Terms of Trade Lawyers Adelaide: Retention of Title, PPSR Registration and Getting Paid
Terms of trade and retention of title in South Australia
Terms of trade decide when a customer must pay, and whether the supplier gets its goods back if the customer fails without paying. Talon Legal drafts and reviews terms of trade, credit applications and retention of title clauses for Adelaide manufacturers, wholesalers, trade suppliers and other businesses that sell on credit, and reviews suppliers’ terms for the businesses that buy from them. Book a same-day free 30-minute consultation or call (08) 7094 2021.
Terms of trade key facts
| Issue | Position in South Australia |
|---|---|
| Retention of title | A security interest, whatever the form of the transaction or who has title (PPSA section 12(1) and (2)(d)). |
| Against third parties | Needs writing signed or accepted by the customer that describes the goods, or covers all present and after-acquired property (section 20(1) and (2)). |
| Perfection | By registration, once the customer has the goods (section 21(2)). |
| Purchase money security interest (PMSI) deadlines | Inventory: registered by the time the customer obtains possession. Other goods: before the end of 15 business days after. The registration must state it is a PMSI (section 62(2) and (3)). |
| Customer insolvency | An unperfected security interest vests in the customer immediately before its winding up, administration, deed of company arrangement, restructuring or bankruptcy (section 267). |
| Late payment charges | Open to challenge if out of all proportion to the interests protected (Paciocco v ANZ, Kiefel J (French CJ agreeing) at [29]). |
| Unfair terms | An unfair term is void in a standard form contract with a consumer or small business (fewer than 100 employees or turnover under $10,000,000) (ACL sections 23 and 24). |
| Consumer customers | Goods must be of acceptable quality, and the guarantees cannot be excluded (sections 54 and 64). For business-type goods, liability can be limited to repair or replacement (section 64A). |
| Time limit | Simple contract claims, such as unpaid invoices: six years (Limitation of Actions Act 1936 (SA) section 35). |
| First step | Same-day free 30-minute consultation. Call (08) 7094 2021. |
Need a terms of trade lawyer in Adelaide?
Our terms of trade lawyers in Adelaide act for suppliers that sell on credit, and for customers reviewing a supplier’s terms. The Personal Property Securities Act 2009 (Cth) (PPSA) decides whether a retention of title clause protects the supplier if a customer becomes insolvent. The Australian Consumer Law (ACL), in Schedule 2 of the Competition and Consumer Act 2010 (Cth), decides which terms are void. This page states the law current to 6 November 2026.
This guide is part of our skilled trades and licensed industries practice. Related guides cover deeds of guarantee, equipment and event hire agreements and service agreements and terms of business.
Free Consultation. Send us your terms of trade and credit application. Book a same-day free 30-minute consultation or call (08) 7094 2021.
On this page
- What should terms of trade cover?
- What should the credit application and payment terms say?
- Can a supplier charge interest and late fees?
- Should directors guarantee the account?
- How does retention of title work under the PPSA?
- Why register on the PPSR, and when?
- What happens if the customer becomes insolvent?
- Which terms can be unfair to a small business customer?
- What changes when the customer is a consumer?
- What should a buyer's purchasing terms say?
- How similar matters tend to play out
- How we act on terms of trade
- Case law
- Frequently asked questions
What should terms of trade cover?
Everything about how the supplier sells on credit, usually in these parts.
- The credit application, the credit limit and the customer’s signed acceptance.
- Price, payment dates, interest, recovery costs and the right to stop supply.
- Retention of title, with risk usually passing on delivery.
- A PPSA clause that lets the supplier register and requires the customer’s cooperation.
- A director’s guarantee where the customer is a company.
- Defects, limits on liability and disputes.
A person who signs a document known to contain contractual terms and to affect legal relations is generally bound by them, read or not. That is so absent a vitiating element or a claim for equitable or statutory relief (Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 at [57]).
A terms of trade lawyer will also check whether the retention of title clause is registered, and whether the unfair terms law applies.
What should the credit application and payment terms say?
