Articles

Home Articles
What to Do When a Contract is Breached

What to Do When a Contract is Breached

Commercial Law, Litigation

A contract is a legally binding agreement between two or more parties that creates rights and obligations for each party. When one party fails to perform their contractual duties, a breach of contract may result. A breach of contract can have serious consequences for both the breaching party and the innocent party, such as loss of money, time, reputation, or opportunities. Therefore, it is important to know what to do when a contract is breached, and what remedies are available to the injured party.

Legal Consequences and Remedies for a Breach of Contract

The legal consequences and remedies for a breach of contract depend on the nature and extent of the breach, and the effect it has on the innocent party. There are three main remedies that a court can award to the injured party:

  • Damages: This is the most common remedy for a breach of contract. Damages are a monetary compensation that aim to put the innocent party in the same position as if the contract had been performed. There are different types of damages and some damages may be expressly excluded from a contract. Damages are a common law remedy for a breach of contract.
  • Injunctions: This is a court order that requires the breaching party to do or refrain from doing something. Injunctions are usually granted when damages are not adequate to remedy the breach and where the balance of convenience is considered. For example, an injunction can be used to stop the breaching party from disclosing confidential information, or from competing with the innocent party. An injunction is an interim step in the resolution of most proceedings where it is sought, meaning that the party seeking an injunction still needs to show that it has a substantive cause of action. Injunctions are an equitable remedy.
  • Specific performance: This is a court order that requires the breaching party to perform their contractual obligations exactly as agreed. Specific performance is usually granted when the subject matter of the contract is unique or irreplaceable, such as land, art, or antiques. However, specific performance is not available if the performance would be impossible, illegal, or unfair. Specific performance is another equitable remedy that may be open to an innocent party.

Whether or not a party has a cause of action and the remedies that they should seek needs to be determined following a review of the circumstances by a lawyer.

How to Prevent or Resolve Contract Disputes

The best way to prevent or resolve contract disputes is to have a clear, comprehensive, and well-drafted contract that covers all the essential terms and conditions of the agreement, and that anticipates and addresses any potential issues or risks that may arise. A good contract should also include a dispute resolution clause that specifies how the parties will handle any disagreements or conflicts that may occur, and what methods or mechanisms they will use to settle them. Some of the common methods or mechanisms for resolving contract disputes are:

  • Mediation: This is a voluntary and confidential process where the parties try to reach a mutually acceptable solution with the help of a neutral third party, called a mediator. The mediator does not decide the outcome, but rather facilitates the communication and negotiation between the parties. Mediation is usually faster, cheaper, and more flexible than litigation, and it can preserve the relationship between the parties.
  • Arbitration: This is a binding and enforceable process where the parties submit their dispute to a neutral third party, called an arbitrator, who makes a decision based on the evidence and arguments presented by the parties. The arbitrator’s decision is final and cannot be appealed, unless there is an error of law or procedure. Arbitration is usually more efficient, private, and less formal than litigation, but it can also be more expensive and less predictable.
  • Litigation: This is the process where the parties take their dispute to court and have a judge or a jury decide the outcome. Litigation is usually the last resort, as it can be costly, time-consuming, stressful, and adversarial. Litigation can also result in a public record of the dispute, which can damage the reputation or goodwill of the parties.

How Law Quarter Can Help You

At Law Quarter, we are experts in contract law and dispute resolution. We can help you draft, review, negotiate, and enforce your contracts, and protect your interests and rights in case of a breach. We can also advise you on the best course of action to take when a contract is breached, and assist you in pursuing or defending a claim for damages, injunctions, or specific performance. We can also represent you in mediation, arbitration, or litigation, and help you achieve a favourable and satisfactory outcome. If you need legal assistance with any contract-related matter, contact us today for a free consultation.

How a Contract Playbook Can Boost Your Business

How a Contract Playbook Can Boost Your Business

Commercial Law

A contract playbook is a document that outlines your business’s preferred positions and fallback options for common contract clauses in your industry. It serves as a guide for your legal team, sales team, and other stakeholders who are involved in negotiating and drafting contracts with your clients, suppliers, and partners. A contract playbook can help you streamline your contract process, reduce legal risks, and increase your competitive edge. Here are some of the benefits of having a contract playbook for your business:

  • It saves you time and money by reducing the need for external legal advice and speeding up the contract cycle.
  • It ensures consistency and clarity in your contract terms and reduces the chances of disputes and litigation.
  • It empowers your sales team to close deals faster and more confidently by giving them clear guidance on what they can and cannot agree to.
  • It enhances your brand reputation and trustworthiness by showing your clients that you have a clear and professional approach to contracts.
  • It helps you identify and mitigate potential risks and liabilities by setting out your acceptable levels of exposure and protection.

