In 2016, Atkinson Vinden launched its Business Advisory Team. The team’s purpose is to stand alongside SME’s providing practical legal support at key moments in the life cycle of their business, whether that be setting up key commercial arrangements at inception, developing appropriate terms and conditions, ensuring compliance with applicable regulatory obligations, handling staff issues, negotiating leases and as required, dealing with equity and business succession issues. In this article AV Senior Associate Janelle Boutros, who heads up the Business Advisory Team, gives us the heads up on three key legal issues for businesses to consider in 2017.
Running a business takes planning and thought. Putting out day-to-day spot fires can distract us from ensuring our overall commercial arrangements are sound, and keeping up with the changing regulatory framework. I would encourage all business owners to schedule time away from the daily grind to review their overarching legal arrangements to make sure everything is in place as it should be, in case something should go wrong.
Here are three key pointers I think all business owners should be considering very carefully as we enter another year. I would be delighted to talk to you about any of these should they raise issues for you.
- Unfair Contract Terms
Businesses may use standard form contracts to improve efficiency, but they must take into account consumer rights when preparing their contracts. Standard form contracts are prepared by one party where that party offers the contract to the other party on a “take it or leave it” basis. From 12 November 2016, the Australian Consumer Law will protect small businesses from unfair terms in standard form contracts where the following conditions are satisfied:
- the contract is for the supply of goods or services or the sale or grant of an interest in land;
- one of the parties is a small business employing less than 20 people, including casual employees;
- the upfront price payable under the contract is no more than $300,000 or $1 million if the contract is for more than 12 months.
The legislation also applies to terms varied on or after 12 November 2016 even if a contract was entered into prior to that date. Some example terms which may be unfair are terms that enable only one party but not another to terminate the contract, a penalty for breaching a contract only applies for one party or terms which enable one party to terminate a contract and not the other. It is important that you review your contract terms to ensure you do not end up in a dispute as to whether or not your terms are unfair.
- Personal Property Security Register
The Personal Property Security Register (PPSR) gives businesses great risk protection. The national register shows whether someone is claiming an interest against goods or assets. Businesses can also create registrations so others are aware that ownership or an interest in goods is retained when those goods are being supplied. This protects businesses if the customer cannot pay or has an administrator or liquidator appointed, it puts you in the best position to have your asset or its value returned to you. Unfortunately, many businesses are still relying solely on their outdated retention of title clauses which states that the title remains with the business until the goods are paid for in full – this no longer protects you on its own. Without a proper registration on the PPSR, retention of title clauses are unlikely to compete with other creditors who have created valid registrations. Don’t keep doing it because you have always done it!
- Employment Contracts
Having good staff is crucial for developing a successful business. Accordingly, every business should ensure that its employees are retained correctly with appropriate job descriptions and employment agreements so both the business and its staff are clear on their roles, duties and responsibilities. The employment contract needs to be clear on any potential bonuses or commissions and what is to occur when the employment relationship ends including but not limited to notice periods and restraints of trade. A hand shake agreement just won’t cut it, there are too many unknowns!
If you would like to discuss any of the above, please contact our Business Advisory Team on (02) 9411 4466.
Telephone+ 61 2 8448 9874