Do Your Existing Customer Terms Still Cover What Your Business Is Selling?

Change is part of running a business.

You might start with one core service, then add another. A once-off product might become a subscription. You might introduce memberships, an app, new delivery options or a completely different way for customers to pay.

The business changes, but sometimes the customer terms you put in place at the beginning don't change with it.

That can become a problem.

Customer terms are meant to set out the rights and responsibilities that apply when someone buys from your business. If they were drafted for an earlier version of the business, there can be a gap between what the contract says and the transaction actually taking place.

So, how do you know when your business has outgrown its existing customer terms?

What Are Customer Terms?

Customer terms are contractual terms a business uses to set out the rules that apply when a customer buys its products or services.

Depending on the business, they might be called Customer Terms and Conditions, Terms of Sale, Terms of Service, a Service Agreement or a Customer Agreement.

A Customer Contract might cover what you're providing, how and when customers pay, delivery or service requirements, cancellations, intellectual property rights and what happens if either side doesn't meet their obligations.

If your business primarily sells goods, Terms of Sale may instead deal with matters such as payment, delivery and the sale of the products themselves.

A customer contract doesn't necessarily need to be formally signed.

Depending on the circumstances, a customer may accept a contract by signing it, verbally agreeing, paying for the product or service or taking another action showing acceptance, such as clicking an “I agree” button online. The ACCC explains that a contract generally arises where a seller makes an offer and a buyer accepts it.

Written terms are useful because they help establish what the parties actually agreed to if a disagreement later arises over payment, delivery, cancellation or another part of the transaction.

Why Are Customer Terms Legally Important?

Your customer terms are only one part of the legal picture.

They can set the commercial rules between you and your customer, but they still need to work alongside laws such as the Australian Consumer Law (ACL).

For example, consumer guarantees automatically apply to many purchases of goods and services. A business can't simply remove those rights by putting something different in its contract.

The ACL also contains rules around misleading conduct and unfair terms in certain standard form contracts.

So, your terms need to reflect how the transaction actually works without cutting across rights and protections that already apply under the law.

That becomes especially important when the business changes.

You've Added A New Product Or Service

Launching something new doesn't automatically mean you need completely new terms.

The important question is whether the agreement you already have actually deals with the new transaction.

Imagine a design agency that originally only provided bespoke services. Its agreement might cover project briefs, revisions, payment and ownership of the final work.

The agency then starts selling downloadable templates.

The business may now need to address how customers can use those templates, whether they can modify or redistribute them, what intellectual property rights they receive and what happens if they have trouble accessing the product.

Similarly, a business that has always sold physical products might begin offering installation or ongoing maintenance.

The old terms may still work for the original sale, but say little about the additional service.

The issue isn't simply that the document looks outdated. It's that important rights and responsibilities relating to the new offering might never have been addressed.

You've Changed How Customers Pay

Payment changes can also affect the agreement.

Perhaps customers previously paid the full amount upfront, but you now take deposits. Maybe you've introduced instalments or recurring charges.

That raises questions such as when payments are due, whether deposits are refundable, what happens if an instalment isn't paid and when recurring charges stop.

This becomes particularly important when a business moves into a subscription or membership model.

A one-off purchase and an automatically renewing subscription are different arrangements. Subscriptions can involve additional issues around billing periods, renewals, price changes and cancellation.

For businesses introducing this model, dedicated Online Subscription Terms & Conditions may be appropriate rather than trying to fit a recurring arrangement into terms designed for one-off purchases.

There are also new Australian rules coming into effect on 1 July 2027 under the Competition and Consumer Amendment (Unfair Trading Practices) Act 2026.

Among other things, the legislation introduces requirements for covered subscription contracts around information given to subscribers and how they can end their contract. It also introduces requirements around cancellation methods for covered arrangements.

The rules don't apply to every recurring payment arrangement, and the legislation contains its own definition of a subscription contract and exclusions.

Importantly, the new provisions can also become relevant to certain earlier subscription contracts if they are renewed, extended, otherwise continued or varied on or after 1 July 2027.

So, moving into subscriptions can involve more than simply switching on recurring payments at checkout.

The Way You Deliver Your Product Or Service Has Changed

Sometimes what you sell stays broadly the same, but the way customers receive it changes.

Perhaps consultations that were once conducted in person now happen through an online platform. Maybe customers create accounts, access resources through a portal or use an app.

These changes can create responsibilities that your original terms never needed to address.

