Deeds Of Release After A Customer Dispute

Say Mia runs a catering business in Brisbane. A customer complains that the food arrived late for a corporate event, asks for a full refund, and posts an unhappy review online. Mia wants to resolve it fairly, but she also wants the matter to end there.

That's where a deed of release can be helpful. It lets you put the settlement in writing, make payment or other promises clear, and reduce the risk of the same complaint coming back later.

A customer dispute can feel personal, especially when your reputation is involved. The good news is that a well drafted deed can help you draw a clear line under the issue without admitting liability or inviting more claims.

What Is A Deed Of Release After A Customer Dispute?

A deed of release after a customer dispute is a formal document that records how the complaint is being settled and what claims the customer agrees to release your business from.

In Australia, a deed is usually more formal than a simple contract. One practical difference is that a deed can be binding even if there's no fresh payment or benefit changing hands, although most customer settlements do involve something like a refund, credit, replacement service or goodwill payment.

For your business, the main purpose is certainty. The deed usually says that:

• you'll do something to settle the matter, such as make a payment or provide a replacement product
• the customer accepts that settlement as final
• the customer releases your business from claims connected to the dispute
• the settlement is made without any admission of liability
• both sides will keep agreed details confidential, where appropriate

You might also hear this called a release deed, customer settlement deed, settlement agreement or deed of settlement and release. The label matters less than whether the document properly covers the risk you're trying to close off.

When Should You Use A Deed Of Release For A Customer Complaint?

You should consider using a deed of release when you're giving the customer something meaningful to resolve the complaint and you want the matter to be final.

For small, low-risk issues, a clear email confirming the outcome may be enough. For example, if a customer receives the wrong colour item and you send the correct item the same day, you may not need a deed.

A deed is more useful where the dispute has become serious, emotional or commercially sensitive. Common examples include:

• a customer is demanding a refund that you don't fully agree is owed
• the customer says your product or service caused them loss
• there are negative reviews, social media posts or media concerns
• you're making a goodwill payment to protect the relationship
• the dispute involves a high-value customer contract or recurring customer relationship
• the customer is another business and there are unpaid invoices or cross-claims
• you want confidentiality around the settlement amount

For example, Mia might offer a partial refund and a future catering credit. In return, the customer agrees not to pursue further claims about that event, keeps the settlement amount confidential, and updates the online review to reflect that the complaint was resolved.

That kind of outcome can be sensible. But if it's only agreed over the phone, you may be left arguing later about what was actually promised.

Can A Deed Of Release Stop Future Claims?

Yes, a deed of release can reduce the risk of future claims, but it can't lawfully wipe away every possible right in every situation.

The release clause is the part of the deed that says the customer gives up certain claims. The wording needs to be clear about what is being released. For example, is the customer releasing claims about a particular invoice, one event, a defective batch of goods, or the whole customer relationship up to the signing date?

A narrow release might say the customer releases your business from claims relating to the delayed delivery on 3 June. A broader release might cover all claims arising out of the supply of services under a particular agreement up to the date of the deed.

The right approach depends on the dispute. If the wording is too narrow, you may still face related claims. If it's too broad, especially in a consumer context, it may be challenged or create issues under the Australian Consumer Law.

What A Release Can Usually Cover

A release deed for a business dispute can often cover:

• refund claims
• service quality complaints
• delivery delays
• invoice disputes
• contractual claims between businesses
• claims about alleged loss caused by your goods or services
• claims known to the parties at the time of settlement

What A Release May Not Safely Cover

You need to be careful about trying to release or restrict rights that the law protects. For example, you generally can't contract out of the consumer guarantees under the Australian Consumer Law for goods or services supplied to consumers.

You also shouldn't draft the deed in a way that tries to stop a customer from:

• making a complaint to the Australian Competition and Consumer Commission, state or territory fair trading bodies, or another regulator
• getting legal, accounting or financial advice about the settlement
• responding truthfully if required by law
• using rights that can't legally be excluded

A strong deed isn't about overreaching. It's about clearly settling the dispute you're actually dealing with.

Can You Settle Without Admitting Liability?

Yes, you can settle a customer dispute without admitting liability, and this is one of the most common reasons businesses use a deed of release.

Many businesses make commercial decisions to settle even when they don't agree with the complaint. Maybe the amount is smaller than the time and stress of continuing the dispute. Maybe you want to protect a customer relationship. Maybe you want to avoid more public back-and-forth.

A deed can say that the settlement is made:

• without any admission of fault, liability or wrongdoing
• as a commercial compromise
• in full and final settlement of the relevant dispute

This wording matters because paying money can otherwise look like an admission, even when that isn't what you intended.

Be careful with your emails and messages before the deed is signed, too. If you write, we accept we breached the contract, or we know we caused your loss, that can undermine the no admission wording later. You can be polite and practical without accepting legal responsibility.

A safer approach might be: We are sorry you were unhappy with the experience. To resolve this matter commercially, we are prepared to offer the following settlement, without admission of liability.

What Terms Should Be In A Customer Settlement Agreement?

Your customer settlement agreement should clearly set out what each side will do, when they will do it, and what happens once those steps are complete.

Templates can miss the details that make a settlement workable. The best document is tailored to the dispute, the customer type, any existing customer contract and the outcome you have negotiated.

Payment Or Refund Terms

If you're paying money, spell out the details. This helps avoid a second dispute about the settlement itself.

