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Telehealth Providers Beware: TGA Cracks Down on Prescription Drug Advertising

Telehealth Providers Beware: TGA Cracks Down on Prescription Drug Advertising

medical law

With the recent Therapeutic Goods Administration (TGA) guidelines in March 2024 honing in on advertising cosmetic health services involving injectables, it’s clear the TGA is focusing on a number of different industries when it comes to advertising. A laser focus on compliance is more important than ever before.

So what laws apply to telehealth services and providers?

The Medical Board of Australia defines ‘telehealth consultations’ as “consultations that use technology as an alternative to in-person consultations between a patient and medical practitioner (doctor)”.  This is a broad definition and includes video, internet and telephone consultations, the electronic transmission of digital images and data, and the electronic prescribing of medicines.  

And the Therapeutic Goods Administration (TGA) is now flexing its muscles when it comes to telehealth and prescription-only medications. 

In a recent move in late 2023, they fined InstantScripts Pty Ltd a hefty $742,500 for allegedly promoting prescription-only medicines through their telehealth services.

This significant fine sends a clear message: telehealth providers need to be extra cautious about their advertising practices. 

Here’s a breakdown of what you need to know:

Why the Crackdown?

The core concern is protecting consumers. The TGA emphasizes that decisions about prescription drugs should be made by a qualified healthcare professional and discussed in a private patient consultation, and not influenced by misleading advertising. Direct-to-consumer advertising of these medications could lead to patients pressuring doctors for unnecessary prescriptions, potentially causing harm.

The Rules of the Game

Pursuant to s 42DLB(1) and (7) of the Therapeutic Goods Act 1989 (Therapeutic Goods Act), advertising substance or goods containing substances which are included in Schedules 3, 4 or 8 to the current Poisons Standard (but not in Appendix H of the current Poisons Standard) other than a reference authorised or required by a government or government authority, is prohibited. 

This means advertising prescription-only medicines like insulin, antibiotics, and blood pressure medication as well as substances such as botulinum toxin type A (often known as ‘Botox’) directly to consumers is strictly prohibited. 

This applies to telehealth providers as well. Section 42DLB of the Therapeutic Goods Act is a civil penalty provision – companies that breach this provision can receive large fines if they are found to be in breach, with the maximum penalty being 5,000 penalty units (currently $1.565 million) and 50,000 penalty units for companies (currently $15.65 million).

What Does This Mean for Telehealth Providers?

Here are some key takeaways and steps to take to ensure compliance:

  • Review your promotional, social and advertising content. Make sure it doesn’t advertise prescription-only medications in any way, even implicitly.
  • Focus on the service, not the drugs. Promote the benefits of your telehealth consultations without mentioning specific medications or treatments if it involves prescription medicines.
  • Brush up on regulations. Familiarize yourself with the Therapeutic Goods Act as well as the Therapeutic Goods Advertising Code, the legislative instrument was made under section 42BAA of the Therapeutic Goods Act.

Beyond the TGA:

TGA isn’t the only regulatory body keeping an eye on telehealth. The Australian Health Practitioner Regulation Agency (AHPRA) and the Medical Board of Australia are also focused on regulating this area of health services.

The new Telehealth Guidelines issued in September 2023, developed by the Medical Board of Australia under section 39 of the Health Practitioner Regulation National Law Act (the National Law), highlight the increased scrutiny on telehealth practices.

Not Just InstantScripts

The TGA has been busy enforcing regulations across the board in 2023. 

The TGA issued 20 infringement notices totalling $159,840 to Mode Medical Pty Ltd (trading as Drip IV Australia) and an executive officer of the company, for the alleged unlawful advertising of intravenous infusion products to Australian consumers on a company website and social media. There were multiple alleged breaches, including alleged prohibited and restricted representations, as well as advertising that referred to ingredients that are prescription only, such as glutathione. 

They’ve also issued fines and prosecuted various entities for offences like:

  • Unlawfully advertising nicotine vaping products.
  • Promoting unapproved treatments for serious diseases.
  • Selling unregistered sports supplements.
  • Manufacturing and advertising illegal performance-enhancing drugs.

The Takeaway

The recent enforcement actions show the TGA is prioritizing regulating the intersection of telehealth and prescription-only medications. Telehealth providers should take a proactive approach by regularly reviewing their practices and advertising materials to ensure compliance. Remember, avoiding hefty fines and protecting your patients’ well-being should be top priorities and engaging in best practice will help you stand out as an industry leader.

Need guidance in relation to compliance with TGA laws? Here at Law Quarter, our lawyers offer advice to clients in many areas and industries, including beauty and skincare, aesthetic medicine, cosmetic clinics and healthcare. We also run a sister business, Compliance Quarter so we can help you implement compliance programs in your business.You can also reach out to Jacqui Jubb, Partner at Law Quarter at or 0411 659 671 to discuss your concerns. We’d love to help.

Legal Landscape of Renewable Energy: Navigating Opportunities and Challenges

Legal Landscape of Renewable Energy: Navigating Opportunities and Challenges

Energy Law

Renewable energy is one of the fastest growing industries in Australia, with significant potential for economic, social and environmental benefits. Australia has vast solar, wind, and land resources that give it a strong competitive advantage in transitioning to renewable energy.1 The renewable energy workforce is projected to grow significantly, with up to 193,900 workers required by 2050 across solar, wind, storage, hydrogen generation, and transmission infrastructure.3 This represents an increase of around 167,900 new workers needed compared to 2020 levels. Wind power is poised for rapid expansion, with projected revenue growth of 52.6% in 2023/2024 after nearly a five-fold increase over the past decade.4

However, the legal landscape of renewable energy is complex and dynamic, with various opportunities and challenges for businesses and investors. This article aims to provide an overview of the key legal issues and considerations for the renewable energy sector in Australia, including the regulatory framework, the market mechanisms, the contractual arrangements, the environmental and planning approvals, and the dispute resolution options. Each renewable energy project is unique and this article does not cover all legal and regulatory considerations.

Regulatory Framework

The renewable energy sector in Australia is regulated by a combination of federal, state and territory laws and policies, as well as industry codes and standards. The main federal legislation governing the sector is the Renewable Energy (Electricity) Act 2000 (Cth), which establishes the Renewable Energy Target (RET) scheme. The RET scheme is designed to encourage the generation of electricity from renewable sources and reduce greenhouse gas emissions. The scheme consists of two parts: the Large-scale Renewable Energy Target (LRET) and the Small-scale Renewable Energy Scheme (SRES). The LRET creates a market for renewable energy certificates (RECs) that are issued to accredited large-scale renewable energy power stations, such as wind farms, solar farms and hydroelectric plants. The SRES provides financial incentives for the installation of small-scale renewable energy systems, such as rooftop solar panels. The RECs can be traded and sold to liable entities, such as electricity retailers and large energy users, who are required to surrender a certain number of RECs each year to meet their obligations under the RET scheme.

