Most businesses treat their terms of trade as a set-and-forget document — drafted once by a solicitor, filed, and referred to only when something goes wrong. That approach carries real risk. Australian commercial and credit law has changed significantly over the past decade, and terms written before key reforms may leave a creditor without protections that are now standard.
The PPSA and what it changed
The Personal Property Securities Act 2009 (Cth) came into full effect in 2012 and fundamentally changed the way security interests in personal property — including retention of title — are created, registered and enforced. A retention of title clause that was effective before the PPSA may be wholly ineffective against a liquidator today if it was not updated to refer to the PPSR and was not registered within the required timeframes.
PPSA practice has continued to develop. Court decisions since 2012 have clarified what constitutes a perfected security interest, when a registration lapses, and what happens on a collateral transfer. Terms written before these decisions may not reflect current practice.
Legislative amendments
Multiple pieces of legislation relevant to credit and recovery have been amended since 2019. The National Credit Code has been updated. State-specific retail leases legislation has changed. The consumer protection provisions under the Australian Consumer Law — which apply to some B2B transactions — have been subject to significant ACCC focus. Unfair contract term provisions, extended to small business contracts in 2016 and strengthened in 2023, may render certain standard clauses unenforceable.
Jurisdiction and dispute resolution clauses
The rise of e-commerce means many businesses now supply customers across state lines. A jurisdiction clause specifying the laws of Queensland may have been appropriate when all your customers were local — it may be less appropriate if a significant proportion are in other states. Similarly, arbitration and mediation clauses may benefit from updating to reference current institutional rules.
New enforcement options
Recovery mechanisms and formal processes available to creditors have evolved. A terms review is also an opportunity to ensure your terms explicitly permit the recovery methods you may want to use — electronic service of notices, credit reporting, referral to a recovery agent — and that any relevant consents are captured at the credit application stage.
What a review should cover
- Payment terms and due dates — precision matters for limitation period calculations
- Interest and recovery cost clauses — ensure they are enforceable and properly drafted
- Retention of title and PPSR registration obligations
- Personal guarantee requirements and execution formalities
- Unfair contract term compliance for small business counterparties
- Dispute resolution and jurisdiction clauses
- Electronic signature and service provisions
A terms review by a commercial solicitor typically costs a few thousand dollars. The cost of unenforceable terms in a significant recovery is almost always higher. Speak to Merion about how your terms interact with recovery outcomes in practice.