How to create a contract playbook for your business

Creating a contract playbook for your business requires a thorough analysis of your industry, your business goals, and your risk appetite. You also need to consider the legal and commercial implications of each contract clause and how they affect your business relationships. Here are some steps to follow when creating a contract playbook for your business:

  • Identify the types of contracts that you commonly use or encounter in your industry, such as service agreements, supply agreements, partnership agreements, etc.
  • Review your existing contracts and identify the clauses that are most relevant and important for your business, such as scope of services, payment terms, warranties, indemnities, limitations of liability, termination, etc.
  • For each clause, define your preferred position, your fallback position, and your walk-away position. Your preferred position is what you ideally want to achieve in the contract, your fallback position is what you are willing to accept as a compromise, and your walk-away position is what you cannot agree to under any circumstances.
  • Provide clear and concise explanations and rationales for each position, as well as examples of acceptable and unacceptable language. You can also include tips and best practices for negotiating and drafting each clause.
  • Organise your contract playbook into sections and categories that are easy to navigate and understand. You can use headings, subheadings, tables, charts, etc. to make your contract playbook user-friendly and visually appealing.
  • Update your contract playbook regularly to reflect any changes in your business strategy, industry standards, or legal regulations. You can also solicit feedback from your legal team, sales team, and other users of your contract playbook to ensure that it is relevant and effective.

How can Law Quarter help you with your contract playbook?

Law Quarter is a law firm that helps businesses with their contract needs. We have extensive experience and expertise in creating and reviewing contract playbooks for businesses across various industries. We can help you with your contract playbook by:

  • Conducting a comprehensive assessment of your business goals, industry trends, and legal risks.
  • Creating a customised contract playbook that reflects your business’s unique needs and preferences.
  • Reviewing and revising your existing contracts and contract playbook to ensure that they are up to date and compliant with the latest laws and regulations.
  • Providing ongoing support and advice on any contract issues or questions that you may have.

If you are interested in creating a contract playbook for your business, or if you want to improve your existing contract playbook, contact us today for a free consultation. We will help you create a contract playbook that can boost your business performance and reputation.

Glow Up Your Business: A Guide to Building a Radiant Legal Foundation for Your Beauty or Skincare Venture in Australia

Glow Up Your Business: A Guide to Building a Radiant Legal Foundation for Your Beauty or Skincare Venture in Australia

Commercial Law, Private Law

So, you’ve decided to dive into the glamorous world of beauty and skincare. 

And it’s all fun and games when you’re dreaming up that perfect perfume scent or creating the perfect booty cream, but there’s a whole lot of legal stuff you need to know before you can build a thriving brand.

Well, buckle up, because we’re about to embark on a journey to set up a legal foundation that’s as flawless as your favorite foundation 🙂

Firstly, before diving in, most personal care, skin care, beauty, make-up and cosmetic products may be described as ‘cosmetics’. 

A cosmetic is defined in our legislation as a substance or preparation intended for placement in contact with any part of the human body, including the mucous membranes of the oral cavity and the teeth, with a view to:

  • altering the odours of the body
  • changing its appearance
  • cleansing it
  • maintaining it in good condition
  • perfuming it
  • protecting it

Cosmetics include soap, shampoo and conditioner, moisturiser, ‘bath bombs’, hair dye, perfume, lipstick, mascara, nail polish, deodorant and many other products.

What laws and regulations govern the beauty and skincare industry?

The regulation of cosmetics in Australia is administered by three government regulators – the Therapeutic Goods Administration (TGA), the Australian Government, Department of Health under the Australian Industrial Chemicals Introduction Scheme (AICIS) and the Australian Competition and Consumer Commission (ACCC).

The Therapeutic Goods Administration (TGA) is responsible for regulating chemicals in personal care, skin care, make-up and cosmetic products that are medicines or marketed as having therapeutic effects

This includes most skin-whitening lotions, primary sunscreens, disinfectants, complementary medicines and blood products.

The second regulatory body is the Australian Industrial Chemicals Introduction Scheme (AICIS).  AICIS is a regulatory scheme that regulates chemicals that are imported or manufactured (introduced) for industrialuse and it’s part of the Australian Government, Department of Health.

It’s basically responsible for regulating the chemical ingredients in personal care, skin care, make-up and other cosmetic products that are not medicines or marketed as having ‘therapeutic effects’ and are considered to have an ‘industrial’ use.

The final body, the ACCC, regulates cosmetic product labelling or product safety in accordance with the Consumer Goods (Cosmetics) Information Standard 2020. The ACL also provides for penalties for false or misleading claims and representations about products.

So remember: one of the most important first steps is figuring out whether your products are cosmetics or therapeutic goods. 

Here’s a (non-exhaustive) list of laws and regulations you should pop on your radar if you’re operating a skincare business:

  • Therapeutic Goods Act 1989 (Cth)
  • Therapeutic Goods (Excluded Goods) Determination 2018 (Cth)
  • Australian Consumer Law (Competition and Consumer Act 2010 (Cth))
  • Consumer Goods (Cosmetics) Information Standard 2020
  • National Measurement Act 1960 (Cth)
  • National Trade Measurement Regulations 1989 (Cth)
  • Industrial Chemicals Act 2019 (Cth)
  • Fair Work Act 2009 (Cth) 
  • Good Manufacturing Practice (GMP)
  • Agricultural and Veterinary Chemicals Act 1994
  • Privacy Act 1998 (Cth)
  • Spam Act 2003 (Cth)
  • The Poisons Standard (also known as the Standard for the Uniform Scheduling of Medicines and Poisons (SUSMP)
  • The Mandatory Standard for Labelling Cosmetics (regulated by the ACCC)
  • General Data Protection Regulation (GDPR)

OK, so that’s the general framework for the beauty industry – now let’s get down to the nitty gritty of laying your flawless legal foundation:

1. Slay the Business Structure Game

First things first, let’s talk business structures. 