In addition to the federal legislation, each state and territory has its own laws and policies that affect the renewable energy sector. For example, some states and territories have set their own renewable energy targets, feed-in tariffs, grants, loans and subsidies for renewable energy projects and consumers. Some states and territories also have specific legislation and regulations for certain types of renewable energy, such as wind energy, solar energy and bioenergy. Therefore, it is important for businesses and investors to be aware of the different legal requirements and incentives that apply in each jurisdiction where they operate or intend to operate.

Market Mechanisms

The renewable energy sector in Australia operates within the National Electricity Market (NEM), which is the wholesale market for electricity supply and demand in the eastern and southern states and territories. The NEM is governed by the National Electricity Law and the National Electricity Rules, which are administered by the Australian Energy Market Commission (AEMC), the Australian Energy Regulator (AER) and the Australian Energy Market Operator (AEMO). The NEM operates as a spot market, where the price of electricity is determined by the interaction of supply and demand every five minutes. The NEM also has a number of ancillary services and mechanisms, such as frequency control, network support, reliability and emergency reserve, and demand response, that are essential for maintaining the security and stability of the power system.

The renewable energy sector also participates in the Australian Renewable Energy Agency (ARENA) and the Clean Energy Finance Corporation (CEFC), which are two independent federal agencies that support the development and deployment of renewable energy technologies and projects in Australia. ARENA provides funding, knowledge and networks for renewable energy innovation, research, demonstration and commercialisation. CEFC provides finance, expertise and co-investment for renewable energy projects, businesses and programs that have positive environmental and economic outcomes. Both ARENA and CEFC work closely with the renewable energy industry, government, research institutions and other stakeholders to accelerate the transition to a low-carbon economy.

Contractual Arrangements

The renewable energy sector in Australia involves a range of contractual arrangements between different parties, such as developers, owners, operators, contractors, suppliers, off-takers, financiers, insurers and regulators. These contracts cover various aspects of the renewable energy project lifecycle, such as development, construction, operation, maintenance, connection, dispatch, sale, purchase, financing and insurance. Some of the common types of contracts in the renewable energy sector are:

  • Power purchase agreements (PPAs): These are long-term contracts between renewable energy generators and electricity buyers, such as retailers, large energy users or government agencies, that specify the terms and conditions for the sale and purchase of electricity and RECs. PPAs provide a stable and predictable revenue stream for renewable energy projects, as well as a hedge against price volatility and regulatory uncertainty. PPAs can be structured in different ways, such as fixed-price, indexed-price, hybrid-price, contract-for-difference, or synthetic PPAs, depending on the risk appetite and preferences of the parties.
  • Engineering, procurement and construction (EPC) contracts: These are contracts between renewable energy project developers or owners and EPC contractors, who are responsible for designing, building, commissioning and handing over the project to the owner. EPC contracts typically include provisions for the scope of work, the project schedule, the contract price, the performance guarantees, the liquidated damages, the variations, the defects liability, the warranties, the indemnities and the dispute resolution.
  • Operation and maintenance (O&M) contracts: These are contracts between renewable energy project owners and O&M contractors, who are responsible for operating, maintaining, repairing and replacing the project assets and equipment. O&M contracts usually include provisions for the scope of services, the service fees, the performance standards, the availability guarantees, the spare parts, the reporting, the health and safety, the environmental compliance and the dispute resolution.
  • Connection agreements: These are contracts between renewable energy project owners and network service providers, who are responsible for connecting the project to the electricity grid and providing network services, such as transmission, distribution and ancillary services. Connection agreements typically include provisions for the connection process, the connection assets, the connection charges, the technical standards, the network access, the network performance, the network augmentation, the curtailment, the metering and the dispute resolution.

These contracts are usually interrelated and interdependent, and require careful drafting, negotiation and management to ensure the successful delivery and operation of the renewable energy project. They also need to comply with the relevant laws and regulations, as well as the industry best practices and standards, that apply to the renewable energy sector.

Environmental and Planning Approvals

The renewable energy sector in Australia is subject to various environmental and planning approvals at the federal, state and territory, and local levels. These approvals are required to ensure that the renewable energy projects are consistent with the environmental objectives and planning policies of the relevant jurisdictions, and that they minimise and mitigate any potential adverse impacts on the environment, the community and the heritage. Some of the common types of environmental and planning approvals for the renewable energy sector are:

  • Environmental impact assessment (EIA): This is a process of identifying, assessing and managing the environmental impacts of a proposed renewable energy project, and obtaining the necessary environmental approvals from the relevant authorities. The EIA process may involve different stages, such as screening, scoping, preparation, review, decision, implementation and monitoring, depending on the nature, scale and location of the project. The EIA process may also require public consultation and participation, as well as the consideration of alternative options and mitigation measures.
  • Planning permission: This is a process of obtaining the necessary planning approvals from the relevant authorities for the use and development of land for a proposed renewable energy project. The planning permission process may involve different steps, such as pre-application consultation, application submission, application assessment, public notification, public submissions, public hearing, decision, appeal and compliance, depending on the planning scheme and the planning regulations that apply to the project. The planning permission process may also require the consideration of various planning criteria and objectives, such as the zoning, the overlay, the development plan, the design and the amenity.
  • Environmental licences and permits: These are specific authorisations that are required for certain activities or aspects of a renewable energy project that may have environmental implications, such as the generation, transmission, distribution, storage, disposal or emission of electricity, water, waste, noise, air, flora, fauna or chemicals. The environmental licences and permits are issued by the relevant authorities, and may include conditions, limitations, obligations and reporting requirements for the project owner or operator.

These environmental and planning approvals are essential for the lawful and responsible development and operation of the renewable energy project. They also involve significant time, cost and risk for the project owner or developer, and require extensive consultation and coordination with the relevant authorities, stakeholders and consultants.

Dispute Resolution

The renewable energy sector in Australia may encounter various disputes between different parties, such as developers, owners, operators, contractors, suppliers, off-takers, financiers, insurers, regulators and consumers. These disputes may arise from various sources, such as contractual breaches, performance failures, payment defaults, regulatory changes, environmental impacts, planning objections, technical faults, force majeure events or market fluctuations. These disputes may have significant financial, operational and reputational consequences for the parties involved, and may require effective and efficient resolution.

