Terms Of Trade Template For Wholesale Suppliers

Supplying wholesale can be exciting because every new customer order can mean bigger volumes, repeat revenue and stronger relationships with retailers or distributors.

It can also put real pressure on your cash flow if orders go out before payment comes in, delivery issues aren't clear, or a customer disputes an invoice months later. That's where your terms of trade do a lot of heavy lifting.

Your terms of trade set the rules for orders, payment, delivery, returns and ownership of goods. A well-drafted document doesn't just sit in a folder - it helps you get paid on time, keep control of credit and avoid messy arguments.

Do Wholesale Suppliers Need Written Terms Of Trade?

Yes, you should have written terms of trade if you supply goods to retailers, distributors, stockists or other business customers.

Wholesale relationships often move quickly. A buyer emails a purchase order, your warehouse dispatches stock, and the invoice follows later. If your terms aren't clear and accepted before the order is confirmed, you may end up relying on email trails, verbal discussions or whatever appears on the invoice.

That can make it harder to prove key points like:

• when payment is due
• whether you can pause supply if invoices are overdue
• who carries the risk if goods are damaged in transit
• whether the customer can return unsold stock
• who owns the goods until payment is made
• whether you can recover reasonable debt collection costs

For Australian wholesalers, your terms also need to sit properly alongside the Australian Consumer Law, the Personal Property Securities Act 2009 and any industry rules that apply to your products. For example, food, cosmetics, electrical goods and therapeutic goods may have extra labelling, safety or recall obligations.

A free template can be a helpful starting point, but wholesale terms work best when they're tailored to your ordering process, margins, delivery model and credit risk. A clause that suits a fashion wholesaler offering seasonal pre-orders may not suit a building materials supplier delivering urgent stock to job sites.

What Should A Terms Of Trade Template For Wholesale Suppliers Include?

Your wholesale terms and conditions template should cover the full customer journey from account approval to final payment, not just the wording on your invoice.

Here is a practical outline you can use as a starting point. This isn't a finished legal document, and a lawyer should tailor it before you use it with customers.

1. Parties And Application: state who your business is, who the customer is, and when the terms apply to quotes, orders, invoices and credit accounts.
2. Account Setup: explain what information the customer must provide in a credit application, such as ABN, business name, delivery addresses, trade references and authorised buyers.
3. Quotes And Pricing: set out how long quotes last, whether prices include GST, and when you can update prices or correct errors.
4. Orders And Acceptance: explain how customers place orders, when an order becomes binding, and whether you can reject or limit an order.
5. Minimum Order Quantities: include minimum spend, carton quantities, back-order rules and any special-order conditions.
6. Payment Terms: state due dates, credit limits, deposits, payment methods, disputed invoice process and late payment rights in your credit terms.
7. Delivery And Risk: explain delivery fees, estimated timeframes, authority to leave, failed delivery costs and when risk passes to the customer.
8. Title To Goods: include a retention of title clause and any Personal Property Securities Register arrangements.
9. Returns, Credits And Defects: set timeframes for reporting issues, your approval process and when credits or replacements are available.
10. Customer Obligations: cover storage, handling, resale restrictions, brand guidelines and compliance with product information.
11. Limitation Of Liability: limit your exposure where legally allowed, while preserving rights that can't be excluded under the Australian Consumer Law.
12. Suspension And Termination: set out when you can stop supply, close an account or require payment upfront.
13. Privacy And Credit Checks: explain how you collect and use business contact details and credit information, where relevant.
14. Governing Law: state which Australian state or territory law applies.

The best terms feel operational as well as legal. Your sales team, accounts team and warehouse should all be able to follow them without needing to interpret legal fine print.

How Should Supplier Payment Terms Work In Australia?

It depends on your commercial model, but your payment terms should be specific, measurable and tied to real consequences if payment is late.

Common wholesale payment structures include:

• payment upfront: useful for first orders, custom goods or higher-risk customers
• deposit plus balance: common for made-to-order, imported or large-volume orders
• 7, 14 or 30 day accounts: common for approved trade customers
• end of month terms: payment is due a set number of days after the end of the invoice month
• cash on delivery: less common now, but still used in some industries

There isn't one general Australian law that sets standard payment terms for all wholesale suppliers. Your contract usually decides when payment is due. Some industries have special rules, so it's worth checking if you operate in a regulated sector.

Clauses That Help Your Cash Flow

If cash flow is the main concern, consider clauses that allow you to:

• set and review a customer's credit limit
• require directors' guarantees where appropriate
• put an account on hold if invoices are overdue
• cancel or delay undelivered orders until payment is made
• allocate payments to the oldest invoices first
• charge reasonable interest on overdue amounts if the contract clearly allows it
• recover reasonable debt recovery costs where legally permitted

Late payment interest needs to be drafted carefully. If a fee is extravagant or out of proportion, a customer may argue it's an unenforceable penalty. A reasonable interest clause is generally safer than a harsh flat fee that doesn't match your likely loss.

Say Maya runs a wholesale skincare business in Melbourne. Her terms give approved customers a $40,000 credit limit and 14 days to pay invoices. A retailer has $32,000 overdue and places a new $18,000 order. Because Maya's terms allow her to suspend supply when the account is overdue or over the limit, she can pause the new shipment until the retailer pays enough to bring the account back within terms. That one clause can stop the debt growing from $32,000 to $50,000.

What Is A Retention Of Title Clause In Australia?

A retention of title clause says you keep ownership of goods until the customer has paid for them, but it needs to work with Australia's Personal Property Securities Act 2009.

On its own, a retention of title clause is helpful but often not enough. If your customer becomes insolvent, other secured creditors may have priority unless you've properly protected your interest on the Personal Property Securities Register, often called the PPSR.