It’s like choosing the perfect shade of lipstick – you want something that suits you and makes you feel fabulous. In Australia, you can opt for a sole trader setup, a partnership, a company, or a trust. Each has its own perks and quirks, so get some solid legal advice and choose the one that aligns with your business goals and ensures you’re strutting down the right legal runway.

2. Registrations and Compliance: Because You’re Worth It

Now that you’ve picked your business structure, it’s time to register your baby. 

Start by getting yourself an Australian Business Number (ABN) with ASIC. 

Think of it as your business’s VIP pass to the exclusive party that is the Australian business scene. 

Next step: compliance

It’s not always the most glamorous field but the beauty world has its own set of rules, and it’s crucial to play by them. Complying with regulations is not only responsible but also adds a layer of trust to your brand – consumers love transparency.

You don’t need to register cosmetic products like you do in the EU, for example, but you will need to think about what other licences, registrations or permits you need, depending on what area of the beauty and skincare industry you’re operating in. 

Here are some of the registrations you need to consider in different categories:

Therapeutic Goods

If you’re in the game of selling therapeutic goods, make sure to register with the TGA – consider it your product’s exclusive red carpet moment ⭐

Importers

If you plan to sell any cosmetics in Australia that you bought from overseas, you must register your business with AICIS before you import (introduce) into Australia. Imagine your business as a jet setting beauty guru, and the entry stamp on your passport to the ultimate beauty destination comes from the AICIS. There is no threshold value or limit so you must register regardless of how much you sell.

Manufacturers (including home-based and small businesses)

If you intend to make cosmetics for sale in Australia where one or more ingredients were purchased from overseas, then you must also register your business with AICIS. Again, there’s no threshold value or limit so you must register regardless of the quantity and how much you sell.

If you purchase all ingredients locally and you blend these together to make your cosmetics, then you don’t need to register with AICIS. But if your process of mixing ingredients results in a chemical reaction, then they consider this to be manufacturing and you must register.

Take soap making, for example. If you’re a chemical maestro, whipping up soaps through the process of ‘saponification’, then you’re not just a soap maker: you’re a chemical magician! This means registering with AICIS is essential.

Local Council – Your Business’s Neighborhood Watch

If your business is setting up shop at home, your local council is like the neighborhood watch – keeping an eye out for all things business-related. Check out your local council’s website for the lowdown on any registrations or permits needed. It’s like getting the thumbs up from your local squad.

Insect Repellent – Keep Bugs at Bay, the Legit Way

Planning to whip up an insect repellent potion? Smart move – bugs are so last season 🙂 Make it official by registering your bug-be-gone creation with the Australian Pesticides and Veterinary Medicines Authority (APVMA).

3. Taming the Tax Beast

Taxes – the necessary evil that keeps the beauty industry glowing. Familiarize yourself with the Australian Taxation Office (ATO) and their guidelines (and find yourself a great accountant). It’s like contouring – a bit tricky at first, but once you get the hang of it, you’ll be sculpting your financial success with finesse.

4. Protecting Your Magic Formula: Intellectual Property

Your beauty and skincare creations are your magic potions, so guard them with all your might. 

Just like a signature fragrance, you want your brand to be unmistakably yours. 

One of the most important ways that you can protect your cosmetic brand and keep copycats at bay is by registering a trade mark

You can register your business name, logo (or a combo of both) and cosmetics brand, and you can also trade mark the distinctive packaging of your products and their distinctive scent. 

A registered trade mark will provide you with the exclusive right to use, licence and sell your mark, which means no one can use or misappropriate your trade mark without your permission. 

You might also want to apply for a patent to protect your product formulas. A patent is a type of intellectual property that gives its owner a legally enforceable right to exclude others from making, using or selling their innovative device or process. 

With a patent, you’re not just creating products; you’re crafting a legacy. It’s a legally enforceable declaration that says, “This genius is mine, and no one else’s!” Whether it’s a groundbreaking skincare formula or a haircare concoction that’s pure magic, a patent makes it yours – and yours alone.

5. Employment: Hiring and Contracts

As your empire grows, you might need to bring in some glam squad members. 

When hiring, ensure you’ve got the legalities covered with proper employment contracts (you can check out our post on contract playbooks and employment considerations here). 

It’s like having a beauty agreement that keeps everyone on the same page – no messy breakups, just a flourishing business relationship.

6. Insurance: A Beauty Business’s Best Friend

Accidents happen, my beauty friends. That’s why insurance is your BFF in the beauty biz. 

Whether it’s public liability, product liability, or professional indemnity insurance, make sure you’re covered. It’s like having a nice big beauty umbrella, protecting you from unexpected downpours.