The renewable energy sector in Australia may adopt different methods of dispute resolution, such as negotiation, mediation, arbitration, litigation or hybrid processes, depending on the nature, complexity and urgency of the dispute, as well as the preferences and interests of the parties. These methods of dispute resolution may have different advantages and disadvantages, such as the cost, the time, the confidentiality, the flexibility, the enforceability and the finality of the outcome. The parties may also choose to include dispute resolution clauses in their contracts, or to refer to dispute resolution rules or institutions, that govern the procedure and the substance of the dispute resolution process.


The renewable energy sector in Australia is a dynamic and diverse industry that offers significant opportunities and challenges for businesses and investors. The legal landscape of renewable energy is complex and evolving, with various laws, policies, mechanisms, contracts, approvals and disputes that affect the sector. It is important for businesses and investors to understand and navigate the legal landscape of renewable energy, and to seek professional advice and assistance when necessary, to ensure the successful and sustainable development and operation of their renewable energy projects.

Understanding Trade Promotions: A Deep Dive into How to Run Compliant Trade Promotions

Understanding Trade Promotions: A Deep Dive into How to Run Compliant Trade Promotions

Private Law

Facebook, Pinterest, Instagram, LinkedIn, Twitter – these are the playgrounds where businesses are actively connecting with their loyal customers and attracting new ones in a flash. So what are the Australian laws around running a promotion online?

What is a trade promotion lottery? 

A trade promotion competition is a free-entry competition that a business conducts to promote their goods or services.  It can be a contest, a raffle, a sweepstakes, or any other promotion that has prizes and winners determined by chance. Businesses run trade promotions to encourage sales and increase engagement. 

The three elements to a trade promotion are that they are:

  1. free to enter;
  2. promoting goods or services; and
  3. conducted by a registered business.

While trade promotions are designed to create excitement and incentivise consumer participation, they must adhere to specific rules and regulations set forth by the Australian government to ensure fairness, transparency, and consumer protection.


Imagine planning the most glamorous fashion show, only to realize you forgot the VIP invitations. That’s the importance of permits in the world of trade promotions. It’s important to obtain the right permits, especially when your promotion involves lotteries or games of chance. 

Trade Promotion Tips: Breaking Down the Legal Runway

Here are the key takeaways:

1. Game of Skill vs. Game of Chance: Firstly, you need to work out what type of promotion you are running. If your promotion involves an element of luck – like drawing winners randomly – you’re wading into lottery territory. It’s a delicate balance that requires the right legal finesse. 

A game of skill is a promotional activity whereby the winner is determined by a skill-based assessment (for example, entrants submit an answer to a promotional question which can then be judged in order to determine a winner). 

A game of chance is one where random winners are picked and it does not involve an assessment of any skill. This could be a Facebook ‘Share to Win’ promotion, lottery ticket, bingo game or a scratchie.

2. State-Specific Permits: Each state in Australia has its own set of rules and requirements. It’s like tailoring your legal outfit to fit perfectly in each jurisdiction. You do not need a permit for a game of skill. However, you still need to comply with any state or territory laws or regulations that deal with trade promotions generally, as well as the Australian Consumer Law (ACL). 

For example, in Western Australia, a trade promotion lottery must be free to enter, and the prize must not be a cosmetic surgical or medical procedure. In South Australia, if you are using instant scratch or break open tickets (where the number, letter or symbol is hidden) it is an instant prize trade promotion lottery and you must apply for a licence regardless of the prize amount and remember that each of the states have their own rules about ticket draws and prizes, etc. 

Be mindful of the laws in each of the states and remember that permit numbers need to appear on your trade promotion creative so give yourself ample time to apply for the permits.

You may need a permit or authority for a game of chance, depending on a number of factors including where you operate your business and the dollar value of the total prize pool.  For example, if the prize pool for a game of chance is:

  • less than $3,000, you do not need a permit;
  • between $3,000 and $5,000, you only need a permit in the ACT;
  • $5,000 or over, you need a permit in the ACT, SA and NT; and
  • $10,000 or over, you need a permit in the ACT, SA, NT and NSW.

Queensland, Tasmania and Victoria do not require businesses to acquire Trade Promotion Lottery permits. Despite this, each business is required to comply with a variety of state specific mandatory conditions.

Here’s a list of the some of the laws and regulations that apply in each state (non-exhaustive):

New South Wales:
– Community Gaming Act 2018
– Community Gaming Regulations (NSW) 2020

NSW trade promotions are reviewed by the following regulatory body:

– NSW Fair Trading

Australian Capital Territory
– Lotteries Act 1964

ACT trade promotions are reviewed by the following regulatory body:

  • ACT Gambling and Racing Commission

– Gambling Regulation Act 2003
– Gambling Regulations 2015

VIC trade promotions are reviewed by the following regulatory body:

  • Victoria Commission for Gambling and Liquor Regulation

South Australia
– Lotteries Act 2019
– Lotteries Regulations 2021

SA trade promotions are reviewed by the following regulatory body:

  • SA Consumer and Business Services

– Charitable and Non-Profit Gaming Act 1999
– Charitable and Non-Profit Gaming Regulation 1999

QLD trade promotions are reviewed by the following regulatory body:

  • Business Queensland

Western Australia
– Gaming and Wagering Commission Act 1987
– Lotteries Commission Act 1990

WA trade promotions are reviewed by the following regulatory body:

-WA Department of Government, Sport and Cultural Industries

– Gaming Control Act 1993

TAS trade promotions are reviewed by the following regulatory body:

  • TAS Department of Treasury and Finance

Northern Territory
– Gaming Control (Community Gaming) Regulations 2006
– Gaming Control Act 1993

NT trade promotions are reviewed by the following body

  • NT Department of the Attorney-General and Justice

3. Transparency: Front-Row Access for All: In the fashion world, inclusivity is a trend that never goes out of style. Translate this into your trade promotion by ensuring that the entry process and winner selection are as inclusive and transparent as possible. You should clearly communicate the terms and conditions to participants. You should also maintain good record-keeping, manage any privacy issues and consider what specific rules exist for the applicable social media platform (for example, Facebook terms state that personal timelines and friend connections cannot be used for promotions).

Let everyone feel like they have front-row access to the fashion extravaganza. It’s not just about legal compliance – it’s about creating an atmosphere of trust, confidence and credibility.

Penalties for Non-Compliance

Each state and territory has its own penalties for not complying with their laws.