Include:

• the exact amount to be paid
• whether the amount includes GST, if relevant
• the due date for payment
• the account details or payment method
• whether payment is a refund, goodwill payment, credit, discount or compensation
• what happens if the payment is late

If your business is providing a credit instead of cash, include any expiry date, exclusions and how the credit can be used. If the customer is a consumer, make sure those limits don't conflict with their rights under the Australian Consumer Law.

Release And Final Settlement

The deed should say that once the settlement steps are completed, the customer releases your business from the agreed claims.

It should also identify who is protected by the release. Depending on your structure, that may include your company, directors, employees, contractors, related entities or franchise network. If your business is a company, use the correct legal name and ACN. If you trade under a business name, check that the contracting entity is still clear.

Confidentiality

Confidentiality clauses are common, especially where you don't want a settlement amount shared publicly or used as a benchmark by other customers.

Your confidentiality clause can cover:

• the settlement amount
• the negotiations leading to settlement
• commercial information exchanged during the dispute
• customer data or business records
• the terms of the deed itself

There should also be sensible carve-outs. Usually, each party can disclose information to their lawyers, accountants, insurers, auditors, related business personnel, or where required by law or a regulator.

Non-Disparagement And Reviews

A non-disparagement clause can help stop both sides from making negative public comments about the dispute after settlement.

For customer disputes, this often needs careful wording. You may want the customer to remove, amend or not repeat a negative review, but you shouldn't mislead the public or pressure a customer into making a fake positive statement.

A practical clause might say the customer will update their review to say the matter has been resolved, rather than forcing them to say they were happy if they were not.

If you use standard form contracts with consumers or small businesses, be careful with broad non-disparagement terms. Since 9 November 2023, unfair contract terms in standard form consumer and small business contracts can attract penalties under the Australian Consumer Law. For companies, penalties can be significant, including up to $50 million, three times the benefit obtained, or 30% of adjusted turnover during the breach period, whichever is greater.

No Further Contact Or Practical Handover

Sometimes the cleanest outcome is for the relationship to end. If so, the deed can sit alongside termination terms and include practical handover points such as:

• who will be the final contact person
• what records or materials will be returned or deleted
• whether access to accounts, portals or services will be closed
• whether any outstanding invoices are waived or still payable
• how stock, equipment or customer property will be returned

These details can feel small, but they often stop a settled dispute from flaring up again.

How Does The Australian Consumer Law Affect Your Settlement?

The Australian Consumer Law affects your settlement because you can't use a deed to take away rights that the law doesn't let you exclude.

If the customer is a consumer, they may have consumer guarantee rights. For example, goods must be of acceptable quality, match their description, and be fit for any disclosed purpose. Services must be provided with due care and skill, be fit for purpose, and be supplied within a reasonable time if no time was agreed.

If there's a major failure, the consumer may be entitled to choose a refund or replacement for goods, or keep the goods and seek compensation for the reduction in value. For services, they may be entitled to cancel the service contract and receive a refund for the unused portion or compensation for reduced value. If the failure is minor, you may have the right to fix the problem within a reasonable time.

A deed can still be useful. It can record how you're resolving the complaint and what happens next. But it shouldn't say the customer has no rights under the Australian Consumer Law, or that they can't contact a regulator.

You also need to avoid misleading or deceptive conduct. For example, don't tell a customer they're legally required to sign a deed before receiving a remedy that the Australian Consumer Law already gives them.

If the dispute is business-to-business, the Australian Consumer Law can still matter. Some business customers may receive consumer guarantee protections depending on the type and value of goods or services, and misleading or deceptive conduct rules can apply broadly in trade or commerce.

Common Mistakes To Avoid

The main mistake is treating the deed as a formality after the deal is done. The wording is what gives you the protection, so it's worth getting right before anyone pays or signs.

Watch out for these issues:

• Paying before the deed is signed: If you pay first, you lose leverage to secure the release, confidentiality and review terms.
• Using the wrong legal name: Check whether the customer contracted with your company, trust, sole trader business or partnership. Use ACNs and ABNs where helpful.
• Releasing the wrong claims: The deed should match the actual dispute, not accidentally leave out the key issue.
• Overpromising confidentiality: A clause that tries to stop reports to regulators or required legal disclosures can create problems.
• Forgetting timing: Include clear dates for payment, removal of posts, return of goods or closure of accounts.
• Ignoring signing rules: Companies can sign under section 127 of the Corporations Act 2001, but other signing methods may also work if properly set up. Individuals signing a deed may need witnessing, depending on the state or territory and signing method.
• Relying on vague wording: Phrases like we are all good now may feel friendly, but they don't clearly stop future claims.

Electronic signing can be available for many deeds in Australia, but the rules can depend on who is signing and where they're based. If the settlement amount or risk is significant, get the execution process checked before you rely on it.

Key Takeaways

• A deed of release can help you settle a customer complaint without admitting liability.
• It's most useful where you're offering a refund, payment, credit or other meaningful concession and want finality.
• The release should be clear about which claims are being settled and who is protected.
• Confidentiality and non-disparagement clauses can help protect your reputation, but they need sensible limits.
• You can't use a deed to remove non-excludable rights under the Australian Consumer Law or stop lawful complaints to regulators.
• Get the signing process right, especially if a company, trust or individual is signing a deed.

If you'd like help with deeds of release, settlement terms, customer contracts and confidentiality clauses, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.