7. Staying Ethical and Sustainable: A Trend That Never Fades

In the era of conscious consumerism, consider weaving ethical and sustainable practices into your business model. It’s not just good for the planet; it’s excellent for your brand image. Showcase your commitment to beauty that cares, and watch your customer base flourish.

There you have it – a laid-back guide to navigating the legal and regulatory scene in the beauty and skincare business.

If you’d like help setting up your legal foundations or drafting your contracts, here at Law Quarter, we advise clients throughout the cosmetics supply chain, including product and packaging manufacturers, importers, exporters, wholesalers, distributors and retailers and our lawyers work with clients involved in beauty, healthcare and wellness throughout Australia. 

We also run a sister business, Compliance Quarter, so we’re set to help you build a big glowing beauty empire with the strongest of foundations 🙂

You can also reach out to me directly at jacqui@lawquarter.com.au or call me on 0411 659 671.

Now, go forth and conquer the beauty world – stay fabulous 💄✨

Brief Breakdown: Australian Competition and Consumer Commission v Booktopia Pty Ltd [2023] FCA 194

Brief Breakdown: Australian Competition and Consumer Commission v Booktopia Pty Ltd [2023] FCA 194

Commercial Law

Welcome to “Brief Breakdown,” where we dive into noteworthy legal cases and explore their implications. In today’s edition, we examine a case that put the spotlight on consumer rights in Australia.

Today, we examine Consumer Commission v Booktopia Pty Ltd [2023] FCA 194. The parties involved were Booktopia, a leading online bookseller, and the Australian Competition and Consumer Commission (ACCC). At the core of this decision were Sections 18 and 29 of the Australian Consumer Law (ACL), which prohibit misleading or deceptive conduct and false or misleading representations. In this breakdown, we’ll outline the key findings, and we discuss the court’s decision.

The commencement

The ACCC commenced the proceedings on 10 December 2021, alleging that Booktopia Pty Ltd had engaged in conduct in contravention of sections 18(1) and 29(1)(m) of the Australian Consumer Law (ACL) (Schedule 2 of the Competition and Consumer Act 2010 (Cth)) by making various representations to customers about their rights to refunds and remedies in respect of goods purchased from Booktopia’s online bookstore that did not comply with the consumer guarantee regime.

The legislative provisions

 Section 18(1) of the ACL states:

(1)     A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

5    Section 29(1)(m) of the ACL states:

(1)    A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services:

(m)    make a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy (including a guarantee under Division 1 of Part 3-2).

Decision

Booktopia accepted that certain representations made were false, misleading or deceptive. The Court went on to examine the conduct, in the context of the making of orders by consent.

The court noted that: The principles applicable to determining whether conduct contravenes s 18 of the ACL are well-established. Conduct is misleading or deceptive, or likely to mislead or deceive, if it has a tendency to lead into error: Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; 250 CLR 640 at [39] (French CJ, Crennan, Bell and Keane JJ). Whether conduct in relation to a particular class of consumers is misleading or deceptive is a question of fact to be resolved by a consideration of the whole of the impugned conduct in the circumstances in which it occurred. The principles that apply to what is considered to be misleading in s 18 of the ACL are the same in respect of s 29 of the ACL: Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 634; 317 ALR 73 at [35]-[47] (Allsop CJ).

The court found that Booktopia had contravened the ACL by making misleading representations about notification requirements, returns and refunds, and its obligation to remedy. Key findings included that Booktopia had misled consumers about the requirement to notify the company within two business days of delivery of a damaged, faulty, or incorrect product to have a right to a refund or other remedy, misled consumers about their entitlement to obtain a refund for certain products, and misled certain customers about Booktopia’s obligation to provide a remedy because the customer had failed to contact Booktopia within two business days of delivery.

The overall outcome was that Booktopia was ordered to pay a pecuniary penalty of $6,000,000 to the Commonwealth of Australia, publish a notice on its website for 60 days, establish and maintain a Consumer Law Compliance Program for three years, review its financial position annually and notify the ACCC if repayment of the penalty can be accelerated, and pay the ACCC’s costs of the proceeding, fixed at $75,000.

This decision serves as an important reminder for businesses to have robust processes in place to ensure compliance with the ACL.

Expert Legal Representation on the Central Coast: Contact Law Quarter for Tailored Advice and Professional Service

Expert Legal Representation on the Central Coast: Contact Law Quarter for Tailored Advice and Professional Service

Commercial Law

Are you looking for a dependable, experienced lawyer to handle your legal matters? Look no further than Law Quarter on the Central Coast. Finding a lawyer can be difficult. This is an important decision as quality representation from a suitably experienced lawyer is super important.

How to find a lawyer

Navigating the legal system can be intimidating and confusing. When it comes to finding a lawyer, it is important to do your research and make sure that the lawyer you choose is experienced in the field of law that you are seeking, has a clear pricing methodology, and is committed to providing excellent service.

What should I consider when choosing a lawyer?

Asking the right questions is important when you’re looking for a lawyer. You need to be confident that they are the right choice for your legal matter. Here are some questions to ask your prospective legal team:

  • How long have you been in business?
  • Do you specialise in my area of law?
  • What is the range of fees that you charge?
  • How much will you charge me, and when will I be charged?
  • How can I contact you?