For wholesale suppliers, retention of title usually matters because goods are delivered before full payment. Your terms might say that:

• legal title stays with you until the customer pays all amounts owing
• the customer holds unpaid goods as bailee for you
• the customer must store unpaid goods separately where practical
• you can enter premises to recover unpaid goods where legally permitted
• you have a security interest in the goods and proceeds of sale

Where The PPSR Fits In

The PPSR is the national register for security interests in personal property, including stock and inventory. A properly registered security interest can give you stronger rights if a customer doesn't pay or becomes insolvent.

If the goods are inventory, a purchase money security interest usually needs to be registered before the customer obtains possession. If the goods aren't inventory, the timing rules can differ, including a 15 business day period in some cases. Timing is technical, so get tailored advice before relying on PPSR protection.

The practical point is simple: if you're supplying on credit, your terms and your PPSR process should work together. Having one without the other can leave a gap.

Who Is Responsible If Delivery Is Late Or Goods Are Damaged?

Your terms should say exactly when delivery is complete and when risk passes, because otherwise delivery disputes can become expensive very quickly.

Risk is about who bears the loss if goods are damaged, stolen or delayed. Title is about who owns the goods. They're related, but they're not the same thing. You might keep ownership until payment is made, while risk passes to the customer once the goods leave your warehouse or are delivered to the customer's nominated address.

Your delivery clause should cover:

• whether delivery dates are estimates or guaranteed deadlines
• who chooses and pays the carrier
• whether the customer can nominate a freight provider
• when risk passes to the customer
• what happens if the customer gives the wrong delivery address
• whether authority to leave is allowed
• who pays for redelivery, storage or failed delivery attempts
• how quickly the customer must report short deliveries or damage

If you export goods or use international freight terms, you may also need clear Incoterms. For domestic Australian wholesale supply, many businesses use simpler wording, but it still needs to match the way goods actually move.

For example, if you use your own courier network and promise delivery to the customer's loading dock, risk might pass on delivery. If the customer arranges pickup from your warehouse, risk might pass once the goods are collected. Neither approach is automatically right or wrong. What matters is that your terms match your process and your insurance arrangements.

Clear delivery wording also helps your accounts team. If a customer says goods were damaged but waited six weeks to report it, your terms can require prompt notice and supporting evidence, such as photos, delivery dockets and batch numbers.

Can You Refuse Returns Or Credits From Wholesale Customers?

Sometimes, yes, but you can't simply contract out of rights that apply under Australian law.

Many wholesale customers buy goods for resupply, which means they may not be treated as a consumer for those goods under the Australian Consumer Law. However, the ACL can still matter. You must not mislead customers, your product descriptions need to be accurate, and end customers may have consumer guarantee rights that flow through the supply chain.

Your terms can usually set commercial rules for change-of-mind returns, slow-moving stock and ordering mistakes. For example, you might say:

• change-of-mind returns aren't accepted unless you approve them in writing
• returns must be requested within 7 days of delivery
• goods must be unopened, unused and in saleable condition
• custom, seasonal, clearance or made-to-order goods can't be returned unless defective
• approved returns may be credited to the customer's account rather than refunded in cash
• restocking or freight costs may apply if clearly disclosed and reasonable

Defective goods need a different approach. If the product is faulty, unsafe, incorrectly supplied or doesn't match the agreed description, you should have a process for assessing the issue and offering a suitable remedy. That might be replacement stock, a credit note, repair, refund or another outcome depending on the circumstances.

Your terms should also require customers to handle and store products properly. This is especially useful for goods affected by temperature, expiry dates, moisture, sunlight or hygiene conditions. If a retailer stores your products incorrectly and then claims they're defective, your records and storage clause can make a real difference.

Are Standard Wholesale Terms A Risk Under The Australian Consumer Law?

Yes, they can be if your terms are standard form contracts used with small business customers and contain unfair terms.

Australia's unfair contract terms regime under the Australian Consumer Law was strengthened from 9 November 2023. Standard form small business contracts can attract significant penalties if they include unfair terms. A small business contract can be covered where at least one party has fewer than 100 employees or annual turnover under $10 million.

For wholesalers, this matters because many of your customers may be small retailers, online stores, cafes, salons or trade businesses. If you use the same terms for everyone and customers don't have much real ability to negotiate, the regime may apply.

Terms that can raise concerns include clauses that let you:

• change prices, products or delivery obligations whenever you like without giving the customer a fair response option
• cancel orders for any reason while locking the customer in
• avoid all responsibility even when your business caused the issue
• charge very high late fees that don't reflect your likely loss
• decide whether goods are defective without any fair assessment process
• keep all prepaid amounts regardless of what has happened

This doesn't mean you can't protect your business. You can still have strong payment, credit, delivery and liability clauses. The key is to make them balanced, transparent and connected to a genuine business need.

A practical way to review your terms is to ask: would this clause look fair if a regulator, customer or investor read it without context? If the answer is no, it may need tighter wording or a more balanced process.

Key Takeaways

• Your wholesale terms of trade should cover orders, payment, delivery, returns, title and account suspension in one clear document.
• Credit limits, overdue invoice rights and account hold clauses can protect your cash flow before debts get out of hand.
• A retention of title clause is useful, but PPSR registration is often needed if you want stronger protection over unpaid stock.
• Delivery clauses should separate title from risk and explain exactly when the customer becomes responsible for damage or loss.
• Returns and credit policies can be firm, but they still need to respect Australian Consumer Law obligations where they apply.
• Standard terms used with small business customers should be checked for unfair contract terms risk.

If you'd like help with your wholesale terms of trade, PPSR wording, payment clauses or delivery and returns processes, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.