The credit application should record the customer’s exact legal name, ABN or ACN, its directors or owners, and its acceptance of the terms for every supply. A company customer should sign in a way the Corporations Act 2001 (Cth) recognises, such as by two directors, or a director and a company secretary (section 127(1)).
The payment terms should state when each invoice is due, and give the supplier a right to suspend supply while an invoice is overdue. Disputed amounts should be withheld only through the dispute process, subject to consumer guarantee rights.
In AIBI Holdings Pty Ltd v Virtual Technology Services Pty Ltd [2022] FCA 696, a customer of an IT services provider withheld payment in a dispute over service quality and extra charges ([2]). The contract allowed disputed amounts to be withheld only once its dispute process had been activated. It had not been, so the invoices were payable in full ([137] to [139]). The provider had suspended helpdesk services in reliance on a clause allowing it to withhold services if invoices went unpaid ([2]), and that was not a breach ([140]).
Can a supplier charge interest and late fees?
Yes, if the terms the customer accepted provide for them. A fee that first appears on an overdue invoice is much harder to justify.
A charge on default can be challenged as a penalty. In Paciocco v Australia and New Zealand Banking Group Ltd [2016] HCA 28, Kiefel J, with whom French CJ agreed, stated the question. It is whether a provision for payment of a sum on default is out of all proportion to the interests of the party which it is the purpose of the provision to protect, which may be of a business or financial nature ([29]).
A rate or fee based on the supplier’s real costs is easier to defend. In a standard form consumer or small business contract, a term that penalises only the customer for breach or termination is also a statutory example of a term that may be unfair (ACL section 25(c)).
Should directors guarantee the account?
Where the customer is a company, usually yes. A director’s guarantee gives the supplier someone to pursue if the company does not pay. A separate guarantee signed by each director is clearer than one buried in the credit application.
If the guarantee is executed as a deed, a natural person’s execution must be attested by at least one witness who is not a party (Law of Property Act 1936 (SA) section 41(2)(a)). A defectively executed deed can still be valid if external evidence shows the party intended to be bound (section 41(4)). See the deeds of guarantee guide.
How does retention of title work under the PPSA?
Ownership stays with the supplier until it is paid, and the PPSA treats that as security. A security interest is an interest in personal property provided for by a transaction that, in substance, secures payment or performance of an obligation. That is so without regard to the form of the transaction or who has title (PPSA section 12(1)). The examples include an agreement to sell subject to retention of title (section 12(2)(d)). Holding title does not, by itself, protect the supplier.
To bind third parties, the interest must have attached and be covered by a security agreement as section 20(2) requires (section 20(1)). The alternatives are possession or control, and a supplier that has delivered the goods no longer has possession.
Section 20(2) needs writing signed by the customer, or adopted or accepted by its act or omission. The writing must describe the particular goods, or state that it covers all present and after-acquired property. Signing includes applying a symbol, or encrypted writing, with intent to identify and adopt (section 20(3)).
So the clause belongs in the terms the customer signs or clearly accepts, and should describe the goods. One printed only on an invoice sent after delivery invites the argument that the customer never agreed to it.
Why register on the PPSR, and when?
Registration perfects the interest and decides priority. A security interest is perfected if it has attached, is enforceable against third parties and one more condition is met. Either a registration is effective with respect to the collateral, or the secured party has possession (other than by seizure or repossession) or, for some kinds of property, control (section 21(1) and (2)). Once the customer has the goods, registration on the Personal Property Securities Register (PPSR) is the practical route.
A supplier can rank ahead of the customer’s bank with a purchase money security interest (PMSI). A PMSI includes a security interest in collateral to the extent it secures all or part of its purchase price (section 14(1)(a)). An “all moneys” clause, which keeps title until every debt is paid, is a PMSI only to that extent. The deadlines are strict.
- For inventory, the PMSI must be perfected by registration at the time the customer obtains possession (section 62(2)).
- For other goods, it must be perfected by registration before the end of 15 business days after the customer obtains possession (section 62(3)). A court can extend the period under section 293 (section 62, note).
