A Sydney B2B SaaS founder signs a $58,000-a-year enterprise contract with a mid-tier logistics group. The Master Services Agreement is the founder’s standard-form paper — twelve pages, drafted by his commercial lawyer at Series A, blessed by every enterprise customer since. Clause 14 excludes all implied terms and warranties to the maximum extent permitted by law. Clause 15 caps total liability at fees paid in the prior twelve months. Clause 17 disclaims all liability for consequential loss. Nine months into the term the platform is offline for eleven business days after a poorly-tested schema migration corrupts the customer’s inventory data. The customer’s lawyers write back citing sections 60 and 61 of the Australian Consumer Law, threatening a claim under section 267 for consequential losses well north of the annual fee. The founder’s read: “we’re B2B, our MSA excludes it.” The customer’s read — and the correct read — is that the founder is a supplier under the ACL, the customer is a consumer under section 3, sections 60 and 61 apply as non-excludable statutory guarantees, and clause 14 is void under section 64.
That pattern is the ordinary shape of ACL exposure in Australian B2B SaaS. Founders think of the Australian Consumer Law — Schedule 2 of the Competition and Consumer Act 2010 (Cth) — as a B2C regime that lives in the world of retail refunds and small-claims tribunals. Since 1 July 2021, when the “consumer” monetary threshold in section 3 lifted from $40,000 to $100,000, that framing has been wrong for the great majority of Australian SaaS contracts. The regime now sits over the top of almost every subscription deal a startup writes.
The Section 3 Gate — Why Your Business Customer Is a “Consumer”
Section 3 of the ACL treats a person as having acquired goods or services as a consumer if any one of three alternative gates is satisfied — the test is disjunctive, not cumulative:
- The price of the goods or services did not exceed $100,000 (raised from $40,000 by the Treasury Laws Amendment (Acquisition as Consumer — Financial Thresholds) Regulations 2020, effective 1 July 2021). Price is measured per acquisition, not aggregated across a customer relationship. An annual SaaS subscription priced under $100,000 sits inside the gate regardless of what the customer looks like.
- The goods or services were of a kind ordinarily acquired for personal, domestic or household use or consumption. This gate has no price ceiling. Communications tools, productivity software, video-conferencing, cloud storage and password managers are all “of a kind ordinarily acquired for personal, domestic or household use,” even where the specific contract is a six-figure enterprise deal. The Federal Court applied the “of a kind” test to a $700,000-plus commercial road vehicle in ACCC v Bunavit [2016] FCA 6 — and the “of a kind” analysis for consumer-adjacent SaaS categories is materially easier.
- A commercial road vehicle or trailer used principally for the transport of goods on public roads — largely irrelevant to SaaS, but a reminder that the gates are alternative.
The upshot is that a $95,000 annual SaaS subscription sold to BHP falls inside the ACL consumer guarantees regime by force of the first gate. A $250,000 enterprise SaaS licence for productivity software sold to Woolworths falls inside by force of the second. Very few Australian SaaS startups sell six-figure deals that clear both gates, and almost none sell sub-$100,000 deals that avoid the regime by any route.
The Services Guarantees That Actually Apply
For a SaaS deal — treated as a supply of services for ACL purposes because the customer is buying cloud access rather than downloading transferrable code — three guarantees in Part 3-2 Division 1 Subdivision B do most of the heavy lifting:
- Section 60 — due care and skill. The supplier guarantees that the services will be rendered with due care and skill. Case law treats this as an objective professional standard, not a “best efforts” obligation. A schema migration executed without a tested rollback plan almost certainly falls short.
- Section 61 — fitness for a disclosed purpose. Where the customer makes known any particular purpose for which the services are being acquired, the services must be reasonably fit for that purpose. The customer does not need to make the purpose known formally; a sales-cycle demo where the customer explains what they intend to use the product for is enough.
- Section 62 — reasonable time for supply. Where the time for supply is not fixed, the services must be supplied within a reasonable time. Uptime commitments and support response windows sit here in the absence of an express SLA.
Downloaded software supplied to a customer on transferrable media is treated as goods for ACL purposes, and the goods guarantees in Part 3-2 Division 1 Subdivision A engage instead — chiefly section 54 (acceptable quality) and section 55 (fitness for purpose). Most modern SaaS is pure services; hybrid installed-plus-cloud products can attract both regimes.
