What is the DIN Regime?

What is the DIN Regime?

Commercial Law

The Director Identification Number (DIN) regime in Australia is a system established under the Corporations Act 2001, which requires directors of companies incorporated under the Act to apply for and hold a DIN. 

This includes directors of a company, registered Australian body, registered foreign company or Aboriginal and Torres Strait Islander corporation.

Are you a director of one of the following?

Are you a director of: Status
Registered Company
Registered Australian body
Registered foreign company
Aboriginal and Torres Strait Islander corporation

The DIN is a unique eight-digit number assigned by the Australian Securities and Investments Commission (ASIC) that is used to identify directors of companies. 

The DIN is linked to the personal details of the director, such as their name and date of birth, and is used to maintain accurate and up-to-date records of the director’s activities and responsibilities within the company. 

The regime was introduced with the Corporations Amendment (Director Identification Numbers) Act 2018, which added a new Part 2D.6 to the Corporations Act 2001. The Director Identification Number Rules 2018 made it mandatory for all directors (existing and new) of companies incorporated under the Corporations Act 2001 to apply for a DIN, effective from 28th May 2018.

The regime aims to improve the accuracy and completeness of information held by ASIC about directors of companies and enhance regulatory compliance. 

As illegal phoenixing (which occurs when a new company, for little or no value, continues the business of an existing company that has been liquidated or otherwise abandoned to avoid paying outstanding debts) has become a significant problem in Australia, the regime is also intended to reduce identity fraud and make sure directors do not engage in unlawful conduct.

A person cannot act as a director of a company without holding a DIN, and it’s now a criminal offence if an individual acts as a director while disqualified or while not holding a DIN. 

Companies are required to check the validity of the DIN of their directors and ensure they hold a valid DIN before they take office. 

If you are a director of an Australian company and you missed the DIN deadline of 30 November 2022, you should apply for a DIN immediately. 

If you need any further advice on corporate governance and legislative requirements for companies and directors, please reach out to us at info@lawquarter.com.au

My Supplier Cannot Meet Their Obligations. What Are My Contractual Rights?

My Supplier Cannot Meet Their Obligations. What Are My Contractual Rights?

Business Sale, Commercial Law

As a business owner or manager, it is important to understand your contractual rights against a supplier when things do not go as planned. A supplier is a company or individual that provides goods or services to another company.

There are several ways in which a supplier may fail to meet their obligations under a contract, including:

  1. Failure to deliver goods or services: A supplier may fail to deliver the goods or services that have been ordered by the buyer, either in whole or in part. This can lead to delays and additional costs for the buyer.
  2. Poor quality goods or services: A supplier may deliver goods or services that are not of the required quality or that do not meet the specifications set out in the contract. This can result in dissatisfied customers and lost sales for the buyer.
  3. Late delivery: A supplier may deliver the goods or services after the agreed upon delivery date, causing delays and potentially resulting in lost profits for the buyer.
  4. Breach of contract: A supplier may breach the terms of the contract in various ways, such as by failing to provide the required goods or services or by failing to meet certain performance standards.
  5. Disputes over payment: A supplier may dispute the amount that the buyer has agreed to pay for the goods or services, or may claim that the buyer has not paid the full amount owed.
  6. Intellectual property disputes: A supplier may use the buyer’s intellectual property without permission, leading to a dispute over ownership or licensing fees.

In these cases, the buyer (the company receiving the goods or services) may have certain rights under the contract to seek remedies.

One common remedy is the right to cancel or terminate the contract and seek a refund or damages. This may be appropriate if the supplier has breached a fundamental term of the contract, such as by failing to deliver the goods.

Another remedy is the right to require the supplier to perform their obligations under the contract. This may be appropriate if the supplier has only partially performed their obligations, or if they have performed them poorly.

It is important to carefully review the terms of the contract to determine what rights and remedies are available in the event of a breach. These rights may include the right to terminate the contract, the right to require the supplier to perform their obligations, and the right to seek damages.

To minimize the risk of disputes with suppliers, it is important to carefully review the terms of the contract before signing it, and to ensure that the contract clearly sets out the rights and obligations of both parties. This can help to avoid misunderstandings and ensure that both parties are held accountable for their obligations under the contract.

In summary, understanding your contractual rights against a supplier is important to protect your business and ensure that you receive the goods or services that you have paid for. Carefully reviewing the terms of the contract, seeking legal assistance if necessary, and taking action to enforce your rights can help to minimize the risk of disputes and ensure that your business is protected.

How do Force Majeure clauses work in supply agreements?

The purpose of a force majeure clause is to protect a party from being held in breach of contract if they are unable to perform their obligations due to circumstances beyond their control such as natural disasters, war, pandemics, or other events that could not have been reasonably anticipated or avoided. 