  • Breaches of the Competition and Consumer Act 2010 and the Australian Consumer Law attract fines and pecuniary penalties.
  • Some breaches are civil and can result in monetary penalties.
  • Some breaches are criminal, and can result in monetary fines and/or jail time. 

The introduction of the Treasury Laws Amendment (More Competition, Better Prices) Bill 2022 on 10 November 2022 resulted in a new maximum penalty for a corporation that breaches the Competition and Consumer Act 2010 (CCA) – $50 million. This is a significant rise from the previous maximum penalty of $10 million. For individuals, the maximum penalty has also increased from $500,000 to $2.5 million – an increase of 500%.

Leaving aside the hefty possible fines and penalties for non-compliance, not staying in line with trade promotion regulations can severely damage your business’s reputation. Negative publicity and customer backlash can be hard to recover from, making it crucial to follow the rules meticulously.

Compliance Checklist

Running trade promotions are like throwing a party for your brand, where you get to showcase your latest products, dazzle your audience, and boost your brand’s street cred all at once! But before you dive headfirst into the promo pool, let’s make sure you’re doing it right:

  • Know the Lay of the Land: Before you unleash your marketing magic, take a peek at the rules in each state or territory. It’s like scouting the terrain before going on a treasure hunt – you gotta know where you’re stepping!
  • Legal Eagles to the Rescue: Don’t worry, you don’t have to navigate this jungle alone. Seek advice from legal experts who specialize in trade promotion regulations. We’ve represented many businesses in this space and helped them craft the right trade promotion terms and conditions. We can make sure your campaign is sailing smoothly from the get-go.
  • Paperwork Party: Keep those records in check. Permits, terms, conditions – it’s like organizing the ultimate guest list for your promotion bash. The more detailed, the better.
  • Transparency is Key: Nobody likes a mystery, especially when prizes are involved. Lay it all out for your participants – how winners will be chosen, what they’re winning – the whole shebang 🙂 No smoke and mirrors here, please.
  • Privacy Matters: Last but not least, play nice with personal info. Follow Australia’s privacy laws when collecting and handling participant data.

So there you have it – your recipe for a rockin’ trade promotion that’ll have everyone talking about your brand for all the right reasons! 🚀

If you’d like help setting up your trade promotions and drafting the terms and conditions, here at Law Quarter, our lawyers work with clients across a range of industries from technology and retail to beauty, healthcare and wellness. We also run a sister business, Compliance Quarter so we can help you stay compliant as you manage your promotions.

You can also reach out to me directly at or call me on 0411 659 671.

Document Version Control for Standard Form Contracts: Why It Matters and How to Do It Right

Document Version Control for Standard Form Contracts: Why It Matters and How to Do It Right

Commercial Law

Document version control is the process of tracking and managing the changes made to a document over time. It allows you to keep track of who made what changes, when, and why, and to revert to previous versions if needed. Document version control is essential for any business that deals with legal documents, such as contracts, agreements, policies, and procedures. Without document version control, you run the risk of using outdated, inaccurate, or inconsistent documents that could expose you to legal liability, breach of contract, or loss of reputation.

What are standard form contracts and what are the challenges of managing them?

Standard form contracts are contracts that are used repeatedly for similar transactions or situations, such as sales contracts, service agreements, employment contracts, or terms and conditions. Standard form contracts can save time and money by reducing the need to draft and negotiate new contracts for every transaction. However, standard form contracts also pose some challenges when it comes to document version control. Some of these challenges are:

  • Standard form contracts may need to be updated frequently to reflect changes in the law, industry standards, or business practices.
  • Standard form contracts may need to be customized or modified for specific transactions or parties, which could create inconsistencies or conflicts between different versions.
  • Standard form contracts may be stored in different locations or formats, such as hard copies, digital files, or online platforms, which could make it difficult to access or track the latest version.
  • Standard form contracts may be used by different people or departments within the organization, which could lead to confusion or miscommunication about which version is the correct one.

How to implement document version control for standard form contracts?

To implement document version control for standard form contracts, you need to follow some best practices that will help you ensure the accuracy, consistency, and compliance of your documents. Some of these best practices are:

  • Create a document management system that allows you to store, organize, and access your standard form contracts in a centralized and secure location.
  • Establish a document naming convention that clearly identifies the document type, version number, date, and author of each document.
  • Use a document editing tool that allows you to track and highlight the changes made to each document, and to compare and merge different versions.
  • Implement a document approval process that requires the review and sign-off of the relevant stakeholders, such as legal counsel, managers, or clients, before using or distributing a document.
  • Maintain a document history log that records the details of each document change, such as the reason, date, and person responsible for the change.
  • Communicate and train your staff on the document version control policies and procedures, and ensure that they follow them consistently.

Why is legal review of contracts important?

Legal review of contracts is the process of examining and evaluating a contract to ensure that it is legally valid, enforceable, and compliant with the applicable laws and regulations. Legal review of contracts is important for several reasons, such as:

  • Legal review of contracts can help you identify and avoid potential legal risks, such as clauses that are ambiguous, unfair, or illegal, or that could expose you to liability, litigation, or penalties.
  • Legal review of contracts can help you protect and enforce your rights and interests, such as clauses that define the scope, terms, and conditions of the contract, or that provide remedies or dispute resolution mechanisms in case of breach or conflict.
  • Legal review of contracts can help you ensure that the contract reflects your intentions and expectations, and that it is consistent with your business objectives and strategies.


Legal review of contracts should be done by a qualified and experienced legal professional, such as a lawyer or a legal consultant, who can provide you with expert advice and guidance on the legal aspects of your contract. Legal review of contracts should be done before signing or using a contract, and whenever there is a change or update to the contract or the law that affects it. Legal review of contracts is especially important for standard form contracts, as they may contain clauses that are outdated, irrelevant, or inappropriate for your specific situation or transaction.

Document version control is a vital process for managing your standard form contracts and ensuring their legal compliance and effectiveness. By following the best practices of document version control, you can avoid the common pitfalls and challenges of using standard form contracts, and enhance your business performance and reputation. However, document version control is not enough to guarantee the quality and validity of your contracts. You also need to ensure that your contracts undergo legal review by a competent and qualified legal professional, who can help you identify and address any legal issues or risks that may arise from your contracts. By combining document version control and legal review, you can ensure that your standard form contracts are accurate, consistent, and compliant, and that they serve your best interests and objectives.

Legal Terms vs Commercial Terms: What You Need to Know

Legal Terms vs Commercial Terms: What You Need to Know

Commercial Law

Contracts are essential for any business transaction, but they can also be complex and confusing. Contracts often contain both legal terms and commercial terms, which have different implications and consequences for the parties involved. In this article, we will explain what the difference is between legal terms and commercial terms in a contract, why lawyers should always review draft contracts, and why commercial managers in a business should also understand the commercial terms and their impact.

