Running a trade promotion for your business

Published 07 May 2019

Businesses have many ways that they can promote their goods and services to potential customers. One of these ways is by using a trade promotion. Do you know the legal basics about setting one up?

What is a trade promotion?

A trade promotion is a free-entry game or competition run by a business that's designed to promote the company's goods or services to participants. Generally, it's either a competition of chance or skill. Other names a trade promotion is known by include:

  • A giveaway.
  • A sweepstake.
  • A lottery.
  • A contest.

While the idea behind a trade promotion is simple, businesses must ensure they meet the legal requirements when setting one up. This means abiding by the Australian Consumer Law (ACL). Some of the areas you need to consider include:

  • Promoting the competition appropriately and legally, as well as supplying all necessary information to contestants. 
  • Ensuring entry is free, unless participants become involved in the competition through the purchase of goods and services at their normal market value. 
  • Have a complete and thorough Terms and Conditions for your trade promotion, and making it easily available for contestants to read. 
  • Figuring out whether your trade promotion is considered a game of chance or skill.

Games of chance

If your trade promotion relies on lottery or chance to determine the winners, then by NSW's law you must have a permit to legally proceed. To get one, you'll need to supply:

  • Your Australian Business Number (ABN). 
  • The specific dollar value of the prizes up for grabs in the trade promotion. 
  • A clear and accurate description of the trade promotion you're planning to run, including the conditions of entry, how you'll award prizes, etc.
  • The date you want it to run on. 

For a lottery or game of chance to be accepted, it must provide an equal chance of winning to each participant. Additionally, for competitions that have prizes valued at over $10,000, there are additional requirements placed on how the trade promotion is run. 

Games of skill

While you don't need a permit to run a trade promotion that is based on an evaluation of skill, you still need to abide by the ACL, and other applicable laws. You must also ensure your competition:

  • Has a set criteria against which all competitors are judged and a winner is chosen by.  
  • Doesn't involve chance at all. 

If you'd like assistance in ensuring your business runs an effective and legal trade promotion, make sure you invest in expert legal advice from Malouf Solicitors. We can help you in creating your terms and conditions, and provide you with sound information around promoting and setting up your competition. 

Please call us on 02 8833 2000 to speak with a lawyer

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