As 2025 approaches, many Australian businesses will be signing, renewing, or reviewing their commercial contracts. Rushed decisions at year-end can create costly risks if key clauses are overlooked. Courts consistently interpret contracts using a practical and common-sense approach, considering the document as a whole and avoiding technical or unjust outcomes. With this in mind, here are the main clauses that warrant careful attention before rolling contracts into the new year.

Termination Clauses

For Cause

Termination “for cause” allows a party to end the contract when the other party is in breach. To be enforceable, the clause must:

  • Specify what types of breaches justify termination
  • Include any notice periods and opportunities to remedy the breach (for example, 14 days to cure default)
  • Outline the consequences of termination, including rights to damages or repayment

Vague or incomplete termination clauses may be difficult to enforce, leaving businesses without clear remedies.

For Convenience

Some contracts allow termination without requiring any breach. These “for convenience” clauses usually require written notice and often include obligations to pay for services provided up to the termination date. Businesses should also consider whether early termination triggers additional costs or obligations.

Dispute Resolution Clauses

Dispute resolution clauses set the framework for handling disagreements before they escalate into litigation. Courts adopt a liberal interpretation of these provisions, and they often include:

  • Negotiation or good faith discussions as the first step
  • Expert determination or mediation as intermediate steps
  • Arbitration or litigation as the final stage

Key elements include setting clear timeframes, specifying the governing law and forum, and requiring parties to continue performing their obligations while a dispute is being resolved.

Indemnity and Limitation of Liability

Indemnities and limitations of liability are some of the most negotiated clauses in commercial contracts. Courts interpret them by their natural meaning in the commercial context. Common features include:

  • Caps on liability to a defined financial amount
  • Exclusions for indirect or consequential loss
  • Carve-outs for gross negligence or wilful misconduct

Because these provisions allocate financial risk, they should be unambiguous and drafted with precision. Ambiguity can leave a party exposed beyond what it anticipated.

Automatic Renewal Clauses

Automatic renewal provisions are often overlooked, but they can lock businesses into additional terms unless action is taken. A well-drafted renewal clause should specify:

  • The length of the renewal period
  • How and when notice of non-renewal must be given
  • Whether price adjustments apply in subsequent terms
  • The maximum number of renewals permitted

Failing to monitor renewal dates can lead to unplanned contractual commitments well into the new year. Further, poorly drafted automatic renewal clauses may be found to be an unfair contract term, and unenforceable. 

Key Considerations

    1. Context Matters
      Courts construe contracts as a whole and prefer interpretations that align with commercial purpose.
    2. Clarity Is Essential
      Defined terms must be consistent, and complex provisions should be broken down into clear, logical components. Ambiguity increases the risk of disputes.
    3. A Practical Approach
      Courts avoid overly technical interpretations. They focus on how the contract would reasonably be understood in its business context.

Final Thoughts

As businesses prepare for 2025, reviewing your commercial contracts is more than a formality. Key clauses on termination, dispute resolution, liability, and renewal can significantly affect your rights and obligations. Taking the time now to review and, if necessary, renegotiate these provisions can prevent disputes and protect your commercial interests in the year ahead.

Feel free to contact Damin Murdock at Leo Lawyers via our website, on (02) 8201 0051 or at office@leolawyers.com.au. Further, if you liked this article, please subscribe to newsletter via our Website, and subscribe to our YouTube , LinkedIn, Facebook and Instagram. If you liked this article or video, please also give us a favourable Google Review.

DISCLAIMER: This is not legal advice and is general information only. You should not rely upon the information contained in this article and if you require specific legal advice, please contact us.

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Damin Murdock (J.D | LL.M | BACS - Finance) is a seasoned commercial lawyer with over 17 years of experience, recognised as a trusted legal advisor and courtroom advocate who has built a formidable reputation for delivering strategic legal solutions across corporate, commercial, construction, and technology law. He has held senior leadership positions, including director of a national Australian law firm, principal lawyer of MurdockCheng Legal Practice, and Chief Legal Officer of Lawpath, Australia's largest legal technology platform. Throughout his career, Damin has personally advised more than 2,000 startups and SMEs, earning over 300 five-star reviews from satisfied clients who value his clear communication, commercial pragmatism, and in-depth legal knowledge. As an established legal thought leader, he has hosted over 100 webinars and legal videos that have attracted tens of thousands of views, reinforcing his trusted authority in both legal and business communities."