Does your managed service subscription agreement comply with Australia’s new subscription laws?

Subscription agreements are a familiar part of doing business. Software platforms, IT providers and other managed service businesses often rely on them to provide ongoing services, automate renewals and build recurring revenue.

From 1 July 2027, new rules will change how many of these agreements need to work.

Australia’s new subscription laws introduce specific requirements for subscription contracts, covering what customers must be told before signing up and how easily they can cancel. Importantly for managed service providers, the rules won’t only apply to consumers. Certain ‘standard form’ agreements with small businesses will also be caught.

If subscriptions form part of your business model, now’s a good time to check whether your agreements and processes are ready, before July 2027 is suddenly around the corner.

What counts as a subscription agreement?

The legislation uses the term ‘subscription contract’, and its scope goes beyond the average streaming subscription.

It can include contracts for recurring or continuing goods or services, where payment happens automatically until the customer cancels. Fixed-term arrangements that automatically continue can also qualify, along with free trials that convert to paid subscriptions plus introductory offers that automatically move to a higher price.

For managed service providers, that means an agreement doesn’t necessarily need to be called a ‘subscription agreement’ to be covered.

Small business subscriptions are included

One of the important features of the new order is its application to certain business-to-business arrangements.

A standard form subscription contract can meet the small business requirement if the subscriber employs fewer than 100 people or had turnover below $10 million in its previous income year.
This could include managed service providers using largely standardised agreements across a customer base of SMEs.

Whether an agreement is considered ‘standard form’ depends on factors including bargaining power, whether the contract was prepared before negotiations and whether the customer had a genuine opportunity to negotiate the terms.

Your subscription agreement needs to be clear upfront

Under the new laws, suppliers will need to make key information clear before a customer agrees to a subscription contract.

That includes information about what they will or may have to pay, the length of the contract, how it renews or continues, any notice required to end it and how cancellation works.

The information must also be presented in a way that is prominent, comprehensible and unambiguous. It can’t be buried in jargon.

Simply adding another clause to your T&Cs isn’t likely to cut it. Managed service providers will need to consider the entire sign-up process, including proposals, order forms and online customer journeys.

Cancelling needs to be straightforward, too

The new rules also tackle one of the biggest frustrations associated with subscriptions: make them easy to stop as well as start.

For subscriptions covered by the consumer or small business requirements, suppliers must provide an exit method that’s easy to find and straightforward, with only reasonably necessary steps required to cancel.

If customers can enter the relevant subscription online, an online cancellation option will generally need to be available, too.

For providers with manual cancellation processes, lengthy notice requirements or a disconnect between online sign-up and offline cancellation, this will all deserve a closer look.

What happens to existing subscription agreements?

The new subscription rules commence on 1 July 2027 and generally apply to contracts entered into from that date.

Existing agreements aren’t necessarily outside the new requirements forever. If an existing contract is renewed, extended, otherwise continued or varied from 1 July 2027, they could still apply.

As a managed service provider, that gives you a highly useful window to work out which of your MSAs need tightening.

Get your subscription agreements ready

Subscription models and automatic renewals aren’t going away anytime soon. What these new laws are doing is putting greater responsibility on businesses to make sure customers understand what they’re agreeing to and have a straightforward out.

For managed service providers, preparation should extend beyond the subscription agreement itself. Your sign-up, renewal and cancellation processes may all need attention.

At Quest Legal, we can review your agreements and subscription processes and tell you exactly what needs to change before that 1 July 2027 deadline.