Commercial Law FAQ

A binding contract requires offer, acceptance, consideration, intention to create legal relations, and certainty of terms. Both parties must have capacity to contract. Most commercial contracts are in writing, though oral contracts can be enforceable.

The Australian Consumer Law (ACL) is set out in Schedule 2 of the Competition and Consumer Act 2010 (Cth). It provides consumer guarantees, prohibits misleading and deceptive conduct, regulates unfair contract terms, and is enforced by the ACCC.

Section 18 of the ACL prohibits a person engaging in trade or commerce from conduct that is misleading or deceptive, or likely to mislead or deceive. It is one of the most heavily litigated provisions in Australian commercial law.

The ACL provides automatic guarantees on goods and services supplied to consumers — including acceptable quality, fitness for purpose, and matching description. These cannot be excluded by contract terms.

A term in a standard form consumer or small business contract is unfair if it would cause significant imbalance, is not reasonably necessary to protect a legitimate interest, and would cause detriment to a party. Unfair terms are void.

Directors owe duties to act in good faith in the best interests of the company, exercise care and diligence, avoid conflicts of interest, prevent insolvent trading, and not misuse their position or information. These are codified in the Corporations Act and supplemented by general law.

Insolvent trading occurs when a director allows the company to incur a debt while the company is insolvent (or becomes insolvent because of the debt). Directors can be personally liable for the debt and face civil and criminal penalties.

The safe harbour provision allows directors to incur debts while exploring a course of action reasonably likely to lead to a better outcome for the company than immediate insolvency administration. It protects against personal liability for insolvent trading in those circumstances.

The PPSA 2009 (Cth) created a single national register of security interests in personal property (anything that is not land). Failure to register a security interest can result in losing priority — even on assets you actually own.

A contract requires consideration (something given in exchange) and is enforceable for 6 years (12 in some states). A deed does not require consideration and is enforceable for 12-15 years depending on the jurisdiction. Deeds must comply with formal execution requirements.

Communications marked "without prejudice" in the context of settling a dispute are generally not admissible in court. The intention is to encourage settlement discussions by ensuring concessions made cannot be used in evidence.

Privity of contract means only the parties to a contract can sue or be sued on it. There are limited exceptions, including statutory exceptions in some Australian jurisdictions and exceptions for trust beneficiaries.

A force majeure clause excuses a party from performing the contract when an unexpected event beyond their control prevents performance. The exact scope depends on the wording of the clause — there is no automatic doctrine of force majeure in Australian common law.

A warranty is a promise that something is true, and damages are the remedy for breach. An indemnity is a promise to compensate for loss arising from a particular event, regardless of fault. Indemnities can give rise to broader liability than warranties.

Due diligence in M&A is the process of investigating a target company's legal, financial, tax, and operational position before completing the transaction. It identifies risks that may affect the price, the deal structure, or whether to proceed at all.

A disclosure schedule is a document accompanying a sale and purchase agreement that lists facts qualifying the seller's warranties. Properly disclosed matters cannot form the basis of a warranty claim against the seller.

The Foreign Investment Review Board reviews proposed foreign investments in Australia. Some investments require approval before completion, depending on the type of asset, the value, and the foreign investor's status.

The Privacy Act 1988 (Cth) governs how Australian organisations handle personal information. It applies to most businesses with annual turnover above $3 million, and the 13 Australian Privacy Principles set out specific obligations including disclosure, consent, and security.

A non-compete clause restricts a party from competing with another for a defined period after the contract ends. Enforceability depends on whether the restraint is reasonably necessary to protect a legitimate interest and goes no further than necessary. Courts read them narrowly.

Quillio reviews commercial contracts in seconds, runs M&A due diligence on data rooms, drafts transactional documents in AU style, and researches Corporations Act and ACL questions with citations. See /practice-areas/commercial-lawyers or start a free trial.