Most small business owners in Perth have contracts. The problem is that having a contract and having a contract that actually protects you are two very different things.

Over nearly 20 years working in corporate law and executive leadership, I've seen the same mistakes show up again and again, in businesses of all sizes, across every industry. The good news is that they are almost always avoidable. The bad news is that most business owners don't discover them until something goes wrong.

Here are the most common ones.

1. Using a Template You Found Online, and Never Changing It

This is by far the most common mistake. A business owner needs a client agreement, finds something on Google, swaps out the names, and calls it done.

The problem isn't that templates are bad. The problem is that a generic template isn't written for your business, your industry, or Western Australian law. It may be based on law from another state or another country entirely. It probably doesn't account for the specific risks in your line of work. And the clauses that matter most (payment terms, liability limits, dispute resolution) are often either missing or written so broadly they're useless.

If you're using a template you didn't get from a lawyer who knows your business, it's worth getting it checked. The cost of a contract review is a fraction of what a dispute will cost you.

2. No Clear Payment Terms, or Terms That Don't Hold Up

Your contract says "payment within 30 days". But 30 days from what? From the date of the invoice? From the date of completion? From the date the client decides they're happy with the work?

Vague payment terms are one of the biggest sources of cash flow problems for small businesses. And when a client decides not to pay, or decides to dispute the amount, a contract with fuzzy payment language makes it very hard to chase the money.

A solid contract should spell out exactly when payment is due, what happens if it's late (interest, suspension of work, termination rights), and what the process is for raising disputes about invoices. If yours doesn't, you're leaving yourself exposed every time you send an invoice.

3. No Limit on Your Liability

This one can be catastrophic.

If your contract doesn't include a liability limitation clause, you could theoretically be held responsible for losses that far exceed what you were ever paid for the job. A client claims your work caused them to lose a major contract. A supplier says your delay cost them hundreds of thousands of dollars. Without a liability cap, you're exposed to the full amount of whatever they claim.

Most well-drafted commercial contracts include a clause that limits your liability to the value of the contract, or to your insurance coverage. It's a standard protection, but only if it's actually in your agreement.

4. Handshake Deals and Verbal Agreements

You've worked with this client for years. You trust them. A detailed contract feels unnecessary, even a bit awkward.

And then something goes wrong.

Verbal agreements are legally enforceable in Australia in some circumstances, but proving what was actually agreed is incredibly difficult. It becomes your word against theirs. And in that situation, even if you're completely in the right, you may not be able to prove it.

This happens most often with long-term clients, referral relationships, and informal subcontracting arrangements. The closer the relationship, the easier it is to skip the paperwork and the messier it gets when things go sideways.

Get it in writing. Every time. It doesn't have to be complicated. It just has to be clear.

5. No Intellectual Property Clause

If you're creating anything for a client (designs, software, written content, systems, processes) your contract needs to say who owns it when the work is done.

In Australia, the default position under copyright law is that the creator owns the intellectual property unless the contract says otherwise. That might sound like good news for you. But it creates real problems if a client expects to own what they've paid for and your contract is silent on the issue.

Worse, if you're a contractor and the IP clause in your client's contract is poorly worded, you might inadvertently sign away rights to something you've built that you intended to reuse or adapt for other clients.

An IP clause doesn't need to be complicated. But it does need to be there, and it needs to say clearly who owns what and under what conditions.

6. Signing a Client's Contract Without Reading It Properly

When a bigger client presents you with their standard terms and conditions, it can feel like a formality. They're a major company. You want the work. The contract is 60 pages long. You sign it.

This is one of the riskiest things a small business can do.

Large companies write their contracts to protect themselves, not you. Their standard terms often include unlimited liability clauses, unilateral termination rights, payment terms that stretch to 60 or 90 days, and indemnity provisions that are extremely one-sided. In some cases, signing their contract means you're taking on risks you didn't even know existed.

Before you sign any contract a client puts in front of you, especially a large one, get it reviewed. Understanding what you're agreeing to before you start the work is always cheaper than trying to get out of it afterwards.

7. No Termination Clause

What happens if the relationship breaks down halfway through a project? What if the client stops communicating? What if you want to walk away from a client who isn't paying?

Without a clear termination clause, the answer is: it's complicated.

A good contract specifies when either party can terminate, how much notice is required, what happens to work already completed, and how the final payment is calculated. Without it, you may find yourself either locked into a relationship that isn't working or exposed to a claim for breach of contract if you walk away.

So What Should You Actually Do?

If you've read through this list and felt a familiar sense of recognition, that's not unusual. Most small business owners are running on agreements that haven't been properly reviewed since they started the business, or that were never reviewed at all.

The good news is that getting your contracts sorted isn't as expensive or complicated as most people assume. A proper review of your standard agreements, a few targeted updates, and a clear template for future work can be done relatively quickly, and the protection it provides is permanent.

At Aesir Legal & Advisory, contract reviews and redrafts are a core part of what we do. We work with Perth small and medium business owners across civil, construction, resources, professional services, and more, and we are used to translating complex legal issues into plain English that actually makes sense.

If you'd like an honest assessment of where your current agreements stand, book a free consultation. No obligation. Just a straight conversation about what you've got and what, if anything, needs to change.

Sakhawat Kabir (Sakhi) is the Principal of Aesir Legal & Advisory and the General Counsel and Executive for Carey Group Holdings, one of WA's top 100 private businesses. He has nearly 20 years of experience in corporate law and commercial leadership across Australia and internationally.

This article is general information only and does not constitute legal advice. For advice specific to your situation, please contact us directly.