What are legal terms and commercial terms in a contract?

Legal terms are the provisions in a contract that define the rights and obligations of the parties, the remedies for breach, the dispute resolution mechanisms, and the governing law and jurisdiction. Legal terms are usually drafted by lawyers and are based on legal principles and precedents. Legal terms are important because they protect the interests of the parties and provide certainty and enforceability in case of a dispute.

Commercial terms are the provisions in a contract that relate to the business aspects of the transaction, such as the scope of work, the deliverables, the payment terms, and the performance standards. Commercial terms are usually negotiated by the parties and are based on their business objectives and expectations. Commercial terms are important because they reflect the value and the risk of the transaction and affect the profitability and the reputation of the parties.

Why should lawyers always review draft contracts?

Lawyers should always review draft contracts before they are signed by the parties, for several reasons. First, lawyers can ensure that the legal terms are clear, consistent, and compliant with the applicable laws and regulations. Second, lawyers can identify and mitigate any potential legal risks or liabilities that may arise from the contract. Third, lawyers can advise the parties on the best legal strategies and options to achieve their desired outcomes and protect their interests. Fourth, lawyers can help the parties resolve any legal issues or disputes that may arise during the contract execution or performance.

While the distinction between commercial terms and legal terms is often made, that does not mean that all terms do not need to be reviewed by a lawyer. The difference is more relevant in terms of commercial managers understanding the areas of a contract that they need to understand, in depth.

Why should commercial managers also understand the commercial terms and their impact?

Commercial managers in a business should also understand the commercial terms and their impact, for several reasons. First, commercial managers can ensure that the commercial terms align with the business goals and expectations of the parties. Second, commercial managers can monitor and evaluate the performance and the results of the contract and make any necessary adjustments or improvements. Third, commercial managers can participate in the negotiation process and influence the commercial terms and their impact. Fourth, commercial managers can communicate and collaborate effectively with the lawyers and the other party to achieve a mutually beneficial and satisfactory contract.


Contracts are composed of both legal terms and commercial terms, which have different implications and consequences for the parties involved. Lawyers should always review draft contracts to ensure that the legal terms are clear, consistent, compliant, and protective. Commercial managers should also understand the commercial terms and their impact to ensure that the contract reflects the value and the risk of the transaction and aligns with the business objectives and expectations of the parties. By working together, lawyers and commercial managers can create and manage successful contracts that benefit both parties.

Case Note: Australian Securities and Investments Commission v Layaway Depot Pty Ltd [2023] FCA 1685

Case Note: Australian Securities and Investments Commission v Layaway Depot Pty Ltd [2023] FCA 1685

Commercial Law

In 2022, the Australian Securities and Investment Commission (ASIC) brought proceedings against Layaway Depot Pty Ltd (LAD), alleging that LAD had contravened section 29 of the National Consumer Credit Protection Act 2009 (Cth) (Credit Act) and section 32A(1) of the National Credit Code at Schedule 1 to the Credit Act (Credit Code). Justice Rangiah of the Federal Court of Australia delivered judgement on 29 May 2023.

By a statement of agreed facts (SOAF), LAD admitted that it had contravened the Credit Act and the Credit Code. The parties provided agreed proposed orders. The decision is relevant to businesses insofar as it provides details on the relevant consumer contracts and the considerations of a court when determining an appropriate civil penalty.

The relevant contracts were with 70 different consumers who described themselves as being on Centrelink benefits. The contracts were for the sale, by instalments, of household and electronic goods such as printers, headphones, smart phones, televisions, electronic tablets, gaming consoles, and wireless speakers. The relevant contracts were “credit contracts” by operation of s 9 of the Credit Code.

Section 9 provides that certain contracts for the hire of goods, under which the hirer has a right or obligation to purchase the goods and where the total of the charges and any other amounts payable under the contract exceeds the cash price of the goods, are to be regarded as “sale of the goods by instalments” and in certain circumstances will be regulated by the Credit Act and the Credit Code.  By sections 4 and 5 of the Credit Code and section 6 of the Credit Act, entry into those relevant contracts by LAB was a ‘credit activity.’ LAD therefore contravened section 29 of the Credit Act by engaging in credit activity without holding an Australian Credit Licence (ACL).  A lesson here, for all businesses, is to carefully consider whether they are engaging in credit activity that requires an ACL.

When examining the appropriate civil penalty in these proceedings, Justice Rangiah carefully considered the nature and extent of the contravening conduct, the size and financial position of the respondent, deterrence (both general and specific), harm to consumers, past conduct, LAD’s cooperation with ASIC, and comparative civil penalties.

The decision considered the relevant course of conduct and the totality principles. Where there are multiple contraventions, with multiple acts and omissions, occurring over a particular period, a court may group the contraventions together as a single course or courses of conduct.  When determining whether or not to group contraventions together as arising from a single source of conduct, a court may consider whether there is an inter-relationship between the factual and legal matters of the two or more contraventions. Consideration is given to whether the contraventions arise out of the same course of conduct or the one transaction. In the criminal context, the outcome is that an offender is not punished twice for what is essentially the same criminality. That being so, the course of conduct principle is no more than a tool of analysis and does not restrict a court’s discretion as to the appropriate penalty to be imposed. Where there are multiple contraventions, but each involves deliberation, such grouping may be inappropriate as is the case where the relevant conduct is directed towards numerous recipients.

Should you require any assistance in determining whether your business requires an ACL, or in responding to a regulatory investigation, please get in touch.

Legal considerations for the energy transition

Legal considerations for the energy transition

Commercial Law, Energy Law

The energy sector is changing. Driven by the need to lower greenhouse gas emissions, improve energy security and efficiency, and promote innovation and competitiveness. The transition involves a move from fossil fuel generation to renewable sources, such as solar, wind, hydro, and bioenergy, as well as the use of new technologies, such as smart grids, energy storage, electric vehicles, and digital platforms. The energy transition has important implications for the legal framework that regulates the sector, as it affects the rights and duties of various stakeholders, such as governments, regulators, investors, consumers, and communities. This article explores some of the main legal issues that emerge during the energy transition, and how they can be resolved to ensure a smooth and sustainable transition.