- Either way, the registration must state that it is a PMSI.
If the conditions are met, the PMSI has priority over a non-PMSI security interest granted by the same customer. If they are missed, that priority is lost, though the interest is still perfected. The safe practice is to register before the first delivery, which meets both deadlines.
A security interest is not a PMSI if, when it attaches, the customer intends to use the goods predominantly for personal, domestic or household purposes (section 14(2)(c), which is subject to section 14(2A)).
What happens if the customer becomes insolvent?
An unperfected interest is lost. Section 267 applies when a company is wound up, an administrator is appointed, a deed of company arrangement is executed or a restructuring practitioner is appointed, or a person becomes bankrupt. A security interest the company or person granted, and that is unperfected at the relevant time, vests in the grantor immediately before the event (section 267(1) and (2)). The supplier is left with a claim for the price as an unsecured creditor, and with any guarantee it took.
A perfected interest is not caught by section 267, and the supplier can claim the goods that remain, subject to priority. A supplier with a failing customer should get advice first.
Which terms can be unfair to a small business customer?
An unfair term of a consumer or small business contract is void if the contract is a standard form contract (ACL section 23(1)). A contract for the supply of goods or services is a small business contract if at least one party employs fewer than 100 persons, or had turnover under $10,000,000 for its last income year (section 23(4)). A contract alleged to be standard form is presumed to be one unless another party proves otherwise (section 27(1)).
A term is unfair if it would cause a significant imbalance in the parties’ rights and obligations, is not reasonably necessary to protect the legitimate interests of the party it advantages, and would cause detriment if applied or relied on (section 24(1)). The party a term advantages, usually the supplier, must prove it is reasonably necessary (section 24(4)).
Statutory examples of terms that may be unfair include terms that penalise only the customer for breach or termination (section 25(c)), or let only the supplier vary the terms (section 25(d)). So do terms letting the supplier vary the upfront price without the customer having a right to terminate (section 25(f)).
In ACCC v JJ Richards & Sons Pty Ltd [2017] FCA 1224, the Court declared, on agreed facts, that eight terms of small business standard form contracts were unfair and void. The Court accepted that a term letting prices rise for any reason, with no right for the customer to terminate or obtain a change of scope or a lower price, caused a significant imbalance ([56](b)). So did an unlimited indemnity that applied even where the loss was not the customer’s fault ([56](g)). At that time an unfair term was void but not penalised.
Since 9 November 2023, making a standard form consumer or small business contract containing an unfair term the supplier proposed, or applying or relying on one, is a contravention, and each term counts separately (section 23(2A) to (2C)). The maximum penalty for a body corporate is the greater of $100,000,000 and three times the benefit or, if that cannot be determined, 30% of adjusted turnover during the breach turnover period. For anyone else it is $2,500,000 (section 224(3) and (3A)).
What changes when the customer is a consumer?
The consumer guarantees apply. A person acquires goods as a consumer if the amount paid or payable did not exceed $100,000 (ACL section 3(1)(a); regulation 77A of the Competition and Consumer Regulations 2010), so many business customers qualify. A person is not a consumer of goods acquired for re-supply, or to use up or transform in trade or commerce in production or manufacture, or in repairing or treating other goods or fixtures (section 3(2)).
Goods supplied to a consumer, other than by auction, must be of acceptable quality (section 54). A term is void to the extent it purports to exclude, restrict or modify a guarantee, or has that effect (section 64(1)). For goods not of a kind ordinarily acquired for personal, domestic or household use, liability may be limited to replacing or repairing the goods, or the cost of doing so, except for sections 51 to 53 (section 64A(1)). The limit does not apply if the consumer establishes that relying on it would not be fair or reasonable (section 64A(3)).
Many terms of trade deem goods accepted unless faults are reported soon after delivery. In ACCC v Booktopia Pty Ltd [2023] FCA 194, Booktopia admitted liability. It accepted that a website term requiring consumers to report incorrect, damaged or faulty items within 2 business days of delivery represented that they had to do so to have a remedy ([15], [18]). A $6,000,000 penalty was ordered for the section 29(1)(m) contraventions. A deemed acceptance clause should apply only to customers who are not consumers.