How do I know if a lawyer is qualified for my legal issue?
All lawyers must be registered with the Law Society and be admitted to work as a lawyer. This means that they have undertaken the necessary training, graduated from university and been admitted to the profession. As part of the registration process, all lawyers must complete continuing professional development (CPD) annually. That doesn’t mean that all lawyers are created equal. So make sure you ask if your lawyer has experience in the area of law you are interested in.

How much will it cost to hire a lawyer?

When you engage a lawyer to help with your legal issue, it is important to know what their fees will be. Lawyers will bill you for their time and costs. If you don’t understand the billing arrangements, you need to ask them before you sign a retainer agreement.

The most common method of paying for a lawyer’s services is an hourly rate. The hourly rate will vary depending on the area of law. You need to consider that it is generally cheaper to get advice at the beginning of a matter, than at the end.

Are there any free or low-cost legal services available in NSW, Australia?

There are a number of free and low-cost legal services in New South Wales, including:

NSW Legal Aid
Legal Aid NSW offers free legal help to people with limited means. The full range of their services is available at https://www.legalaid.nsw.gov.au/. Their hotline can be reached on 1300 888 529.

Community Legal Centres
Community Legal Centres (CLCs) are independent, non-profit organisations that provide free legal services across Australia. They offer free or low cost legal services for people who cannot afford private lawyers.

Law Quarter is based on the NSW Central Coast.

All our work is conducted with a strong emphasis on client service and communication, so you’ll always know where you stand and be fully informed about your matter. Whatever your needs, we have the expertise to deliver tailored advice and professional representation. Contact us today for more information or to request an appointment. We also have in-depth experience with all types of property law. We’re experts in conveyancing and will guide you through the legal processes, ensuring everything goes smoothly from start to finish.

Are you looking for a dependable, experienced lawyer to handle your legal matters? Look no further than Law Quarter in the Central Coast. We specialize in commercial law and litigation, so we can provide the tailored advice and representation you need. Our team of experienced lawyers have years of experience in all aspects of the law, from contract drafting and dispute resolution to negotiations and representing clients in court.

We understand that legal issues can be overwhelming and stressful, which is why we are here to help. We take the time to explain the legal process and ensure you have the best possible outcome. So if you’re in the Central Coast area and need a reliable lawyer, give Law Quarter a call today!

Get in touch

When it comes to quality legal representation, look no further than Law Quarter on the Central Coast. To find out more about how we can help you with your legal needs, get in touch today!
Contact Us. We’re always happy to hear from our customers.

How do I protect my assets and wealth?

How do I protect my assets and wealth?

Business Sale, Private Law

The start of a new year is a time for reflection and planning for all of us. You might be setting some big, dreamy, personal goals that will outlast the hangover of New Year’s Day. 

But if you’re a business owner, you’re likely also in goal setting mode too and putting your ‘blue ocean strategy’ thinking hat on to create long term success. This is why asset protection should be a top priority for you in 2023. It’s a perfect time to think about what will happen to you and your business if things don’t quite go as planned.

What is asset protection?

If you’re a business owner, your assets may be at risk to creditors, which include lenders, suppliers, the trustee in bankruptcy, the ATO, and any other people or organizations you owe money to. You also need to consider any statutory obligations that come with your role as a director and/or employer.

Asset protection is the process of legally safeguarding your assets from creditors, lawsuits, and other types of claims. For example, what will happen to your assets if an unexpected event occurs, such as a litigation or a personal accident? What happens if your business falls into tough times and the creditors come calling? 

Strategies for asset protection

There are several ways to protect your wealth and assets. Some common strategies include:

  1. Creating a trust: A trust can be used to protect assets such as property, investments, and cash from creditors and litigants.
  2. Setting up a company: By transferring assets to a company, you can limit your personal liability and make it more difficult for creditors to access those assets.
  3. Superannuation funds: Superannuation funds can provide protection against creditors as long as they are set up correctly.
  4. Offshore structures: Some individuals may consider using offshore structures, such as foreign companies or trusts, to provide an additional layer of asset protection.
  5. Insurance: Obtaining insurance for assets can provide protection against risks such as theft, fire, and other types of damage.
  6. Estate planning: This is the process of organising and preparing for the distribution of your assets after you pass away. It involves creating a plan that takes into account your financial situation, your goals, and the needs of your loved ones (including creating a will, potentially setting up trusts, naming beneficiaries, having a lawyer draft up powers of attorney (giving a person, or trustee organisation the legal authority to act for you to manage your assets and make financial and legal decisions on your behalf) and appointing an enduring guardian to make decisions about your health and lifestyle in the event you cannot make these decisions for yourself.

Protecting the Family Home

One of the primary concerns of most people is protecting the family home. The family home is often one of the most significant assets a person can own but as it is generally held in an individual’s name, it can 
be at risk.

There are several ways a business owner can ‘ring-fence’ the family home from his or her business activities. However, there are some risks and misconceptions about protecting the family home. 