Legal drivers and challenges of the energy transition

The energy transition is influenced by a number of legal factors, such as international agreements, national policies, regulations, contracts, and litigation. Some of the legal drivers and challenges of the energy transition are:

  • The Paris Agreement (Accord de Paris) on climate change, which aims to limit the global temperature rise to well below 2°C above pre-industrial levels, and pursue efforts to limit it to 1.5°C, by requiring countries to submit nationally determined contributions (NDCs) to reduce their emissions and enhance their adaptation efforts. The Paris Agreement also provides a framework for cooperation, transparency, and accountability among parties, as well as mechanisms for financial, technical, and capacity-building support. The Paris Agreement creates a legal obligation for countries to implement their NDCs and to increase their ambition over time, which in turn requires them to adopt and enforce policies and measures to decarbonize their energy sector.
  • National policies and regulations, which set the goals, targets, and instruments for the energy transition, such as renewable energy mandates, carbon pricing, subsidies, feed-in tariffs, auctions, net metering, grid codes, standards, and licensing. National policies and regulations also define the roles and responsibilities of the actors involved in the energy sector, such as the government, the regulator, the utilities, the generators, the distributors, the retailers, and the consumers. National policies and regulations need to be coherent, consistent, and predictable, to provide a clear and stable framework for the energy transition, and to balance the interests and expectations of the different stakeholders.
  • Contracts, which govern the relationships and transactions among the stakeholders in the energy sector, such as power purchase agreements, interconnection agreements, grid access agreements, and service contracts. Contracts need to reflect the changing dynamics and risks of the energy transition, such as the variability and intermittency of renewable energy, the integration of distributed and decentralized generation, the emergence of new business models and services, and the potential for disputes and conflicts. Contracts need to be flexible, fair, and enforceable, to ensure the security and reliability of the energy supply, and to protect the rights and interests of the parties.
  • Litigation, which involves the use of judicial or quasi-judicial processes to resolve disputes or enforce rights and obligations related to the energy transition, such as lawsuits, arbitrations, mediations, and complaints. Litigation can arise from various sources, such as breaches of contracts, violations of regulations, infringements of intellectual property, damages to property or environment, human rights abuses, or public interest claims. Litigation can have positive or negative impacts on the energy transition, depending on the outcome and the precedent it sets. Litigation can also be costly, time-consuming, and uncertain, and can affect the reputation and credibility of the parties involved.

Legal implications and opportunities for the energy transition

The energy transition poses significant legal implications and opportunities for the various stakeholders in the energy sector, as it affects their rights, obligations, risks, and benefits. Some of the legal implications and opportunities for the energy transition are:

  • For governments, the energy transition requires them to design and implement effective and coherent policies and regulations that support the transition, while ensuring the public interest, the rule of law, and the respect for human rights. The energy transition also offers them the opportunity to enhance their international cooperation and leadership, to attract investments and innovation, and to foster social and economic development and inclusion.
  • For regulators, the energy transition requires them to adapt and update their regulatory framework and tools, to address the new challenges and opportunities of the transition, such as the integration of renewable energy, the management of the grid, the protection of the consumers, and the promotion of the competition and innovation. The energy transition also offers them the opportunity to engage and collaborate with the stakeholders, to improve their transparency and accountability, and to increase their efficiency and effectiveness.
  • For investors, the energy transition requires them to assess and manage the risks and returns of their investments, to diversify their portfolio and sources of finance, and to comply with the legal and regulatory requirements and standards. The energy transition also offers them the opportunity to access new and growing markets and technologies, to benefit from the incentives and support mechanisms, and to contribute to the environmental and social goals and values.
  • For consumers, the energy transition requires them to adapt and change their behavior and preferences, to pay for the costs and benefits of the transition, and to exercise their rights and responsibilities as energy users and prosumers. The energy transition also offers them the opportunity to participate and influence the energy sector, to access more affordable, reliable, and clean energy, and to enjoy a better quality of life and well-being.
  • For communities, the energy transition requires them to cope and adjust to the impacts and changes of the transition, such as the deployment of renewable energy projects, the closure of fossil fuel plants, the creation or loss of jobs, and the alteration of the landscape and the culture. The energy transition also offers them the opportunity to benefit and share from the transition, such as the ownership and management of energy resources and assets, the generation of income and revenues, and the enhancement of the social and environmental justice and equity.


The energy transition is a complex and multifaceted process, that involves a wide range of legal considerations and challenges, as well as opportunities and benefits, for the various stakeholders in the energy sector. The legal framework that governs the energy sector needs to evolve and adapt to the changing realities and needs of the transition, while ensuring the security, reliability, and sustainability of the energy supply, and the protection and promotion of the rights and interests of the parties involved. The legal framework also needs to facilitate and enable the cooperation and collaboration among the stakeholders, to foster the innovation and competitiveness of the energy sector, and to support the achievement of the global and national goals and commitments on climate change and development.

Electricity – the Lifeblood of Modern Industry: Key Contract Considerations for Large Energy Consumers

Electricity – the Lifeblood of Modern Industry: Key Contract Considerations for Large Energy Consumers

Energy Law

Electricity – the lifeblood of modern industry. For large commercial and industrial operations, it’s often more than just a cost; it’s a strategic imperative. Securing a reliable and cost-effective supply forms the backbone of smooth operations, impacting everything from production costs to profitability. But navigating the complexities of Australia’s dynamic electricity market, particularly as a large energy consumer, can be daunting. This article acts as your guide, exploring the key considerations you must ponder before signing that dotted line on your electricity supply contract.

Large, But How Large? Defining the Category

The definition of a “large energy customer” in Australia depends on your specific jurisdiction. In New South Wales (NSW) for example, the threshold is 100MWh per annum. If your business uses in excess of this threshold, then you are a large energy customer. There are also circumstances where your consumption is determined by aggregation. If you need to determine if you are a large customer, get in touch.

Price Variability: The Dance with the Market

One of your most crucial decisions revolves around the pricing structure of your electricity supply contract. As a large energy consumer, understanding the nuances of these options is paramount:

Fixed Price Contracts: Think of these as insurance policies – your price per unit of electricity remains locked in, providing certainty for budgeting. However, you might forfeit potential savings if wholesale energy prices drop.

Variable Price Contracts: You’re directly exposed to the whims of the wholesale electricity market, where prices fluctuate based on real-time supply and demand. Potential for savings during low-price periods, but risk of exposure during spikes.

Hybrid Contracts: Striking a balance, these contracts blend elements of fixed and variable pricing. Customization is key, allowing for a degree of both predictability and market participation.

The right choice depends heavily on your company’s appetite for risk versus its need for cost certainty. Analyse your regional wholesale price history and internal risk tolerance before committing.