Section 64 — Why Your Exclusion Clause Is Void
Section 64 ACL is the anti-avoidance provision that ends the standard-form founder argument. Its effect is stark: a term of a contract is void to the extent that it purports to exclude, restrict or modify the application of a consumer guarantee, the exercise of a right conferred by such a guarantee, or the liability of a person for a failure to comply with such a guarantee. A blanket “we exclude all implied terms and warranties” clause is not merely unenforceable — it is void by force of statute, without judicial intervention, from the moment the contract is signed.
Section 29(1)(m) ACL overlays a further layer: making a false or misleading representation concerning the existence, exclusion or effect of a guarantee is itself a contravention, exposing the SaaS supplier to ACCC action and civil penalties (currently the greater of $50 million, three times the value of the benefit obtained, or 30% of adjusted turnover for the relevant period).
Section 64A — The One Legitimate Limitation
Section 64A ACL carves out a limited exception. Where the services are not of a kind ordinarily acquired for personal, domestic or household use or consumption, the supplier may limit its liability for a breach of the services guarantees to any of:
- Supplying the services again; or
- Payment of the cost of having the services supplied again.
Two constraints matter. First, the section 64A limitation is only available where the services flunk the second section 3 gate — that is, where the services genuinely are not “of a kind” ordinarily acquired for personal, domestic or household use. Enterprise workflow-automation software plausibly clears that bar; consumer-adjacent productivity tools do not. Second, section 64A(4) then reinstates the customer’s ordinary damages entitlement if it would not be fair or reasonable for the supplier to rely on the limitation — a proportionality test that looks at the parties’ relative bargaining positions, whether the customer knew or should have known of the limitation, and whether the services were manufactured to the customer’s specifications. Section 64A is a valid liability cap for well-advised enterprise SaaS suppliers; it is not a template.
The Unfair Contract Terms Overlay
Even for contracts that sit outside the section 3 consumer guarantees regime — the rare enterprise SaaS deal priced above $100,000 for services that are not “of a kind” ordinarily acquired for personal, domestic or household use — the unfair contract terms regime in Part 2-3 ACL applies to standard-form contracts entered into with small-business customers (fewer than 100 employees or annual turnover below $10 million, since the 9 November 2023 expansion). Since the same expansion, an unfair term now attracts civil penalties — a broad exclusion of implied terms in the founder’s MSA is itself a penalty exposure, independent of the customer’s claim.
What Founders Should Do Now
The compliance discipline is boring but discrete. First, audit the MSA: any clause that purports to exclude implied terms and warranties without a section 64A carve-out is void and should be redrafted around a section 64A remedies cap tied to re-supply. Second, align the SLA with sections 60, 61 and 62 — an express uptime commitment, tested rollback discipline and a reasonable-time obligation for support responses give the founder a defensible position under the guarantees, rather than a void exclusion. Third, segment the price book: contracts priced above $100,000 for genuinely non-consumer services can carry a section 64A limitation; contracts below that threshold cannot, and the SLA is the only real risk management tool. Fourth, watch for section 29(1)(m): any “as is, no warranties” language in trial agreements, order forms or product pages is itself a misrepresentation of the guarantees position and a penalty exposure. The founders who get this right treat the ACL as the mandatory floor beneath every commercial deal, and the MSA as the layer that sits on top.
The Bottom Line
The Australian Consumer Law is not a B2C regime that stops at the SaaS founder’s front door. Since the 1 July 2021 threshold lift, the great majority of Australian SaaS contracts sit inside the consumer guarantees regime by force of section 3, sections 60, 61 and 62 impose non-excludable service-quality obligations, and section 64 makes the standard exclusion clause in most founder-drafted MSAs void. Founders who understand the regime price the risk into the SLA, use section 64A properly, and rebuild their standard-form paper on the assumption that the ACL is the floor rather than a curiosity. Founders who don’t, discover the point only when a customer with in-house counsel points out that clause 14 has never protected them.
Viridian Lawyers advises Australian SaaS and technology startups on Australian Consumer Law exposure, master services agreements, SLA drafting and section 64A liability limitations under the Competition and Consumer Act 2010 (Cth). If your startup is negotiating an enterprise SaaS contract, redrafting its standard-form MSA or triaging an ACL claim from a customer, get in touch.