The clause will typically specify the types of events that will trigger the clause and the duration of the excuse from performance. It may also allow either party to terminate the contract if the specified event continues for an extended period of time and prevents either party from performing their obligations under the contract.

If a force majeure event occurs, the supplier may be excused from performing their obligations under the agreement for a specified period of time. This may include their obligation to deliver goods or services to the buyer. The supplier must typically give notice to the buyer as soon as possible after the force majeure event occurs, specifying the nature of the event and the extent to which it has affected their ability to perform their obligations under the agreement.

The force majeure clause may also specify how long the excuse from performance will last. This may be a fixed period of time, or it may continue until the force majeure event has ended or its effects have been mitigated. In some cases, the clause may allow either party to terminate the agreement if the force majeure event continues for an extended period of time and prevents either party from performing their obligations under the agreement.

A key example from the past few years is the global pandemic which caused a range of postal, shipping and delivery issues by suppliers, which resulted from government orders and lockdowns outside of their reasonable control.

It is important to note that a force majeure clause will only excuse a party from performing their obligations if the specified event has caused a true inability to perform. The supplier must show that the force majeure event has caused a genuine inability to perform, and not just an inconvenience or a financial burden. In addition, a force majeure clause will not excuse a party from performing their obligations if they have already breached the contract before the specified event occurred.

If you have a supply agreement that includes a force majeure clause and you believe that it may apply to your situation, it is a good idea to seek legal advice to understand your options and the best course of action to take.

Insurance and Risk

Insurance and risk are important considerations in supply contracts, as they can help to protect the parties involved in the event of unexpected losses or liabilities.

Here are a few ways that insurance and risk can be addressed in a supply contract:

  1. Indemnity clause: An indemnity clause in a supply contract may require one party (the indemnifying party) to compensate the other party (the indemnified party) for any losses or liabilities that the indemnified party incurs as a result of the indemnifying party’s actions or inactions. For example, if the supplier’s goods cause damage to the buyer’s property, the supplier may be required to indemnify the buyer for the damages.
  2. Insurance: A supply contract may require one or both parties to maintain certain types of insurance coverage, such as liability insurance or property insurance. This can help to protect the parties against potential losses or liabilities that may arise in the course of the contract.
  3. Limitation of liability: A supply contract may include a clause that limits the liability of one or both parties for certain types of losses or damages. For example, the supplier may be limited in their liability for damages caused by their goods to the amount of the purchase price of the goods.
  4. Risk of loss: The supply contract may specify which party is responsible for bearing the risk of loss for the goods being supplied. For example, the risk of loss may pass to the buyer once the goods have been delivered to them.

Can I make a claim under the Australian Consumer Law? 

The Australian Consumer Law is set out in Schedule 2 of the Competition and Consumer Act 2010 (Cth) (ACL) and provides a set of consumer guarantees that apply whenever goods are supplied to “consumers” as defined under the ACL.

And yes, it is possible to make a claim under the ACL against a supplier. The ACL sets out the rights and obligations of consumers and businesses, and provides remedies for consumers in the event that their rights are breached. 

If you are a consumer (an individual or a small business with an annual turnover of less than $10 million) and you have purchased goods or services from a supplier that are defective, not of acceptable quality, or not fit for their intended purpose, you may be able to make a claim under the ACL. You can make a claim against a supplier if they have breached their obligations under the ACL, such as by:

  • Supplying goods that are not of acceptable quality
  • Supplying goods that are not fit for their intended purpose
  • Supplying goods that do not match their description or sample
  • Supplying goods that are unsafe
  • Engaging in deceptive or misleading conduct

Section 259 sets out the rights of a consumer to require a supplier to remedy a failure to meet a statutory guarantee in relation to the supply of goods. Under s 274 of the ACL, 

The supplier may also be able to bring an indemnity claim against the manufacturer for defective goods. A supplier has 3 years within which to make that indemnity claim against the manufacturer under section 274(4) of the ACL. 

There are a range of claims available under the ACL and the time limits for bringing such claims vary depending on the type of claim and the jurisdiction in which the claim is brought, so it is best to seek legal advice when disputes arise.

If you are able to successfully make a claim under the ACL, you may be entitled to remedies such as a refund, replacement, repair, or compensation for damages.

