Commercial Contract Review NSW: Key Clauses and Termination

A commercial contract review in NSW before you sign can save a business from years of disputes. Once a contract is signed, its terms generally bind you, even if you did not read the fine print. This guide explains the clauses that most often cause trouble, how Australian law approaches unfair terms in small business contracts, and the main ways a contract can be brought to an end. It is general information only.

Start with the basics

Before looking at the detail, check the fundamentals:

• Parties: are the correct legal entities named, with ABN or ACN, and does the person signing have authority to bind the company?
• Scope: does it clearly describe the goods, services or deliverables, standards and timeframes?
• Price and payment: are the fees, payment dates, GST treatment and late payment consequences clear?
• Term: when does it start and end, and does it renew automatically?

Key clauses to review in a commercial contract

Warranties and performance standards

Warranties are promises about quality, capability or compliance. Check what you are promising and what the other side is promising, and whether any service levels carry financial consequences.

Limitation of liability and indemnities

These clauses decide who bears the loss if something goes wrong. A cap on liability, an exclusion of indirect loss or a broad indemnity can shift significant risk to one side. Ask whether the cap is realistic compared with the value of the contract and whether you hold insurance that matches your obligations.

Intellectual property and confidentiality

Check who owns work created under the contract, what licences are granted, and what information must be kept confidential and for how long.

Variation, assignment and subcontracting

Some contracts let one party change prices or terms by notice. Others restrict you from assigning the contract or subcontracting work. Consider whether the clause is balanced and whether your business could comply in practice.

Dispute resolution and governing law

Many contracts require negotiation or mediation before court. Check which law governs and which courts have jurisdiction, because a clause requiring disputes to be heard interstate or overseas can add real cost.

Force majeure and entire agreement

A force majeure clause says what happens when events outside the parties' control prevent performance. An entire agreement clause says the written contract is the whole deal, which can limit your ability to rely on earlier discussions. Make sure important promises made in negotiations are written into the contract itself. Separately, the Australian Consumer Law prohibits misleading or deceptive conduct in trade or commerce (section 18), and this can apply to pre-contract statements in some situations.

Unfair contract terms and small business

The Australian Consumer Law, in Schedule 2 of the Competition and Consumer Act 2010 (Cth), protects eligible small businesses against unfair terms in standard form contracts, which are generally contracts offered on a take-it-or-leave-it basis. Reforms that commenced on 9 November 2023 changed the regime in important ways. A contract is now a small business contract if at least one party employs fewer than 100 people or has annual turnover of less than $10 million. The previous upfront price threshold under the Australian Consumer Law has been removed. Unfair terms are now prohibited and can attract significant penalties, with each unfair term a separate contravention.

A term may be unfair if it causes a significant imbalance in the parties' rights, is not reasonably necessary to protect legitimate interests, and would cause detriment if relied on. A court can declare an unfair term void, but the rest of the contract may continue. These rules do not make every harsh term unenforceable, so seek advice about specific clauses.

How a commercial contract can be terminated

Under a termination clause

Most written contracts set out when a party may end them, for example by giving notice, after a breach is not remedied within a set period, if a party becomes insolvent, or for convenience. The procedure matters. If the contract requires written notice of a breach and a cure period, skipping those steps risks a wrongful termination.

At common law

Even without a clause, a party may be able to end a contract in some circumstances, such as where the other side has repudiated it (clearly shows it will not perform), breached an essential term, or committed a breach so serious that it deprives you of substantially the whole benefit of the contract. These questions are fact specific and courts look closely at the conduct.

By agreement or on expiry

Parties can agree in writing to end a contract, ideally with a deed of release that deals with money owed, confidentiality and return of property. Fixed-term contracts end on expiry unless they renew automatically, so diarise notice dates.

The risk of terminating wrongly

If you terminate without a valid right, you may be treated as having repudiated the contract yourself and could be liable for damages. Before acting, review the contract, record the breach with evidence, follow the notice process exactly and obtain advice.

Frequently Asked Questions

Can I get out of a contract I have already signed?

Only if the contract allows it, the other party agrees, or the law gives you a right, for example for repudiation, a serious breach or in some cases misleading conduct. Simply changing your mind is not a ground.

Do the unfair contract terms laws protect my business?

They may if the contract is a standard form contract and your business or the other party employs fewer than 100 people or has turnover under $10 million. Whether a particular term is unfair depends on its effect.

Is an email enough to terminate a contract?

It depends on the notice clause, which may specify the method, the address and the timing. Follow the contract exactly, and keep proof of delivery.

Should I have a lawyer review a contract before I sign?

Review before signing is generally cheaper than resolving a dispute afterwards, particularly for long-term, high-value or standard form contracts. A review can identify risks and terms to negotiate.

This article is general information only and is not legal advice. Laws and processes change, and every situation is different. Speak to a lawyer about your circumstances before you act.