Australian retailers selling to consumers must comply with the Australian Consumer Law (ACL), which is Schedule 2 of the Competition and Consumer Act 2010 (Cth).
Your Terms of Service (also called Terms and Conditions or Terms of Trade) are not just boilerplate – they are a legally binding contract between you and your customer.
Drafting them incorrectly can lead to penalties, refund demands, and reputational damage. This guide explains how to create compliant TOS for both physical shops and e-commerce websites.
Mandatory Consumer Guarantees (Cannot Be Excluded)
Under ACL Part 3-2, consumers have automatic guarantees that override any contrary term in your TOS:
- Acceptable quality: Goods must be safe, durable, and free from defects.
- Fitness for purpose: Goods must do what the customer was told they would do.
- Correspondence with description: Online photos and descriptions must match the actual product.
- Repair or spare parts availability: For a reasonable period after purchase (varies by product).
It is illegal to put any statement like 'No refunds' or 'Goods sold as is – no warranty' on a receipt or website. The ACCC can fine you up to $2.5 million for individuals and $50 million for corporations.
Essential Clauses for Retail TOS
For In-Store Sales (Physical Shop)
- Returns and refunds policy: Must be consistent with ACL. You do not have to give a refund for 'change of mind' unless you choose to (clearly state this). For faulty goods, you must offer repair, replacement, or refund – customer chooses.
- Lay-by terms: Deposit amount, payment schedule, cancellation fee (maximum reasonable, e.g., $15 or 5% of purchase price).
- Gift card terms: Expiry date (minimum 3 years under Australian Consumer Law (Gift Cards) Amendment Act), replacement if lost (subject to fee).
- Liability limitation: You can limit liability for consequential loss (e.g., lost profits) but cannot limit liability for death, personal injury, or breach of consumer guarantees.
For Online Sales (E-commerce)
Additional clauses required for digital transactions:
- Acceptance of offer: Specify when the contract is formed (usually when you dispatch the goods, not when order is placed). This protects you if an item is out of stock.
- Shipping and delivery: Estimated times, shipping carriers, insurance options, and risk of loss during transit (recommend 'delivery at premises' – risk transfers when customer receives goods).
- Privacy collection notice: Required under the Privacy Act 1988 (Cth) if you turn over $3 million+ annually or handle sensitive data (credit cards, health info). Must state what data you collect, why, and with whom it is shared.
- Unsubscribe mechanism: Every marketing email must have an 'unsubscribe' link (Spam Act 2003).
- Secure payment disclosures: PCI DSS compliance statement (even if using Stripe or PayPal).
Prohibited Terms (Unfair Contract Terms)
The Unfair Contract Terms (UCT) regime (Treasury Laws Amendment Act 2022) now applies to small business contracts.
A term is void if it:
- Causes significant imbalance in the parties' rights and obligations.
- Is not reasonably necessary to protect your legitimate interests.
- Would cause detriment (financial or non-financial) to the consumer.
Example void terms: 'We may change any price without notice', 'We are not liable for any delay', 'You waive all rights to dispute credit card charges'.
Best Practices for Presenting TOS
- In-store: Display a printed notice at the checkout counter or on the back of receipts. Better: include a QR code linking to full TOS on your website.
- Online: Use a 'clickwrap' agreement – a checkbox saying 'I agree to the Terms of Service' before checkout. Unchecked = no contract. Do NOT use 'browsewrap' (terms hidden in a footer link) – courts rarely enforce them.
- Language: Plain English, 12pt font minimum. Avoid legal jargon like 'indemnify', 'hold harmless', 'force majeure' without explanation.
Final warning: ACCC actively monitors retail websites for false 'free returns' statements, misleading 'sale' prices, and non-compliant refund policies. Penalties are publicised and damage brand trust.
Have your TOS reviewed by an Australian consumer law specialist every 2 years or whenever the ACL changes.
A compliant TOS is your first defence against customer disputes and regulatory action.