Agribusiness contract terms and conditions

A well drafted set of terms and conditions is an important way to protect your agribusiness, manage risk, clarify expectations upfront, avoid misunderstandings and build trust with customers.

Terms and conditions define the rights and obligations of each party to a transaction and are often the starting point if something goes wrong. They can capture the nature of goods or services supplied, payment and delivery terms, dispute resolution mechanisms and warranties.

Generic off the shelf templates usually fail to address the risk, market and operational considerations for most businesses. Terms and conditions should be tailored to the business, with clear and precise language to avoid ambiguity.

For example, if your agribusiness is supplying goods, it is critical to clarify when title and risk in the goods pass from your business to a buyer. Appropriate retention of title and security clauses are particularly important.  Without clear agreed terms upfront, misunderstandings can arise, leading to disputes regarding what terms were implied based on the parties’ conduct and correspondence.

Changes to Australia’s unfair contract terms (UCT) regime under the Australian Consumer Law in November 2023 make it unlawful to rely on unfair contract terms in standard form ‘take it or leave it’ contracts with individuals or small business.

If you transact with individuals or small businesses (less than 100 employees or $10M turnover), your business is likely caught by the UCT regime; a significant expansion of the class of small business that can rely on the UCT protections. Terms may be unfair if they cause a significant imbalance in the rights or obligations of the parties, aren’t reasonably necessary to protect the legitimate interests of your business and would cause financial or other harm to the other party if enforced. Examples include terms that allow your business (but not the customer) to end the contract or unilaterally vary the contract terms.

Outdated terms and conditions that don’t account for the UCT regime may expose your business to unnecessary risk. For businesses that rely on non-negotiable standard form contracts (e.g. purchase order terms) on a regular basis, engaging a legal professional to review your terms and conditions is essential.

By investing in a tailored set of terms and conditions, you can safeguard your agribusiness, mitigate risk, ensure compliance with the legislative requirements and provide certainty for your customers.

Hugo Le Clerc
Associate
T: 03 5225 5213
E: hleclerc@ha.legal