Termination Fees: The Cost of Changing Your Mind

Electricity contracts often include termination fees, those pesky charges for cutting your contract short. These exist to protect the supplier from lost revenue. Thoroughly understand the triggers for these fees and their associated costs. See if you can negotiate lower fees or exception clauses (like force majeure events or major changes to your operations) to grant you flexibility if circumstances change.

Consumption Envelopes: Staying Within the Lines

Many contracts work with consumption envelopes – a predicted range of your electricity usage over defined periods (think monthly, quarterly, or annually). Stray outside these envelopes, and you could face penalties like higher rates or added fees. Accurate forecasting is crucial here. Push for flexibility in your envelope if you anticipate potential fluctuations in your energy needs.

Limits on On-site Generation and Storage: Roadblocks to Self-Sufficiency

As solar, battery storage and other distributed energy sources gain traction, many large businesses want to reap their benefits. Unfortunately, some electricity contracts might try to hinder you with restrictions on these technologies. Look out for export limits, fees, or potential bans on on-site generation and storage. Fight for terms that support, not obstruct, your efforts to reduce grid reliance and potentially lower your overall energy costs.

Let There Be Light, and Let It Be Affordable

The journey toward a favourable electricity contract is paved with careful analysis and negotiation. By understanding these key considerations and the unique definitions of a “large customer” within your jurisdiction, you’ll be empowered to secure a supply solution that fuels your success, not your financial woes.

Influencer Marketing: The Legal Essentials for Influencers and Product-Based Businesses

Influencer Marketing: The Legal Essentials for Influencers and Product-Based Businesses

Commercial Law, Private Law, Regulatory Updates, Social Media Law

There are more than 64 million influencers’ accounts on Instagram all over the world. 

And it may seem like a sparkly, selfie-obsessed, sunkissed swathe of inspirational posts and weight loss tips where the only rule is that there are no rules.

But, of course, there are rules. Knowing what could land you in hot water (for both influencers and product-based businesses reaching out to influencers) will mean you’re a legally savvy influencer and not just there for the hype. 

Ready to dive into the wild and wonderful world of influencer marketing? Grab your virtual popcorn as we explore the drama, glamour, and the legal intricacies of influencer marketing.

The Legal Framework

A number of laws apply to influencers in Australia. Firstly, the Australian Association of National Advertisers (AANA) has a Code of Ethics that applies to all advertisers which sets the standard for advertising in any medium.

The Code of Ethics is the cornerstone of the AANA self-regulatory system and is supplemented by a Code of Advertising and Marketing to Children, Food and Beverages Code, Environmental Claims Code and Wagering Advertising & Marketing Communication Code. 

The self-regulatory system is underpinned by an independent, transparent and robust complaints-handling system administered by Ad Standards. Its’ object is to ensure that advertisements and other forms of marketing communications are legal, honest, truthful and have been prepared with respect for human dignity, an obligation to avoid harm to the consumer and society and a sense of fairness and responsibility to competitors.

The Code applies to all kinds of content, cinema, internet, outdoor media, print, radio, telecommunications, television or other direct-to-consumer media including new and emerging technologies. Which means Instagram, Tik Tok, Snapchat and all social media platforms are all fair game.

Influencers are also bound to comply with the Competition and Consumer Act 2010 (Cth) known as the Australian Consumer Law (ACL), which prohibits businesses from misleading or deceiving consumers. This applies to influencers engaging in trade or commerce, as well as brands and marketers using influencers to advertise online. The Australian Competition and Consumer Commission is the competition regulator, watchdog and national law champion (ACCC).

And don’t forget that if you’re in the therapeutic goods game, section 24 of the Therapeutic Goods Advertising Code 2021 (TGA Code) sets out the specific requirements for using endorsements and testimonials in advertisements about therapeutic goods. (Watch this space for our comprehensive to the TGA Advertising Code in the next week.)

So let’s take a look at some of the key legal areas influencer should wrap their head around:

1. Disclosure Dazzle: Let’s Play ‘Spot the Sponsorship’

Let’s talk about sponsored posts. If a brand offers you free products or pays you to post about them, you have to disclose it to your audience. Think of disclosure like a secret handshake – only cooler. 

Of the 118 social media influencers reviewed in the ACCC’s influencer sweep, 81 per cent were found to be making posts that raised concerns under the ACL for potentially misleading advertising

The ACCC is due to release guidance in early 2024 for influencers and businesses to remind them of their obligations under the ACL to disclose advertising in social media posts.

So be transparent about those sponsored posts, gifts, or any cash flowing into those influencer pockets. Think of it as a trust exercise for your followers. Your influencers have gotta spill the beans with a nod to the laws so hashtags like #Ad, #Sponsored will denote that they know their legal game.

2. Influencers and the Deceptive Mirage: Don’t Mislead Your Fans

Let’s talk about the FYRE Festival Fiasco of 2017. 

Picture this: a luxurious three-day music festival on Pablo Escobar’s private island, promising A-list celebrities such as rapper Ja Rule and models Kendall Jenner and Bella Hadid, 5-star cuisine, and non-stop celebration. And festival goers forked out thousands for it. 

What could possibly go wrong? Well, as it turns out, everything. The FYRE Festival, orchestrated by the infamous Billy McFarland (aged 26), became the epitome of a party that never happened. Disgruntled festivalgoers found themselves stranded in the Bahamas, facing hurricane tents, cancelled performances, and a scant supply of cheese sandwiches.

The festival’s downfall wasn’t just due to logistical nightmares; it was fuelled by the misleading promotion orchestrated by social media influencers. 

High-profile models and actresses were paid to post idyllic photos and videos on their private Instagram accounts, creating a mirage of the ultimate party destination. Little did their fans know, these influencers had no intention of actually attending the event. 

The aftermath left both disappointed festivalgoers and a legal conundrum in its wake. The disastrous Fyre Festival spawned lawsuits against the event’s organizers, who included Ja Rule and Billy McFarland, the latter of whom is now serving a six-year prison sentence for fraud.

As the FYRE Festival unfolded, legal questions arose, especially regarding the responsibility of influencers for promoting misleading content. 

In Australia, consumer protection laws, like the ACL, make it clear that deceptive advertising practices won’t be tolerated. While there’s no specific legislation targeting social media, the general laws on false and misleading claims in the ACL apply to businesses and influencers alike.

3. The Fine Print Finesse: Contracts Are the New Black

Contracts are your legal safety net in the unpredictable world of social media. 

An Influencer Agreement is a legal document which sets out the agreement between the Influencer and the Brand in relation to the rights and obligations of each party. Things like the length of the contract, confidentiality, permitted use of content, agreed fees and payment terms, exclusivity and restraints and the circumstances in which the agreement can be terminated should all be mapped out clearly in the contract. 

