Category: Commercial Law

How To Avoid Breaching Unfair Contract Terms Legislation

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If you own or manage a business that uses commercial contracts as part of its operations, then we hope that before implementing those contracts you sought the advice of commercial lawyers. If you did not, then there is the possibility that because the contracts were not checked by a legal expert that they could include unfair terms.

Unfair contract terms are those terms and clauses within a contract that could be deemed to be unfair at best, potentially void, and almost undoubtedly unenforceable if you were to refer to or rely on them should any legal dispute arises between your business and a customer or client. Note that it is a two-way street, which means you could enter a contract in which the other party has included unfair contract terms.

Unfair Contract Terms Explained

Whilst most people will understand what ‘unfair’ means in a general sense, when it comes to how it is used within commercial law and specifically in relation to commercial contracts, the definitions are far narrower. Commercial legislation states that a contract term is regarded as unfair when it would create any of the following scenarios:

  • A Significant Disparity In The Rights And Obligations Of The Respective Parties As To Create An Imbalance

In effect, this means that any terms which remove or significantly reduce one party’s rights while at the same time minimising the obligations of the other party, would be deemed unfair. An example is a company that supplies and installs heating systems removing any obligation it had concerning a warranty and placing all obligations for fixing it on its customers.

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Why You Need A Commercial Lawyer If You Are Selling A Business

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If you are selling a business the complexities of transaction and the legalities that have to be observed means that it almost certainly going to be essential that you have the experts at Commercial Lawyers Perth to advise on the sale to ensure it completes correctly. The last thing you need is to try and save the cost of a lawyer only to find out you are even more out of pocket because the sale was not conducted properly and falls through.

A commercial lawyer is the person who will handle what some refer to as ‘dotting the ‘i’s and crossing the ‘t’s’ although that unfairly underplays the importance of the role that they have. In effect, they will ensure that everything within the sale agreement is complete, accurate, and most importantly valid in terms of the sale proceeding.

Perhaps the most crucial benefit that they provide you is to eradicate and sort any errors which exist within any sale agreements that have been made between the two parties but not yet audited by a lawyer. They will also fix any problems that they find in the agreement of the type outlined below.

Important Details Omitted

Even the most seemingly simple of business sales need to have certain important details included in the final sale agreement. If any of these are omitted, even if unwittingly,  it can cause delays, invalidate the sale, or it could lead to future litigation due to a crucial piece of information being missing.

Details such as the financial aspects of the sale including the agreed value of inventory and equipment, for example, have to be included. Details of what actual inventory and equipment exist needs to be in there too. If it is not it leaves open the potential for the person selling to claim they were not part of the sale when the buyer believed they were.

Financial Clauses Not Complete

Obviously, the financial details of the business being sold are a core element of the transaction, and therefore it is vital that everything which is relevant to the business’s finances and the sale is included.

The sale agreement also needs to have any financial clauses that exist as part of the transaction such as whether the terms of the sale are for payment in full or an upfront payment followed by the balance being paid in instalments. Another example is where the seller is allowed to retain some shares in the company as part of the deal.

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Are My Personal Assets Separate From My Business?

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Starting a new business can be an exciting time, especially if you’re finally doing something that you’ve dreamed of your whole life. However, there are also risks associated with building a business from scratch. Things can go wrong, your business can fail, and you might be liable for a whole range of costs that you hadn’t accounted for.

One of the biggest mistakes that people make when starting a new business is not separating their personal assets from their business. This means that if your business fails, your personal assets will be at risk. It’s always a good idea to speak to an experienced commercial lawyer like www.daviescolawyers.com.au to make sure that you’re using the best business structure for your circumstances, otherwise you could end up with all sorts of unforeseen problems.

Am I Exposed As A Sole Trader In Australia?

