Terms and Conditions of Trade

Terms of Trade Lawyer Sydney: Terms and Conditions of Trade

Terms and conditions of trade are the standard rules on which your business supplies goods or services on credit, and a good set lets you get paid, charge interest, recover costs and take back unpaid goods. Invictus Legal is a terms of trade lawyer in Sydney that drafts terms of trade and credit applications for NSW businesses, including retention of title clauses, personal guarantees and Personal Property Securities Register (PPSR) protection. Properly drafted and registered terms can be the difference between being paid and being an unsecured creditor in an insolvency.

Reviewed by Sam Saadat, Principal Lawyer, Invictus Legal. Last reviewed: 7 October 2026

What should terms of trade and a credit application include?

Your terms of trade and credit application should give you clear payment rights, security over what you supply and a person you can pursue if the customer does not pay. We usually include:

• Payment terms: credit limits, due dates, and the right to suspend supply or withdraw credit on default.

• Interest on overdue amounts: an agreed contractual rate of interest on late payments, so interest is clearly claimable from the due date.

• Retention of title: ownership of goods stays with you until they are paid for, with rights to enter premises and recover goods and to trace proceeds of sale.

• PPSA security: a security interest under the Personal Property Securities Act 2009 (Cth) over goods supplied and, where appropriate, other property, together with the customer's consent to registration on the PPSR.

• Personal guarantees from directors: directors of a company customer personally guarantee the company's debts, ideally supported by a charge over their property.

• Costs of recovery: the customer pays your reasonable collection and legal costs if it defaults.

• Limitation of liability: sensible limits on your liability that are consistent with the Australian Consumer Law.

Why do I need to register on the PPSR?

You need to register on the PPSR because an unregistered retention of title or security interest can be lost if your customer becomes insolvent. Registration perfects your security interest and protects your priority against other creditors.

What is a purchase money security interest and when must it be registered?

A purchase money security interest (PMSI) is security over goods you supply on credit, securing the price of those goods. A properly registered PMSI can rank ahead of a lender's earlier general security. To obtain that priority under s 62 of the PPSA:

• for goods that are not inventory in the customer's hands, you must register before the end of 15 business days after the customer (or someone at its request) obtains possession of the goods; and

• for inventory (goods the customer holds for resale or lease), you must register before the customer obtains possession.

In practice, register your security interest when you open the customer's account, before your first delivery.

What happens if I do not register before my customer becomes insolvent?

If your security interest is unperfected when your customer goes into liquidation or administration, executes a deed of company arrangement or becomes bankrupt, it vests in the customer under s 267 of the PPSA. That means you lose your security and the goods become available to the liquidator, administrator or trustee for creditors generally. You become an unsecured creditor.

Timing also matters for company customers. Under Corporations Act 2001 (Cth) s 588FL, a security interest perfected only by registration can also vest in an insolvent company unless it was registered within 20 business days after the security agreement came into force, or more than six months before the insolvency began. Do not wait until a customer is in trouble to register.

Do the unfair contract terms laws apply to terms of trade?

Yes. Terms of trade are usually standard form contracts, so the unfair contract terms provisions in the Competition and Consumer Act 2010 (Cth) Sch 2 ss 23–25 and 27 apply where you deal with consumers or small businesses. A small business contract includes one where a party employs fewer than 100 persons or had turnover of less than $10 million in its last income year. Since 9 November 2023 it has been unlawful to propose, use or rely on an unfair term. Penalties for a company can reach the greatest of $50 million, three times the benefit obtained, or 30% of adjusted turnover during the breach period, and up to $2.5 million for an individual. One-sided clauses allowing you alone to vary terms, terminate or penalise the customer need careful drafting.

Can my terms of trade exclude consumer guarantees?

No. Consumer guarantees under the Australian Consumer Law cannot be excluded, restricted or modified by contract (s 64), and it is unlawful to mislead customers about their rights. Clauses such as "no refunds" or a blanket exclusion of all warranties can expose your business to regulatory action. We draft limitation clauses that protect you while complying with the law.

How do strong terms of trade help with debt recovery?

Strong terms of trade make debt recovery faster and cheaper because the debt, interest, recovery costs and guarantor liability are already agreed in writing. If a customer stops paying, our debt recovery team can act on letters of demand, proceedings in the Local Court, District Court or Supreme Court of NSW, and claims against guarantors. Invictus Legal appears in courts across Sydney and NSW. For lending and security documents, see loan agreements, guarantees and security.

What does it cost?

The cost depends on your industry, whether you supply goods, services or both, whether you need a credit application and guarantee as well as terms of trade, and whether existing terms are being reviewed or new terms drafted. Fees for commercial matters are determined by the scope of work involved, and we issue a costs agreement before we commence any work, so you have full transparency from the start. We can also assist with PPSR registrations.

Frequently asked questions

What is a retention of title clause?

A retention of title clause provides that ownership of goods stays with the supplier until the customer pays for them. Under the Personal Property Securities Act 2009 (Cth) it is treated as a security interest, so it should be registered on the PPSR to protect it if the customer becomes insolvent.

How long do I have to register a PMSI on the PPSR?

For goods that are not inventory in the customer's hands, the PMSI must be registered before the end of 15 business days after the customer obtains possession to get PMSI priority. For inventory, registration must happen before the customer obtains possession. The safest approach is to register when you open the account.

What happens if my customer goes into liquidation and I have not registered?

Under section 267 of the PPSA, a security interest that is unperfected when the customer is wound up, enters administration, executes a deed of company arrangement or becomes bankrupt vests in the customer. You lose your security and rank as an unsecured creditor. Late registration can also be defeated under section 588FL of the Corporations Act.

Should I get personal guarantees from directors?

If you extend credit to a company, a properly drafted personal guarantee from its directors gives you an individual to pursue if the company cannot pay. The guarantee should be signed by each director personally, and we can include a charge over their property for extra protection.

Can my terms of trade say there are no refunds?

No. Consumer guarantees under the Australian Consumer Law cannot be excluded, restricted or modified by contract, and it is unlawful to mislead customers about their rights, for example with 'no refunds' statements. Your terms should limit liability only in ways the law permits.

Why choose Invictus Legal as your terms of trade lawyer in Sydney?

We recover debts and act in insolvency-related disputes, so we know which clauses hold up when a customer fails. You get experienced, practical drafting from a principal lawyer. See our full range of commercial law services.

Protect your business with a terms of trade lawyer in Sydney. Call 02 8553 0500 or book online. For urgent matters call 0410 600 230.

This page is general information only and is not legal advice. Contact Invictus Legal to discuss your situation.