Establishing a business in a company or trust structure gives the owner the protection of the corporate veil and generally creditors only have access to the company’s or trust’s assets. But if a company or trust can’t pay its debts, there is a risk that creditors will be able access the personal assets of the director or trustee to pay some or all of the debts.

One strategy is to give majority ownership of the home to a person who is not at risk from any bankruptcy or litigation procedures, for example, your spouse. This might lead to some stamp duty exemptions and doesn’t usually result in any capital gains tax (CGT) liabilities.

However, under the presumption of resulting trust, a party can be treated as a beneficial owner of property under the law of equity, despite the fact they are not the legal owner of the property.  The presumption generally arises where a person contributes purchase money to a property but is not registered on title as an owner, or where a person transfers a property or part of a property to another for no payment.

If a resulting trust can be established, the creditors of the at-risk party may be able to lay claim to an interest in the family home – even if the home is solely in the name of the other partner – unless evidence shows the transfer was intended as a gift (referred to as the ‘presumption of advancement’). There are a number of other factors to consider under the Bankruptcy Law as to whether or not a presumption of advancement would arise, and it ultimately comes down to the intention of the parties.

Currently, the “presumption” of advancement applies only in cases of gifts or contributions made by a husband to a wife, or by a parent to a child, however the High Court in Bosanac v Commissioner of Taxation [2022] HCA 34 indicated that it is open to expanding the categories to align with current values.

An alternative strategy to signing over the home to the unexposed spouse is to borrow against the property and to allow a related charge to be made over the primary residence, meaning there is very little equity left for creditors to pursue. These are not the only options for business owners, however, so it’s best to obtain advice on the most appropriate strategy for you.

Next Steps

Prior to making any changes to your business structure and other asset protection decisions, it is important to review the potential costs or tax implications that may arise from such alterations in order to effectively protect your assets.

You should consider seeking advice from a legal and financial professional before implementing any of these strategies to make sure that you are complying with all applicable laws and regulations.

For advice on business structure and asset protection, contact us at info@lawquarter.com.au or call us on 

What is the difference between an Australian Financial Services Licence and an Australian Credit Licence?

What is the difference between an Australian Financial Services Licence and an Australian Credit Licence?

Business Sale, Regulatory Updates

What is an AFSL?

An Australian Financial Services Licence (AFSL) is a licence issued by the Australian Securities and Investments Commission (ASIC) that allows a company or organisation to provide financial services to clients. 

This can include a wide range of services such as:

  • Providing financial advice to clients, including advice on investment products, superannuation, and insurance.
  • Dealing in a financial product, such as buying and selling shares or derivatives on behalf of clients.
  • Making a market for a financial product, such as trading shares or derivatives on behalf of clients.
  • Operating registered schemes, such as managed funds or superannuation funds.
  • Providing traditional trustee company services, such as acting as a trustee for trusts, estates and other securities.

To obtain an AFSL, a company must meet certain requirements and comply with certain regulations, such as having sufficient capital and insurance, and maintaining proper records and reporting. As an AFSL holder, you have a general obligation to provide efficient, honest and fair financial services. You must comply with the conditions of your AFS licence and the Corporations Act 2001.

What is an ACL?

An Australian Credit Licence (ACL) is a licence issued by ASIC that allows a company or organization to engage in credit activities, such as:

  • Providing credit assistance, such as helping clients apply for a loan or mortgage.
  • Brokering credit, such as arranging loans or mortgages on behalf of clients.
  • Providing credit advice, such as giving advice on the best type of loan or mortgage for a client’s needs.

Credit activities include providing credit assistance, brokering credit, and providing credit advice. For example, a mortgage broker would need an ACL, but the bank providing the mortgage would need an AFSL.

To obtain an ACL, a company must also meet certain requirements such as training and compliance and be able to demonstrate its ability to conduct the credit activity and how it will engage in good credit practice.

You have general conduct obligations that include:

  • acting efficiently honestly and fairly
  • being competent to engage in credit activities, and ensuring your representatives are competent and
  • being able to ensure your clients are not disadvantaged by an conflicts of interest that you or your representatives may have in relation to your credit activities
  • ensuring you and your representatives comply with the credit legislation
  • having appropriate dispute resolution systems (including both internal systems and being a member of an external dispute resolution scheme) 
  • having appropriate compensation arrangements in place (which for some will include holding professional indemnity insurance) 
  • having adequate resources (including financial, technological and human resources) and risk management systems
  • having appropriate arrangements and systems to ensure compliance.

The applicable legislation is the National Consumer Credit Protection Act 2009 and the National Credit Code. The credit legislation also contains more specific obligations and requirements, including:

  • the responsible lending requirements (ascertaining and verify a consumer’s financial situation and assessing whether the credit contract is not unsuitable) 
  • requirements in the National Credit Code dealing with precontractual disclosure and conduct in relation to the terms of credit contracts and consumer leases
  • maintaining trust accounts (if you hold money on behalf of another person while providing a credit service).

The above list, however, is not an exhaustive list of your obligations. 

In summary, AFSL allows the holder to provide financial services, including credit services, while ACL allows the holder to engage in credit activities only.