Unfortunately yes, you are somewhat at risk as a sole trader in Australia. While there are ways to protect your personal assets, failing to do these places everything you own at risk if you get sued or go bankrupt. There are a few simple things that you can do to protect your major assets, including:

  • Make sure that things like your home and vehicles are in your partners name, not your own. This makes it less likely that they will be targeted if you’re facing legal action or financial problems.
  • Keep your wealth in superannuation. If you’ve built up significant savings over the years, consider putting them into a superannuation account. Generally, super accounts are untouchable and can’t be claimed by litigators or creditors.

These simple actions offer some form of protection, but you can also go further and set up individual legal entities for your personal and business assets.

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Are your Assets at Risk?

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Before starting a business or even as you operate it, it’s important to weigh the pros and cons of every decision carefully. It’s a good idea to consult trained commercial lawyers to understand the potential implications of every important decision.

If you are just starting out, you have probably thought of a suitable name for your business. However, there are some important issues involved in the selection of a business name:

• Before you order business cards and signs etc, it’s necessary to consider legal issues involved. You need to ensure that the name or logo etc has not already been registered; such cases are known as copyright or trademark infringement. Your chosen business name may infringe on another business’s registered trademark and this counts as violation of law.

• If your business involves creative design, media etc, you may wish to protect your intellectual property rights. You need to ensure that your idea, brand or invention is available legally in order to register.

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Silence Is Golden – Tips and Essentials of Confidentiality and Non-Disclosure Agreements

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According to experienced commercial lawyers Rowe Bristol Lawyers, with the modern day era of the internet, ever-increasing data size, and light-night fast communication across a broad array of platforms, confidential information can be taken and then distributed widely in the blink of an eye.  Company secrets, so-called “crown jewel” data is a mouse click away from becoming disseminated across the globe.

So, it is important that confidentiality and Non-Disclosure agreements are in place at all appropriate levels in a company.  These agreements should be well drafted, but not so onerous that it is difficult for the average person to evaluate and consider.  One-sided, draconian agreements that grossly misappropriate the power of a business relationship are a thing of the past.

To that end, here are some tips and essential guidelines for drafting confidentiality and non-disclosure agreements in employment contexts.

Employment:  Non-Disclosure agreements with employees.  It’s important to consider several factors when deciding on what type of agreement is appropriate for employees.  First, what type of employee are they?  Front line troops?  Executive level managers?  It’s important to assess what types of information each level of employee has access to and then draft appropriately.  A summer associate does not have access to the type of sensitive information that a Chief Human Resources Office would.  Second, decide what information needs to be protected.  Not all data is created equal.  Next, decide the scenarios most likely for each level of employee to harm the business and then plan for the worst.

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Licensing Agreements – Tips and Tricks

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If you were to consult experienced commercial lawyers, they would tell you that it is important in drafting commercial licensing agreements to understand the world you’re dealing with.  Become an expert contract drafter doesn’t mean you’re an expert in your client’s world.  Get to know their industry, technology, and concerns.  Gathering as much information as possible ensure better contracts and agreements.

Fact Gathering

Why gather as many facts as you can before drafting?  The answers are obvious:

  • Gathering information reduces the chance of inadequate drafting, leaving out import clauses and crucial elements of your client’s business. Instead of reducing risk, you may increase risk by  missing information
  • Finding out as much as possible about your client’s needs and business will save time, which in turn will save money and make for a happy client. Also, saving time means beating deadlines and not being pressured to complete a document at the last minute.
  • Understanding what your client needs, by gathering data allows you to pick and write the proper provisions.

So what types of facts should lawyers collect before drafting?  The answers fall into several categories:

  • Transactional Facts: These are data points such as names and addresses, nature of the parties
  • Additional Transactional Fact – “The Deal”: What is being offered, what is required to accept the terms of the contract?  What types of situations does your client want to avoid?  Consideration – what will the parties pay and in what form?  How will payment be exchanged and how will it be measured?  How long will the relationship last and what would cause the end of the relationship?  What is your client most worried about losing?

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