach or cancellation

That does not mean a business can never adjust prices or cancel. It means the right should be reasonably necessary, balanced, and transparent. The service agreement’s annual CPI adjustment is an example of a variation tied to a published index rather than to the provider’s choice. The pricing sheet example goes further, with six numbered rules on seats, prorating, overage and price protection, including a rule that a list price rise never applies to an annual term already paid.

Presenting them so they bind

Terms bind a customer who had a reasonable opportunity to read them before agreeing. The SBDC warns that failing to provide terms before or during a transaction could affect whether you can enforce them, and that everything on one page in tiny print may have legal consequences as well as annoying customers.

In practice:

1. Put them where the decision happens. On the quote, the order form, the checkout page and the invoice.
2. Ask for acceptance. A signed quote, a checkbox beside the order button, or a line on the booking confirmation.
3. Number every clause. A customer who complains about clause 7.2 is easier to answer than one who complains about the bit about refunds.
4. Date every version. A dispute is decided on the terms the customer accepted at the time, not on today’s.
5. Summarise the hard parts. The wholesale price list example puts its eight ordering terms in short numbered rules, each with a bold heading, so a cafe owner can find the 2pm cut off in seconds.

Common mistakes

• Copied terms. They describe someone else’s business and may never have been checked.
• Legal words with no meaning. A clause the owner cannot explain is one a customer will not follow either.
• Hidden variation rights. A clause that lets the business change terms at any time without notice is a textbook unfair term.
• Consumer guarantee exclusions. Void, and potentially misleading.
• Terms nobody sees. A footer link is not agreement.
• No complaints process. Customers who cannot complain easily go to the regulator or social media instead.

The post explaining common contract clauses covers boilerplate such as entire agreement, severability and force majeure, which most terms end with.

Build it

Terms and conditions are a numbered document, and the numbered clauses document maker starts from that structure. Describe the business, what it sells, how customers pay and cancel, and what you want capped, and the generator classifies every document by register (legal, corporate, editorial or personal) and structure (flat, numbered or tabular) before writing it, and uses a letterhead only when the document speaks for a sender. A table of contents is used only on long documents, and its titles must match the headings exactly so the page numbers resolve.

A generated draft is a starting point for your own lawyer, not advice. Research grounds the content, but documents never print citations. The guide to document layout, spacing and page breaks covers margins, the footer and forcing a page break where a section should start on a fresh page, which matters in a document customers will print.