Supplier contract review checklist for Australian businesses

Start with the exit, not the start

The instinct is to read a contract front to back. That puts the definitions and the service description first, which is the least commercially dangerous part of the document.

Read the termination and renewal clauses first. They decide how long you are committed and what it costs to stop. Everything else is negotiable inside that frame.

The clauses that carry the money

In rough order of how often they cost Australian buyers something real.

Auto-renewal and notice window

How far before the renewal date you have to give notice. Miss it and you are committed to another full term. Put the date in a calendar the day you sign.

Termination for convenience

Whether you can leave without cause, and on how much notice. If the clause is absent entirely, that is the finding.

Liability cap

The ceiling on what you can recover if things go wrong. Check whether it is mutual and whether a data breach sits inside or outside it.

Indemnities

Who covers whom, and for what. One-way indemnities in a standard form contract are a common unfair contract terms exposure.

Payment terms

How many days you have to pay. This is working capital, and it is one of the easiest terms to move.

Price variation

Whether the supplier can raise prices mid-term, by how much, and whether a rise gives you a right to exit. GST treatment should be explicit.

Service levels and credits

What is promised, how it is measured, and what you actually get when it is missed. Credits that require you to claim them within a short window are easy to lose.

Data and privacy

Who owns the data, where it is hosted, and what happens to it on exit. If the contract touches personal information, check that Australian Privacy Principles obligations are addressed.

Governing law and jurisdiction

Which state's courts hear a dispute. A foreign governing law clause makes enforcement slower and more expensive for an Australian buyer.

What to compare against

Knowing a clause exists is not the same as knowing whether it is reasonable. For the clauses where we have measured the market, the benchmark pages on this site show the median and the spread with the sample size attached.

Where the contract is a standard form contract offered to a small business, the unfair contract terms regime is the other reference point, because a term that is significantly one-sided and not reasonably necessary may be unlawful rather than merely unattractive.

Common questions

Do I need a lawyer to review every supplier contract?

No. Most supplier contracts turn on eight or nine clauses, and identifying which of those sit outside the norm is work a procurement or operations person can do. A lawyer is worth involving for high value contracts, uncapped liability, foreign governing law, or a supplier who will not move on a one-sided term.

Which clause costs Australian buyers the most?

Auto-renewal, because missing the notice window does not feel like a decision. A 90 day window on an annual contract means the real decision date is nine months in, not twelve.

Should an Australian contract be governed by Australian law?

It is generally preferable for an Australian buyer, because enforcement is faster and cheaper in a local court. A foreign governing law or jurisdiction clause is worth raising, particularly where the contract value is significant.