Written by Madeleine Los
In commercial disputes, one of the most common areas of contention is whether terms and conditions (T&Cs) form part of a contract. Often, when a dispute arises, customers find they are subjected to T&Cs they never explicitly agreed to when negotiating the contract. So, how are T&Cs incorporated into a contract? And is it possible to challenge their incorporation?
1. Has the Contract Been Signed?
Generally, the first step in determining whether T&Cs are binding is assessing whether the contract (with those T&Cs included) has been signed. In most circumstances, when a party signs a contract, they are considered to have agreed to its terms. This means, if a customer signs a contract with reference to T&Cs, they are likely incorporated (even if you haven’t read them or if they are contained overleaf)1
However, even a signed contract can be challenged in certain circumstances—particularly if it contains onerous or unusual terms that were not properly brought to the customer’s attention, or the customer could not have been reasonably aware of the T&Cs when the contract was signed.
2. Was There Reasonable Notice of the T&Cs?
Even in a signed contract, if the customer wasn’t reasonably aware of the T&Cs at the time of signing, they may not form part of the agreement. For example, a vague reference to T&Cs on a website with no hyperlink or no clear direction on how to locate the T&Cs is probably not sufficient for the T&Cs to be binding. For the T&Cs to be enforceable, the party providing them must ensure the other party has had a reasonable opportunity to review them. If there is an argument the terms were not reasonably available or clear to find, a Court may find they do not form part of the binding contract.
So, what is sufficient notice? T&Cs must be provided before a contract is entered into to be binding; however, all that is usually required is that a customer is reasonably aware that the T&Cs exist. This means they may not need to be provided with a copy of the T&Cs each time they enter a contract for them to apply. It may be sufficient for the customer to be aware of the T&Cs from prior dealings between the parties. T&Cs can also be incorporated ‘by reference’. This means the T&Cs don’t have to be physically provided, but can be incorporated by reference to, for example, a website or other document (so long as there is a hyperlink or clear directions on where to find the T&Cs). T&Cs do not otherwise necessarily need to be brought to the attention of the customer,2 unless there are particularly onerous terms.
3. Are There Any Onerous Terms?
As well as reasonable notice of the T&Cs, customers must also be specially notified of any onerous terms in the T&Cs. Onerous terms are provisions that could impose an unfair burden or disadvantage on one party. These terms might include excessive penalties for breach, unreasonable time frames, or clauses that limit a party’s rights or impose obligations beyond what is reasonable in the context of the agreement.
For onerous terms to be incorporated, special notice must be given of them. Whether or not there has been satisfactory notice is very much fact specific.3
Even if the terms were provided with reasonable notice, signed, and are not considered onerous, you may still have grounds to challenge them as unfair contract terms under the Australian Consumer Law (ACL) in certain circumstances.
If you have concerns about your contract terms or need advice on your recovery prospects where a contractual dispute has arisen, please contact Madeleine Los on 07 3330 9159 or Jessica Woods on 03 9947 4516.
- Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd – [2004] HCA 52 ↩︎
- Hood v Anchor Line (Henderson Bros) [1918] AC 837 as per Lord Parmoor:
If an intending passenger; either personally or through his agent, has reasonable notice that the ticket or document handed to him by a carrier contains certain conditions, and accepts the document or ticket as handed to him without objection, and without taking the trouble to make himself acquainted with such conditions, he must be taken to have assented to them, and they thereupon become evidence of the contract of carriage made between such passenger and the carrier. ↩︎ - Carnival plc v Karpik (The Ruby Princess) [2022] FCAFC 149 At [170]
What amounts to satisfactory notice is very much fact specific, with the result that drawing guiding principles as to this issue is difficult if not impossible.. ↩︎