For example, the agreement may now need to explain how long customers receive platform access, their responsibilities for keeping an account secure, restrictions on how the platform can be used or what happens if a third-party service becomes unavailable.

If you've introduced an app, separate Mobile App Terms and Conditions may also be relevant to the way users access and use it.

Not every operational change requires new terms. But if the way you fulfil your obligations to customers has materially changed, it's worth checking whether the agreement still explains what you're actually providing.

You've Changed Your Refund Or Cancellation Process

Your refund or cancellation process might also change as the business develops.

You could introduce cancellation deadlines, change your rescheduling process or create different rules for particular products.

However, there is an important distinction between your business's policy and a customer's rights under the law.

The ACL contains consumer guarantees that apply automatically where the relevant requirements are met. Businesses can't use their terms and conditions to take those rights away.

For example, a business generally cannot rely on a blanket “no refunds” policy where a customer is legally entitled to a remedy under the consumer guarantees.

That doesn't mean customers are always entitled to a refund simply because they change their mind. Whether a statutory remedy applies depends on the circumstances, and businesses can choose to offer additional change-of-mind rights through their own policies.

The key is that your refund and cancellation terms should work alongside the customer's ACL rights rather than attempting to replace them.

You're Selling To A Different Type Of Customer

Who you sell to can also affect which legal protections apply.

For example, a business might begin by negotiating individual agreements with larger companies, then introduce standard terms offered to consumers or small businesses.

The ACL regulates unfair terms in certain standard form consumer and small business contracts.

For contracts made or varied from 9 November 2023, the small business protections generally apply where the business has fewer than 100 employees or less than $10 million in annual turnover.

Businesses can face penalties for proposing, using or relying on unfair terms in covered contracts.

A term isn't automatically unfair simply because it benefits one party. Broadly, the law considers whether it creates a significant imbalance, whether it is reasonably necessary to protect legitimate interests and whether it could cause detriment if relied upon.

A court ultimately determines whether a particular term is unfair.

This means terms prepared for one type of customer or contracting process may need another look when the way you sell changes.

Can You Just Update The Terms On Your Website?

Not necessarily.

There's a difference between introducing updated terms for a new transaction and trying to change an agreement that already exists.

For a new customer, revised terms can generally be presented as part of the process through which the new contract is formed.

An existing customer may already have a binding agreement based on the earlier terms.

Simply replacing the document on your website doesn't necessarily change that contract.

Whether an existing agreement can be varied depends on matters such as what the contract already says about changes and how the proposed variation is made.

Some agreements contain clauses allowing the business to change particular terms. However, the ACL's unfair contract term provisions identify terms allowing one party but not the other to vary a contract as the type of clause that may raise concerns.

The unfair contract term regime can also apply when a term in an existing covered standard form contract is varied or added.

So, a clause saying the business can “change these terms at any time” shouldn't automatically be treated as a solution whenever the business changes.

Do You Need An Amendment Or Completely New Terms?

Not every change means starting again.

If the underlying customer relationship remains largely the same and you're changing one particular part of the arrangement, a Contract Amendment may be enough.

For example, you might change a payment arrangement or add a specific service while leaving the rest of the agreement untouched.

However, there comes a point where repeatedly adding changes to an old contract can make the arrangement less clear.

If you've moved from one-off services to memberships, introduced an app, changed the payment structure and started selling to a different customer market, you're no longer dealing with one minor change.

At that point, updated customer terms may make more sense than continuing to patch an agreement written for a different business model.

What Else Might Need Updating?

Changing your offering can also affect other legal documents.

For example, if a new product or app changes the personal information you collect, how you use it or which third parties receive it, it may be time to review your Privacy Policy.

Depending on the change, your refund policies, website or app terms, intellectual property arrangements and supplier agreements may also need another look.

It's useful to consider the whole customer journey: what customers are told before purchasing, what they agree to, what happens after payment and what happens if the arrangement ends or something goes wrong.

How Often Should You Review Your Customer Terms?

There isn't a set rule requiring customer terms to be rewritten every few months.

A more practical approach is to use significant business changes as a reason to check them.

If the way you sell, get paid or deliver your offering materially changes, ask:

Do the terms customers are agreeing to still describe the transaction taking place today?

If they don't, it may be time to update them.

Need To Update Your Customer Terms?

Your customer terms may need to develop as your business does.

Sprintlaw's lawyers can review your existing Customer Contracts, prepare a Contract Amendment where only part of an agreement needs changing, or help put updated terms in place where your existing documents no longer suit the way you operate.

If you would like a consultation on updating your customer terms, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.