Guides · Commercial Contracts Guide · Chapter 2 of 6
Scope, price and payment
Last reviewed 14 August 2026
Defining what is actually being supplied, pricing changes properly, and payment terms that protect cash flow.
In short
Most contract disputes are scope disputes wearing a payment dispute's clothing. A scope schedule that says what is included, what is excluded, what assumptions the price rests on, and how changes are approved and priced removes the majority of them.
The commercial core of any agreement is what is being supplied, for how much, and when the money moves. It is also the part most often left to a quote pasted into a schedule.
Writing scope so it can be tested
A usable scope has four components:
- Inclusions — deliverables described in terms that can be objectively assessed.
- Exclusions — stated expressly. Silence is read against the party who drafted the document.
- Assumptions and dependencies — what you are relying on the customer to provide (access, data, approvals, sign-off timeframes) and what happens if they do not.
- Acceptance criteria — how a deliverable is accepted, within what period, and what happens if the customer says nothing. Deemed acceptance after a stated number of business days is standard and worth insisting on.
Change control
The clause that saves the relationship is change control: a short procedure requiring any change to scope, price or timing to be written, priced, and signed by both parties before work proceeds. Without it, "small extras" accumulate into unpaid work, and the supplier is left arguing that a verbal instruction varied a written contract that says it cannot be varied verbally. Our note on statements of work covers the mechanics.
Pricing models and the risk each carries
- Fixed price. Certainty for the customer, scope risk for the supplier. Only workable with a tight scope and real change control.
- Time and materials. Risk sits with the customer; usually paired with an estimate and a not-to-exceed threshold requiring approval to pass.
- Retainer. Predictable both ways; needs clarity on what is included, whether unused capacity rolls over, and how out-of-scope work is priced.
- Milestone-based. Aligns payment with progress; requires unambiguous milestone definitions.
Whatever the model, state whether amounts are inclusive or exclusive of GST, who bears disbursements and third-party costs, and whether rates can be indexed annually and on what basis.
Payment terms that protect cash flow
- An invoicing trigger tied to an event you control, not to the customer's internal approval.
- A defined payment period — and note that payment times to small business suppliers are publicly reported for large businesses under the payment times reporting regime, which is useful leverage in negotiation.
- Interest on overdue amounts, at a stated rate.
- A right to suspend performance for non-payment after notice. Without it, you may be obliged to keep working while unpaid.
- Limits on set-off, so disputed amounts do not stall unrelated invoices.
- Where credit is extended: retention of title over goods, PPSR registration, and a director's guarantee.
Security of payment in construction
If your work is construction work or related goods and services, each state's security of payment legislation gives a statutory right to progress payments and rapid adjudication, and contract terms that try to defeat it are void. The regime rewards strict compliance with timeframes — a late payment schedule can be fatal to a defence.
Where this fits
Scope schedules, change control and terms of trade are among the most common fixed-fee jobs we do, and typically the cheapest legal work with the highest return.
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