An Authorised Representative (AR) of an AFSL is a person or entity that is authorised by an AFSL holder to provide financial services on their behalf. The AR must be appointed by the AFSL holder in writing and must meet certain requirements, such as having the necessary qualifications and experience to provide the financial services offered. The AR must also comply with the conditions of the AFSL and with all applicable laws and regulations. They essentially act as an agent of the licensee, providing financial services under the licensee’s AFSL and conducting responsibilities on behalf of that licensee.

If you’re receiving either credit or financial advice, you need to ensure that the company or person is authorised and properly licensed to provide the advice. 

We’ve represented clients who have encountered problems when they’ve been dealing with an unauthorised or unqualified professional and have lost a significant amount of money as a result.

Check the Registers

You can check if a company or organisation holds an Australian Financial Services Licence (AFSL) by searching the Financial Advisers Register on the Australian Securities and Investments Commission (ASIC) website.

To check if a company or organization holds an AFSL, follow these steps:

  1. Go to the ASIC website: https://www.asic.gov.au/
  2. Click on “View All Registers” on the top right menu
  3. Under “Financial Advisers”, click on “Financial Advisers Register”
  4. Search for the company or organisation using the name or Australian Company Number (ACN)
  5. The search results will provide information about the company or organisation, including whether it holds an AFSL and the scope of the licence.

It’s important to note that the Financial Advisers Register only includes information about companies and organisations that hold an AFSL for providing financial advice and related services, not for credit services.

If you want to check if someone holds an Australian Credit Licence (ACL), you can look it up on the National Credit Licence Register, which is also available on the ASIC website. You can search by the name of the company or individual, or the credit licence number. The register will show you the type of credit activities the licensee is authorised to conduct, the expiry date of the licence, and other related information.

Contact Us Now

If you’ve received poor professional advice from an adviser, or you’re looking to obtain an AFSL or ACL in order to provide advice to clients and consumers, please contact us at info@lawquarter.com.au or call us on (02) 8318 5962

Finding the Right Fit: A Guide to Choosing a Lawyer in Australia

Finding the Right Fit: A Guide to Choosing a Lawyer in Australia

Business Sale, Commercial Law

Choosing the right lawyer for your legal needs is an important decision, and one that should not be taken lightly. There are many factors to consider when choosing a lawyer, and it is essential to ensure that you are working with someone who is qualified, experienced, and able to meet your specific needs. In this blog post, we will discuss the key factors to consider when choosing a lawyer in Australia, and provide an overview of the legal profession in Australia to help you make an informed decision.

The first factor to consider when choosing a lawyer is their qualifications and experience. Lawyers in Australia are required to be admitted to practice by the legal professional body of the state or territory in which they practice. They must also comply with continuing professional development requirements and maintain their registration with the relevant professional body.

It is also important to consider a lawyer’s experience and area of expertise. While all lawyers are trained in the same basic principles of law, some may have more experience and specialized knowledge in certain areas of law. For example, if you are looking for a lawyer to assist you with a commercial dispute, you will want to choose a lawyer who has experience and expertise in commercial law and disputes resolution.

Another important factor to consider is the lawyer’s communication style and approach to client service. It is important to work with a lawyer who is responsive, attentive, and willing to take the time to explain complex legal concepts in plain language. Additionally, they should be able to provide a clear understanding of the process and realistic estimates of the time and costs involved in your matter.

Cost is another important factor to consider when choosing a lawyer. Legal fees can vary widely, and it is important to understand the costs involved and the basis on which the lawyer will charge you. Most lawyers in Australia bill on an hourly basis, and they should provide an estimate of the total costs involved in your matter.

Location is also a factor to consider, especially if you are dealing with a legal matter that involves court appearances or frequent meetings with the lawyer. It can be more convenient to choose a lawyer that is located close to your place of business or residence.

Finally, it’s important to choose a lawyer you feel comfortable working with. The lawyer should be someone you feel confident in, and who you trust to represent your interests. The lawyer should be approachable, accessible, and responsive to your needs, and you should feel comfortable discussing your matter with them.

When looking for a lawyer, it’s recommended to start by asking for referrals from friends, family or business colleagues who have had a positive experience with a lawyer. You can also check the lawyer’s credentials and reviews through the legal professional bodies or online review platforms.

In conclusion, choosing the right lawyer for your legal needs is an important decision that should not be taken lightly. There are many factors to consider, including qualifications and experience, area of expertise, communication style, cost, location and comfort. By taking the time to consider these factors and seeking out the right lawyer for your needs, you can be confident that you are in good hands and that your legal matter will be handled effectively and efficiently.

Contract Review 101: A Step-by-Step Guide for Reviewing Proposed Contracts in Australia

Contract Review 101: A Step-by-Step Guide for Reviewing Proposed Contracts in Australia

Business Sale, Commercial Law

Contracts are an essential part of doing business in Australia, and they play a critical role in protecting the rights and interests of both parties involved. However, reviewing proposed contracts can be a complex and time-consuming task, particularly for those who are unfamiliar with the legal and regulatory framework surrounding them. In this blog post, we will discuss the best process for reviewing proposed contracts in Australia and provide an overview of the key concepts and considerations to keep in mind when reviewing a contract.