Make it clear who’s the boss, who’s getting paid, how to handle disputes, how to exit the arrangement if necessary and who’s in charge of the creative chaos.

4. The Age-Old Challenge: Mastering the Influencer Game when Marketing to Children

Stricter rules apply to advertising to children as of 1 December 2023, when the new Children’s Advertising Code came into force.

Advertising to Children must not contravene prevailing community standards, including by promoting products or services unsuitable or hazardous to children or encouraging unsafe practices. Advertising to Children that encourages bullying or promotes unhealthy ideal body image may also breach this rule.

AANA CEO Josh Faulks has said the new Code recognises the distinct vulnerability of children and provides a robust framework for the advertising industry:

“The Code is no longer limited to advertising for children’s products and will provide critical protections around any advertising directed at children,” Faulks said.

“It places a clear ban on directing advertising of hazardous products to children such as vapes, kava or highly caffeinated drinks. It also prohibits the encouragement of unsafe practices, including bullying or promoting unhealthy body image, and the use of sexual appeal or imagery when communicating to children.”

The new Code pays special attention to the rise of ‘kidfluencers’ and influencer advertising directed at children.

“The rules go beyond Australian Consumer Law recognising the subtle, embedded nature of influencer advertising directed at children which research says lowers children’s ability to recognise it as advertising. It must now be immediately clear to a child that they are interacting with advertising content,” Faulks said.

The new Children’s Advertising Code complements AANA’s Food & Beverage Advertising Code which already bans advertising of occasional food and beverages to children. This applies to all advertising, across all media channels at all times of the day.

Complaints about advertising that raise issues under the Children’s Advertising Code are handled by Ad Standards and are determined by the independent Ad Standards Community Panel, whose members are representative of the Australian community.

Keep it legal, keep it real, be sensitive and remember, kids are the toughest critics.

5. Endorsement Etiquette: Honesty is Punk Rock

Fake reviews are so 2010. Let your influencers be the punk poets of authenticity. Real talk, real opinions, and maybe a little rebellion in the mix – that’s the influencer code.

A 2022 ACCC analysis of more than 130 online businesses found 37% were manipulating reviews to have fake positive reviews published or negative reviews scrubbed. The ACCC found the sectors with the highest proportions of potential fake or misleading reviews were household appliances and electronics, beauty products, and home improvement and household products.

Misleading endorsements are a breach of the ACL and a no no.

6. The Data Dilemma: 

In this crazy world of tweets, snaps, and double-taps, we’re all navigating a sea of personal information. Remember, you’re not just posting pics – you’re the captain of your data ship! ⚓️ 

So influencers have certain responsibilities! 🕵️‍♂️ To stay on the good side of the Privacy Act 1988 (Cth), here’s the lowdown:

  • uncheckedHave a clear Privacy Policy: Lay it all out – how you scoop up, use, and share personal data. Your followers need to know what’s up, so keep it real.
  • uncheckedLock it down with ninja-level security: Fortify that data fortress with strong encryption, secure data storage, No unauthorized peeping, no sneaky business. Use Fort Knox-level storage, unbreakable encryption, and multi-factor authentication.
  • uncheckedSound the alarm on data breaches: If the ship’s got leaks, don’t keep it quiet! Tell your customers ASAP and take all reasonable steps to mitigate any harm.
  • uncheckedStay in the privacy policy loop: The Privacy Act is like a constantly updating playlist – you’ve gotta stay tuned. Be in the know about the latest reforms and keep your privacy game strong.

The evolving landscape of consumer protection laws and influencer regulations suggests that influencers must tread carefully in the #instaworthy realm. 

So, next time you see your favorite influencer promoting paradise on Earth, remember: the law is watching, and the party might just be a legal minefield. Stay savvy, stay legal, and keep scrolling!


If you’d like help setting up your legal foundations as a product-based business, or influencer, here at Law Quarter, we advise clients on all areas of business, marketing and consumer law, and our lawyers work with clients involved in beauty, healthcare and wellness throughout Australia. 

We also run a sister business, Compliance Quarter, so we’re set to help you build a big glowing business empire with the strongest of foundations 🙂

You can also reach out to me directly at or call me on 0411 659 671.

The Problem with Termination for Convenience Clauses in Construction Contracts

The Problem with Termination for Convenience Clauses in Construction Contracts

Private Law

Termination for convenience clauses are contractual provisions that allow one party, usually the principal, to terminate the contract without cause or default by the other party, usually the contractor. These clauses are common in construction contracts, especially in large-scale or complex projects, where the principal may want to have flexibility and control over the project’s scope, budget, or timeline. However, these clauses can also pose significant risks and challenges for the contractor, who may incur costs and losses that are not recoverable under the contract.

What are the benefits of termination for convenience clauses for the principal?

Termination for convenience clauses can provide several benefits for the principal, such as:

  • Reducing the risk of litigation or disputes with the contractor, as the principal does not have to prove breach or fault by the contractor to terminate the contract.
  • Enabling the principal to adjust the project’s scope, budget, or timeline according to changing circumstances, such as market conditions, stakeholder preferences, or regulatory requirements.
  • Allowing the principal to switch to a different contractor or subcontractor if the principal is dissatisfied with the performance, quality, or price of the original contractor.

What are the problems with termination for convenience clauses for the contractor?

Termination for convenience clauses can create several problems for the contractor, such as:

  • Losing the expected profit or revenue from the contract, as the contractor may have invested time, money, and resources in preparing and performing the contract.
  • Bearing the costs and liabilities of demobilising and terminating the contract, such as paying off subcontractors, suppliers, or employees, or disposing of materials, equipment, or waste.
  • Not being able to recover the costs and expenses incurred in the overall management of the contract, such as site visits, inspections, meetings, or administration, unless the contract expressly allows for the recovery of those amounts.

How can contractors protect themselves from termination for convenience clauses?

Contractors can take some measures to protect themselves from the adverse effects of termination for convenience clauses, such as:

  • Negotiating the terms and conditions of the clause, such as limiting the grounds or circumstances for termination, requiring notice and consultation, or specifying the compensation or reimbursement for termination.
  • Keeping accurate and detailed records of the work done and the costs and expenses incurred under the contract, such as invoices, receipts, timesheets, or reports, to support any claims for payment or damages.
  • Seeking legal advice from a construction lawyer before entering into, performing, or terminating a contract that contains a termination for convenience clause, to understand the rights and obligations of the parties and the remedies available in case of termination.