What should a buyer’s purchasing terms say?
Larger customers send their own terms with each purchase order. These typically require goods to meet the specification and arrive on time, keep risk with the supplier until acceptance, and require insurance and an indemnity for the supplier’s negligence. A buyer acquiring goods for re-supply, or to transform in manufacture, is not a consumer (section 3(2)), so the guarantees will not protect it and its contract has to set the standard.
When both sides have standard terms, which set governs depends on how each contract was formed. A credit application signed by the buyer, accepting the supplier’s terms for every supply, is strong evidence for the supplier (Toll v Alphapharm at [57]). If the supplier’s terms keep title until it is paid, it holds a security interest in goods in the buyer’s hands (PPSA section 12(2)(d)).
Buyers should check their own terms too. The small business test is met if at least one party, including the supplier, employs fewer than 100 persons or has turnover under $10,000,000 (ACL section 23(4)). A right for the buyer alone to cancel orders at any time, for no reason, is a statutory example of a term that may be unfair (section 25(b)).
How similar matters tend to play out
Illustrations of how the law on this page combines on ordinary facts, not predictions. Outcome depends on the documents, the evidence and the court.
Lower range. A homewares retailer withholds a $9,000 invoice, saying part of the delivery was damaged. Its wholesaler’s terms allow disputed amounts to be withheld only after a dispute notice, which was never given. On terms like those in AIBI, the invoice is payable ([137] to [139]). The retailer bought for re-supply, so it is not a consumer (section 3(2)).
Middle range. An equipment supplier sells a $60,000 machine for use in a customer’s factory, retaining title, and registers 20 business days after delivery. The customer’s bank already holds security over all its assets. The supplier is perfected, so section 267 will not vest its interest in the customer. But it missed the 15 business day window, and with it the priority over the bank that section 62(3) gives.
Upper range. A building products supplier sold to a builder on account for years, retaining title but never registering. The builder’s company is wound up owing $180,000, with the supplier’s stock still on its sites. The unperfected interest vests in the company immediately before the winding up (section 267), leaving the supplier unsecured. Its best asset is the director’s guarantee, if properly executed.
How we act on terms of trade
Our terms of trade lawyers act for suppliers that sell on credit and for the businesses that buy from them. For a supplier, the aim is terms that get it paid and security that holds if a customer fails. For a buyer, it is clear standards.
| Stage | What happens | What we do |
|---|---|---|
| Set-up | The supplier prepares to open accounts. | Draft the terms, credit application and guarantee, and check them against the unfair terms law. |
| Security | Goods go out on credit. | Advise on registration and PMSI timing, and on registering before delivery. |
| Collection | An invoice is overdue. | Draft the demand, apply interest and costs as the terms allow, and call on any guarantee. |
| Insolvency | A customer fails. | Advise on the security interest, recovering goods and the guarantee. |
| Review | Products, customers or the law change. | Update the terms and the registration process. |
We cannot promise an outcome, and no lawyer can. We can make sure your terms, guarantees and registrations are in place before a customer fails.
Every hour matters. Book a same-day free 30-minute consultation, or call (08) 7094 2021 now.
Terms of trade case law
None of the decisions below concerned retention of title or the PPSA; each decided a point that applies to terms of trade.
| Case | Court | Principle | Pinpoint |
|---|---|---|---|
| Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 | High Court | A signed contractual document binds, read or not | [57] |
| AIBI Holdings Pty Ltd v Virtual Technology Services Pty Ltd [2022] FCA 696 | Federal Court | Disputed invoices withheld only through the dispute process | [2], [137] to [140] |
| Paciocco v Australia and New Zealand Banking Group Ltd [2016] HCA 28 | High Court | Test for a sum payable on default | [29] |
| ACCC v JJ Richards & Sons Pty Ltd [2017] FCA 1224 | Federal Court | Price variation and indemnity terms unfair | [56], [57] |
| ACCC v Booktopia Pty Ltd [2023] FCA 194 | Federal Court | Short notification term misrepresented consumer rights | [15], [18] |
Case notes
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52
The joint reasons stated the general rule that a person who signs a document known to contain contractual terms and to affect legal relations is bound by them, read or not, absent a vitiating element or a claim for equitable or statutory relief ([57]).
