Supply Agreement Australia | ACL & PPSA Compliant

A sale of goods agreement is a contract for the transfer of ownership in tangible goods from a seller to a buyer for a price. A supply agreement is the broader cousin: it governs an ongoing relationship where goods (and sometimes related services) are delivered repeatedly over time under agreed terms of trade, rather than a single one-off sale. In practice Australian businesses use the terms loosely, but the distinction matters when you draft. A one-off sale needs a clean description, price, and delivery term. A continuing supply relationship needs credit terms, ordering mechanics, and a framework that survives dozens of individual deliveries.

The document differs from a services agreement, which deals with work performed rather than goods transferred, and from a simple invoice, which records a transaction but rarely sets out the terms that decide a dispute. It also differs from an independent contractor agreement built for genuine contracting relationships, where the value is labour and deliverables rather than physical stock. A supply agreement answers the questions an invoice never does: when does title pass, who carries the risk in transit, what happens if the goods are defective, and how are disputes resolved. Suppliers who trade on account without one are effectively extending unsecured credit on a handshake, and that position collapses the moment the buyer's solvency does.

The sale of goods in Australia is governed by two layers of law that operate together. The first is the state and territory Sale of Goods Act in each jurisdiction, such as the Sale of Goods Act 1923 (NSW), the Goods Act 1958 (Vic), and the Sale of Goods Act 1896 (Qld). These statutes codify the default rules on when property and risk pass, the implied conditions as to title, description, and merchantable quality, and the seller's remedies for an unpaid price. They apply unless the contract displaces them, which is precisely why a written agreement matters: it lets you set your own rules on passing of risk and payment rather than inheriting the default position by silence.

The second layer is the Australian Consumer Law, contained in Schedule 2 of the Competition and Consumer Act 2010 (Cth) and enforced by the ACCC. The consumer guarantees in the ACL attach automatically to goods and cannot be contracted out of. Under section 64 of the ACL, any term that purports to exclude, restrict, or modify a consumer guarantee is void. These guarantees are not limited to household shoppers. A business buyer is treated as a consumer where the goods are priced at or below $100,000, or are of a kind ordinarily acquired for personal or domestic use regardless of price. Many routine B2B sales fall inside that threshold, so a supply agreement that says "no refunds under any circumstances" is not just unenforceable, it is a compliance risk.

The third piece is the Personal Property Securities Act 2009 (Cth). Any retention of title clause, historically called a Romalpa clause, is now treated as a security interest and must be registered on the Personal Property Securities Register to bind third parties. A supplier who keeps a retention of title clause in the contract but never registers it on the PPSR will usually lose priority to secured creditors if the buyer becomes insolvent. Since 9 November 2023, the unfair contract terms regime carries civil penalties, and it now covers small business standard form contracts where a party employs fewer than 100 people or turns over less than $10 million. You can read the current framework in the ACCC guidance on business rights and obligations under Australian Consumer Law, which sets out how these provisions are enforced in practice.

The clearest trigger is selling goods on credit rather than cash on delivery. The moment you hand over stock before you are paid, you are an unsecured creditor unless your terms of trade say otherwise, and a written supply agreement with a registered retention of title clause is what changes that. Wholesalers, distributors, and manufacturers who invoice on 30-day terms are the most exposed group, and they are also the ones most likely to be trading on a verbal understanding or a set of terms printed on the back of an invoice that no one signed.

The second common scenario is an ongoing supply relationship with a repeat customer. Once orders become regular, the parties need a master agreement that governs every future delivery, so the price mechanism, lead times, minimum order quantities, and payment terms are settled once rather than renegotiated each time. This is also the point where founders formalising their trading structure often revisit their company constitution drafted to the Corporations Act 2001 and their broader governance documents, because supply obligations sit better on a properly constituted company than on a sole trader.

A third situation is supplying goods with a real defect or safety risk, where the description, fitness for purpose, and warranty terms decide who bears the cost of a return or recall. Suppliers of equipment, components, and industrial goods need warranty and liability clauses that reflect the actual risk profile of the product rather than boilerplate. A fourth, easily missed case is selling internationally or importing for resale, where the contract needs to fix the delivery term, the currency, and the point of risk transfer with far more care than a domestic sale. The edge case worth flagging is the master supply agreement where the headline order sits above the ACL threshold but individual drawdowns fall below it, which can quietly pull the guarantees back into play on the smaller purchases.

• The description and specification of the goods fixes exactly what is being supplied, by reference to model numbers, grades, or an attached schedule. Vague descriptions are the single most common source of supply disputes, because a buyer who claims the goods do not match can rely on the implied condition as to description under the state Sale of Goods Act. A precise specification closes that argument off.

• The price and payment terms set the amount, whether it is inclusive or exclusive of GST, the invoicing cycle, and the due date. This clause also carries the late payment interest rate and the point at which supply can be suspended for non-payment, which are the two levers that actually move a slow-paying customer.

