Key Things Every Business Contract Should Include But Often Doesn’t

In Victoria’s commercial landscape, businesses are operating in an increasingly regulated environment, yet many commercial contracts still fail to include essential protections that could easily prevent businesses from facing costly disputes and litigation fees.
While most agreements cover the basics such as price, deliverables, and duration, they frequently overlook disclosure obligations, means of variation, well defined indemnities, limitations of liability, clear allocation of risk and compliance with the unfair contract terms (UCT) reforms.

1. Disclosure Obligations
   Many contracts fail to include clear disclosure obligations even though silence can amount to misleading or deceptive conduct under section 18 of the Australian Consumer Law (ACL). In Delor Vue Apartments CTS 39788 v Allianz Australia Insurance Ltd [2022] HCA 38, the High Court has warned that a representation or promise made during negotiations does not become binding or irrevocable unless the recipient has acted on it to their detriment.
2. Means of Variation
   Many commercial disputes stem from poorly drafted or ambiguous variation clauses. It is common for parties to agree that they will “sort it out later”, only to discover that the absence of a clear, enforceable variation mechanism leaves them exposed. Where a contract does not specify how variations must be documented or approved, even minor adjustments can trigger allegations of breach of contract or misleading conduct. A well‑defined variation clause is essential to provide certainty, reduce future disputes, and ensure that any amendments to the original agreement is both intentional and enforceable.
3. Indemnities
   Broadly drafted indemnities can end up placing significant liability on one party beyond what is commercially reasonable. Poorly written contracts may require a business to assume responsibility for:
   • losses outside of their control;
   • the other party’s negligence;
   •
   third party actions;
   • regulatory penalties; and,
   • consequential or unforeseeable losses.
   Broad indemnities such as these can expose businesses to regulatory fines, cyber incidents, data breaches and contractual penalties, all of which can result in severe financial losses exposure for a business.
4. Limitation of liability
   A limitation of liability clause is one of the most critical yet frequently overlooked protections in commercial contracts. A well‑drafted limitation of liability clause can cap a party’s financial exposure, exclude categories of loss that would otherwise be devastating, and provide certainty about the maximum risk a business is assuming. However, many commercial agreements either omit these clauses entirely or do not adequately reflect the commercial realities of the transaction. Without a clear limitation of liability, a business may find itself liable for extensive losses, including consequential loss, loss of profits, business interruption, or damages arising from third‑party claims. Properly drafted limitation clauses are therefore essential to ensuring that contractual risk remains proportionate, predictable and commercially manageable.
5. Risk Allocation
   Given the broader regulatory focus on cybersecurity obligations, data governance and privacy compliance in recent years, there is an increasing need for commercial contracts to allocate risk clearly and explicitly in relation to data governance, cybersecurity standards, and privacy compliance. However, many businesses continue to rely on outdated precedents or generic online templates that fail to address modern regulatory requirements. This exposes parties to significant operational, financial and reputational risk, particularly where contracts do not specify who is responsible for data breaches, notification obligations, or liability for third‑party system failures.
6. UCT reforms
   The recent UCT reforms means that it is now illegal, not just voidable, for businesses to have unfair contract terms in their agreements. Courts can impose substantial civil penalties for proposing, using or relying on unfair terms. This applies to both standard form consumer agreements as well as small business contracts. Clauses that provide unilateral variation rights, broad indemnities, automatic renewals and termination for convenience clauses are now at high-risk especially if they are not drafted appropriately.

It’s essential to obtain legal advice before signing any commercial agreement to ensure your rights are protected and your business is not exposed to unnecessary risk. Whether you need to update your contracts to reflect current legislative reforms and regulatory requirements, or you simply want a thorough commercial contract review before finalising a deal, Zanier Legal Services is here to support you. Contact us today to book an appointment with Nicole.