AIBI Holdings Pty Ltd v Virtual Technology Services Pty Ltd [2022] FCA 696
Because the contract’s dispute process had not been activated, invoices the customer withheld were payable in full, and the provider’s suspension of its helpdesk was not a breach ([137] to [140]). The application was dismissed.
Paciocco v Australia and New Zealand Banking Group Ltd [2016] HCA 28
Kiefel J, with whom French CJ agreed, asked whether a provision for payment of a sum on default is out of all proportion to the interests it is intended to protect ([29]). Both appeals were dismissed with costs.
ACCC v JJ Richards & Sons Pty Ltd [2017] FCA 1224
On agreed facts, Moshinsky J declared eight terms of small business standard form contracts unfair and void, accepting that the price variation and indemnity terms caused a significant imbalance ([56]) and that the supplier bore the onus under section 24(4) ([57]).
ACCC v Booktopia Pty Ltd [2023] FCA 194
Booktopia admitted liability and accepted that its 2 business day notification term represented that consumers had to notify within that time to have a remedy ([15], [18]). Burley J ordered a $6,000,000 penalty for the section 29(1)(m) contraventions.
Frequently asked questions
What are terms of trade?
The standard terms on which a supplier sells to its customers, usually accepted through a signed credit application.
Does a retention of title clause protect a supplier?
Not on the customer’s insolvency unless it is perfected. Retention of title is a security interest (PPSA section 12(2)(d)), and an unperfected one vests in the customer if it is wound up, enters administration or becomes bankrupt (section 267).
Do I need to register on the PPSR?
In practice, yes. Registration perfects a retention of title interest once the customer has the goods (section 21), and an unperfected interest is lost on the customer’s insolvency (section 267).
How long does a supplier have to register a PMSI?
For inventory, by the time the customer obtains possession. For other goods, before the end of 15 business days after it obtains possession. The registration must state that it is a PMSI (section 62(2) and (3)).
Can a supplier charge interest on overdue invoices?
Yes, if the terms provide for it. A charge payable on default that is out of all proportion to the interests it protects is open to challenge (Paciocco v ANZ, Kiefel J at [29]).
Should a supplier ask directors for a personal guarantee?
Where the customer is a company, usually yes. If signed as a deed, a natural person’s execution must be attested by at least one witness who is not a party (Law of Property Act 1936 (SA) section 41(2)(a)).
Can a customer withhold payment because some goods were faulty?
Only as the terms and the law allow. A consumer’s guarantee rights cannot be excluded (ACL section 64(1)). In AIBI, disputed invoices were payable because the dispute process had not been activated ([137] to [139]).
Are terms of trade covered by the unfair contract terms law?
Yes, where they form a standard form contract with a consumer or small business. An unfair term is void (ACL section 23(1)), and since 9 November 2023 proposing or relying on one is a contravention (section 23(2A) and (2C)).
How long does a supplier have to sue for an unpaid invoice?
Six years. An action founded on simple contract must be commenced within six years after the cause of action accrued (Limitation of Actions Act 1936 (SA) section 35).
Do I need a terms of trade lawyer?
For any business that sells on credit, yes. A terms of trade lawyer can set up the terms, credit application, guarantee and registration process so they hold up when a customer fails. A free 30-minute consultation will tell you where you stand.
Related skilled trades guides
Related guides
- Skilled trades and licensed industries lawyers Adelaide
- Deeds of guarantee
- Equipment and event hire agreements
- Subcontractor agreements
- Event management agreements
- Cleaning, security and maintenance agreements
- Service agreements and terms of business
- Quotes and variation agreements
- Online sales terms and consumer law