• The passing of risk and title clause is drafted to separate the two deliberately. Risk in the goods usually passes to the buyer on delivery, so the buyer must insure from that point, while title is retained by the supplier until payment is received in full. This is the commercial heart of the document and the reason the retention of title wording has to be precise.

• The retention of title and PPSR clause preserves your ownership until you are paid and puts the buyer on notice that you will register a security interest. The clause only bites against other creditors if you actually register it on the Personal Property Securities Register, so the drafting is written to support a purchase money security interest registration.

• The consumer guarantees and limitation of liability clause is written to sit lawfully alongside the ACL. It limits liability to the extent the law permits, caps consequential loss, and expressly preserves the non-excludable guarantees rather than pretending to remove them, which keeps the whole agreement compliant with section 64.

• The delivery, acceptance, and returns clause sets lead times, the inspection window, and what counts as valid rejection, so a buyer cannot sit on defective goods for months and then claim a refund.

New South Wales applies the Sale of Goods Act 1923 (NSW), one of the oldest codifications in the country. Its default rules on when property passes turn on whether the goods are specific or unascertained, and on the parties' intention, which the contract can and should override expressly. NSW suppliers should pay particular attention to the interaction between the state Act and the Personal Property Securities Act 2009 (Cth), because a retention of title clause that relies only on the state statute without PPSR registration will usually fail against a liquidator. The state's Fair Trading office handles consumer-facing complaints, but B2B supply disputes above the ACL threshold generally proceed as ordinary contract claims in the Local or District Court.

Victoria operates under the Goods Act 1958 (Vic), which combines the sale of goods rules with the state's goods and consumer provisions. Victorian suppliers dealing in higher-value plant and equipment should note that the passing of risk default can leave them carrying loss in transit unless the contract fixes risk transfer on delivery. The clause allocating risk needs to be explicit, because relying on the statutory presumption is exactly where suppliers get caught when a shipment is damaged before the buyer takes possession.

Queensland uses the Sale of Goods Act 1896 (Qld), and section 22 of that Act expressly allows a seller to reserve the right of disposal until conditions are met, which underpins retention of title arrangements. Queensland has a large volume of primary production and equipment supply, so PPSR registration of purchase money security interests is especially common here. Suppliers who register within the statutory time limit gain the "super priority" that a purchase money security interest confers, which is often the difference between recovering stock and joining the queue of unsecured creditors.

Western Australia applies the Sale of Goods Act 1895 (WA), the oldest of the state Acts, and its resources and mining supply chains generate a high proportion of the country's large-value goods contracts. WA suppliers to mining and construction clients frequently deal with buyers whose standard purchase terms try to shift risk and reverse warranties, so a supplier's own supply agreement is what gives them a starting position to negotiate from rather than accepting the buyer's terms by default.

You start by identifying the parties, using the full legal names and ACNs of the supplying and buying companies rather than trading names, because a notice or claim served on the wrong entity is a notice served on no one. From there the form asks whether this is a one-off sale or an ongoing supply relationship, and it adjusts the ordering and credit terms accordingly. You then set the description of the goods, either inline or by attaching a specification schedule for anything technical, and you fix the price, the GST treatment, and the payment cycle.

The template then walks you through the commercial levers that matter most: the delivery term, the point at which risk passes, the retention of title position, and the late payment interest rate. You choose your governing state, which aligns the agreement with the relevant Sale of Goods Act, and you complete the retention of title and limitation of liability clauses to match your actual risk. Once the details are in, you download the finished agreement in Word and PDF, ready to sign and, where retention of title applies, to support a PPSR registration. Businesses building out a full set of trading documents often pair this with an employment contract compliant with the Fair Work Act 2009 and the other core agreements in the Captain.Legal Australian business document library.

The most expensive mistake is keeping a retention of title clause in the contract while never registering it on the PPSR. Before 2012 ownership alone protected a supplier, but under the Personal Property Securities Act 2009 (Cth) an unregistered security interest usually vests in the buyer's company on insolvency, meaning the supplier loses both the goods and the money. Suppliers also routinely fail to separate risk from title, leaving themselves liable for goods that are sitting in the buyer's warehouse, or carrying insurance on stock the buyer should be covering. A close third is drafting a blanket exclusion of all warranties, which is void to the extent it purports to remove the ACL consumer guarantees and now carries penalty exposure under the unfair contract terms regime.

The other recurring errors are quieter but just as damaging. Vague goods descriptions invite disputes about whether what arrived matched what was ordered, and a missing specification schedule turns a clear breach into a contest of recollection. Many suppliers also forget to set a late payment interest rate and a suspension right, which leaves them with no practical remedy short of litigation when an invoice ages. Finally, businesses that grow past a handful of customers often keep relying on terms printed on the back of an invoice that no buyer ever signed, and unsigned terms of trade are the weakest possible foundation for a claim. A properly executed supply agreement sits far better alongside a shareholders agreement built to the Corporations Act 2001 as part of a coherent set of company documents.