SaaS Contracts in Australia: Legal Requirements for overseas software and tech product suppliers

Many overseas technology companies assume they can sell software into Australia using their existing SaaS agreements or master services agreements.

However, Australian law can still apply where an overseas company supplies products and services to Australian customers, particularly where the company is considered to be carrying on business in Australia or targeting Australian consumers.

As a result, SaaS contracts drafted for overseas markets, such as in North America, Canada or Europe, often require modification to ensure they remain compliant and enforceable under Australian law.

For international software providers entering the Australian market, getting an Australian contract lawyer to review your agreements before you launch your product here can help reduce regulatory risk and avoid unenforceable contract conditions. 

Do overseas SaaS companies need Australian SaaS contracts?

Overseas SaaS companies selling software into Australia may need to update their agreements to address Australian legal requirements, including for example in respect of:

• the Australian Consumer Law (ACL) mandatory guarantees;
• the unfair contract terms requirements; and
• obligations under the Privacy Act 1988 (Cth)

As noted above, Australian laws can apply even where the supplier has no physical presence in Australia but is carrying on a business in Australia or targeting Australian customers. So, in circumstances relevant to SaaS or software supply, this may occur for example where the overseas supplier:

• supplies software subscriptions to Australian customers;
• markets or promotes services to Australian businesses; or
• collects personal information from individuals located in Australia.

Because of this, common approaches adopted by international SaaS providers include:

• global agreements which include Australian-specific amendments; or
• an Australian contract addendum modifying specific clauses based on relevant Australian laws; or 
• separate Australian-specific contract terms or agreements for local customers.

How does Australian Consumer Law affect SaaS contracts? 

The Competition and Consumer Act 2010 (Cth), includes the Australian Consumer Law (ACL) which is the main consumer protection regime governing the supply of goods and services in Australia.

The ACL can apply broadly to businesses supplying goods or services to customers in Australia, including overseas companies providing software or SaaS subscriptions.

More information about the ACL is available from the Australian Competition and Consumer Commission (ACCC) website at: https://www.accc.gov.au/business/selling-products-and-services

Consumer guarantees 

The ACL includes mandatory consumer guarantees that apply to goods and services supplied to consumers.

Importantly, under the ACL a “consumer” includes buyers of goods or services for ordinary personal, domestic or household use, as well as buyers acquiring goods or services priced at $100,000 or less.

This means the mandatory guarantees may still apply in many business-to-business SaaS transactions and sales. For SaaS platforms, these guarantees may include requirements that services are:

• provided with due care and skill;
• reasonably fit for their intended purpose; and 
• supplied within a reasonable time.

Many international SaaS agreements attempt to exclude all warranties or guarantees. However, certain ACL guarantees cannot be excluded or can only be limited in some business-to-business situations in accordance with the ACL.

Contracts used with Australian customers therefore will often include ACL carve-outs in limitation of liability clauses to ensure non-excludable guarantees are not contracted out of.

How do unfair contract terms rules apply to SaaS agreements?

One of the most common compliance issues for international (as well as many local) SaaS agreements in Australia is the unfair contract terms (UCT) regime.

Reforms introduced in November 2023 expanded its scope and introduced significant penalties for non-compliance. 

The regime generally applies to standard form contracts with consumers and small businesses that employ fewer than 100 employees or have an annual turnover of less than $10 million (AUD).

Courts can declare unfair terms void and unenforceable, and regulators may seek hefty financial penalties from businesses that include unfair contract terms in their contracts.

Many SaaS contracts drafted for overseas markets, particularly the North American market, include provisions that may raise issues under Australian unfair contract terms laws. 

Examples include:

• unilateral rights to change contract conditions or services;
• termination rights that favour only the supplier and give no (or very little) rights to the purchaser;
• disproportionately broad and one-sided indemnities benefiting the supplier; and
• automatic renewal clauses without notice or termination rights;

Where such conditions are disproportionate and not protecting legitimate business interests, they often require rebalancing to comply with Australian law.

Do Australian privacy laws apply to SaaS product supply? 

Another important issue when selling software products or platforms into Australia is compliance with the Privacy Act 1988 (Cth).

The Privacy Act 1988 (Cth) can apply to overseas organisations where they have an “Australian link”, which generally includes organisations that carry on business in Australia and collect or hold personal information about individuals located in Australia.

For SaaS products and platforms, this commonly occurs where the service collects or processes user personal data or information from Australian customers.

Australian Privacy Principles

The Privacy Act 1988 (Cth) includes the Australian Privacy Principles (APPs), which regulate how personal information must be collected, used and disclosed by businesses subject to the privacy law.

Privacy policies prepared for other jurisdictions often require updates to address Australian requirements, including:

• what personal information is collected;
• how the information is used or disclosed;
• whether personal information is transferred overseas;
• how individuals can access or correct their information; and
• how privacy complaints are handled.

Transparency around cross-border data transfers are particularly relevant for SaaS providers storing, using and accessing data outside Australia as part of the product supply and business operations.

Organisations subject to the Privacy Act 1988 (Cth) must also comply with the notifiable data breach scheme, which requires reporting eligible data breaches affecting personal information.

GST and SaaS contracts in Australia

International SaaS agreements often refer to VAT or sales tax, which do not apply in Australia. Instead, Australia has a Goods and Services Tax (GST).

Contracts used with Australian customers may therefore require adjustments to address:

• GST treatment of services;
• invoicing language; and
• allocation of tax liability.

Overseas service providers supplying software or SaaS subscriptions to Australian consumers may also be required to register for Australian GST under the offshore supplies regime under the A New Tax System (Goods and Services Tax) Act 1999 (Cth).

Other laws may also apply. Get your contracts reviewed

The above is not an exhaustive list of all possible applicable laws. Overseas SaaS companies selling software into Australia may also be subject to other laws depending on their product and market, including tax compliance obligations and industry-specific regulation. Because certain Australian laws can apply even where the supplier is located overseas, SaaS agreements drafted for other jurisdictions often require targeted review and updates.

Seeking a review of your contracts from Australian-based lawyers with expertise in IT and SaaS supply agreements before entering the Australian market can help ensure your agreements remain commercially workable as well as legally compliant.

At SLB Legal we help international and Australian SaaS and Tech suppliers draft and review contracts which comply with applicable Australian laws. Contact us today if your business needs help with your contracts.