Key terms

The first step in reviewing a proposed contract is to understand the key terms of the agreement. This includes understanding the rights and obligations of both parties, as well as the specific terms and conditions that are applicable to the agreement. It is important to pay special attention to any clauses that are particularly important to the business or organization, such as payment terms, delivery dates, and intellectual property rights.

Regulatory considerations

It is also important to consider any legal and regulatory requirements that may be relevant to the contract. This includes understanding the relevant laws and regulations that govern the contract, such as the Australian Consumer Law, the Privacy Act, and the Competition and Consumer Act. It is also important to ensure that the contract complies with any relevant industry standards or codes of conduct.

Uncertainty and concern

Another important step in the review process is to identify any areas of concern or uncertainty in the proposed contract. This includes identifying any terms or clauses that may be ambiguous or that may place the business or organization at an unfair disadvantage. It is important to flag these concerns with the other party and to work with them to clarify or revise the terms of the contract as necessary.

Impact

It is also important to consider the potential impact of the contract on the business or organization. This includes assessing the potential financial impact, as well as the impact on relationships with customers, suppliers, and business partners. In some cases, it may be more advantageous to negotiate more favorable terms in order to mitigate any potential negative impacts on the business.

It’s highly recommended to seek the help of a legal professional when reviewing proposed contracts, as they are trained in identifying potential legal issues and can advise on the best course of action. They can also help to negotiate and revise the terms of the contract to ensure that it is in the best interests of the business or organization.

In conclusion, reviewing proposed contracts is an essential part of doing business in Australia and it plays a critical role in protecting the rights and interests of both parties involved. However, it can be a complex and time-consuming task. By understanding the key terms of the agreement, considering any legal and regulatory requirements, identifying any areas of concern or uncertainty and seeking the help of a legal professional, businesses and organizations can ensure that contracts are fair and in line with their best interests. This will help them to navigate the process with confidence, and move forward with their business.

Navigating Commercial Disputes in Australia: A Guide for Businesses and Organizations

Navigating Commercial Disputes in Australia: A Guide for Businesses and Organizations

Private Law

Commercial disputes are an unfortunate reality of doing business, and they can be both time-consuming and costly. In Australia, commercial disputes can arise in a wide variety of contexts, and they can be challenging to navigate, particularly for those who are unfamiliar with the legal framework surrounding them. In this blog post, we will discuss the key concepts and considerations surrounding commercial disputes in Australia, and provide an overview of the legal framework that governs them.

A commercial dispute is any disagreement or conflict between two or more parties involved in a commercial transaction. These disputes can arise in a wide variety of contexts, including contracts, partnerships, joint ventures, and intellectual property. Common examples of commercial disputes include breach of contract, fraud, and misappropriation of trade secrets.

Commercial disputes can have a significant impact on businesses and individuals, both financially and emotionally. We wrote about the impact of litigation here. The cost of legal fees and the time involved in resolving a dispute can be substantial, and disputes can also cause significant disruption to the normal course of business. Additionally, commercial disputes can damage relationships with customers, suppliers, and business partners, making it more difficult to do business in the future.

In Australia, the legal framework surrounding commercial disputes consists of both state and federal legislation.

In the (NSW) court system, disputes are resolved through the courts, starting from the Local Court, moving to District Court and ultimately to the Supreme Court and the High Court, if the matter is escalated. The Federal Court system can also apply. Commercial disputes can also be resolved through alternative dispute resolution methods such as mediation, arbitration and conciliation, which are often considered to be faster, less formal and less expensive than court proceedings.

When it comes to commercial disputes, one of the key considerations is to understand your legal rights and options. This includes understanding the relevant laws and regulations that govern the dispute, as well as the legal remedies that may be available. Additionally, it is important to understand the strengths and weaknesses of your case, and to develop a strategy for resolving the dispute that is in your best interests. This is where it is critical to consult with a good lawyer.

Another important consideration is to understand the costs and benefits of different dispute resolution methods. While court proceedings may be necessary in some cases, alternative dispute resolution methods such as mediation or arbitration can often be faster and less costly. It is important to evaluate the specific circumstances of the dispute and to select the method that is most appropriate for your needs.

It is also important to consider the potential impact of the dispute on your business or organization. This includes assessing the potential financial impact, as well as the impact on relationships with customers, suppliers, and business partners. In some cases, it may be more advantageous to settle the dispute out of court, even if it means accepting less favorable terms, in order to preserve relationships and avoid further disruption to the business.

In conclusion, commercial disputes are an unfortunate reality of doing business, and they can be both time-consuming and costly. In Australia, commercial disputes can arise in a wide variety of contexts, and they can be challenging to navigate, particularly for those who are unfamiliar with the legal and regulatory framework surrounding them. It is important to understand your legal rights and options, the costs and benefits of different dispute resolution methods, and the potential impact of the dispute on your business or organization. By working with experienced legal professionals and carefully evaluating the specific circumstances of the dispute, businesses and organizations can navigate commercial disputes effectively and resolve them in a manner that is in their best interests.