Key Takeaways

  1. Make sure you have a written contract: A written contract can help to protect your interests and provide a clear record of the terms that have been agreed upon. It is important to carefully review the terms of the contract before signing it, and to ensure that it clearly sets out the rights and obligations of both parties.
  2. Know your rights: It is important to understand what rights you have under the contract in the event that the supplier fails to meet their obligations. These rights may include the right to cancel the contract, the right to require the supplier to perform their obligations, and the right to seek damages.
  3. Understand the terms of the contract: The terms of the contract will determine what rights you have and how you can enforce them. It is important to carefully review the terms of the contract to ensure that you understand your rights and obligations.
  4. Consider seeking legal assistance: If you are unable to resolve a dispute with a supplier, it may be necessary to seek legal assistance. A lawyer can help you understand your options and negotiate a resolution with the supplier.
  5. Take action to enforce your rights: If a supplier breaches the contract, it is important to take action to enforce your rights. This may involve cancelling the contract, requiring the supplier to perform their obligations, or seeking damages.

If you have a dispute with a supplier and you believe that your rights have been breached, it is a good idea to seek legal advice to understand your options and the best course of action to take.Contact us at Law Quarter for help with your supplier agreements and advice regarding disputes with suppliers. You can email us at info@lawquarter.com.au or you call (02)

Why you need to stress test every proposed contract

Why you need to stress test every proposed contract

Commercial Law

Stress testing a proposed contract is a critical part of the contract drafting process, as it allows for the identification and mitigation of potential risks that may arise in the future. Stress testing can help to ensure that the contract is mutually beneficial and will provide a framework for dispute resolution should any issues arise. This article will provide an overview of what stress testing is, how it can be used to assess a proposed contract, and how businesses can go about completing a stress test.

What is Stress Testing?

Stress testing is a process of assessing the potential outcomes of a contract in a variety of scenarios. It is used to evaluate the potential risks and benefits of a proposed contract. Stress testing can help to identify potential issues that may arise in the future, such as a desire to terminate, a force majeure event, a failure to perform, or a change in the underlying costs of supply. By assessing the potential outcomes of these scenarios, businesses can take steps to mitigate any potential risks.

How to Stress Test a Proposed Contract

When stress-testing a proposed contract, it is important to consider all of the potential scenarios that may arise in the future. This includes looking at the potential outcomes of a desire to terminate, a force majeure event, a failure to perform, and a change in the underlying costs of supply.

Stress test a contract by considering future scenarios and how they are dealt with by the contract.

When assessing the potential outcomes of a desire to terminate, it is important to consider the terms of the contract, the triggers for a termination clause and the potential consequences of terminating the contract. This includes looking at the potential financial and legal implications, as well as any potential damage to the business’s reputation.

When assessing the potential outcomes of a force majeure event, it is important to consider the terms of the contract and the potential implications of the event. This includes looking at the definition of a Force Majeure event and the potential financial and legal implications.

When assessing the potential outcomes of a failure to perform, it is important to consider the terms of the contract and the potential consequences of the failure.

Finally, when assessing the potential outcomes of a change in the underlying costs of supply, it is important to consider if the terms and conditions adequately take this into account.

Process for Stress Testing

When stress testing a proposed contract, it is important to have a clear and structured process in place. This will help to ensure that all potential risks and benefits are identified and assessed.

The first step in the stress testing process is to review the proposed contract. This includes looking at the terms and conditions of the contract and assessing the potential outcomes of various scenarios.

The second step is to identify potential risks and benefits. This includes looking at the potential financial and legal implications of a range of scenarios.

The third step is to assess the potential risks and benefits. This includes looking at the potential outcomes of each event based on the existing terms and conditions.

The fourth step is to develop a plan to mitigate any potential risks. This may include negotiating additional clauses or amendments.

Conclusion

Stress testing a proposed contract is a critical part of the contract negotiation process. It allows for the identification and mitigation of potential risks that may arise in the future. By following a structured process and assessing the potential outcomes of a variety of scenarios, businesses can ensure that the contract is fair and reasonable for both parties.

At Law Quarter, we understand the importance of stress testing a proposed contract. We operate under an ISO 9001-certified quality management system and have a team of experienced lawyers. Contact us today to discuss your legal needs.

Should you negotiate terms in an RFP response?

Should you negotiate terms in an RFP response?

Commercial Law

Submitting a response to a Request for Proposal (RFP) is an important and complex process that requires careful consideration. It is essential to review and negotiate the terms and conditions proposed in the RFP before submitting a response. At Law Quarter, we understand the importance of carefully reviewing and negotiating RFP terms and conditions and are here to offer our expertise and advice on how to maximize the benefits of doing so.

Key Recommendations

  1. Understand and review the terms and conditions: It is important to carefully review and understand the terms and conditions proposed in the RFP before submitting your response. This will help to ensure that you are aware of all of the requirements and can make sure that your response meets them.
  2. Negotiate the terms and conditions: It can be tempting to simply accept the terms and conditions that are proposed. Many non-sophisticated businesses will simply accept terms that are proposed. This may be driven by a feeling that your likelihood of a successful bid will be reduced if you submit requested amendments. The challenge becomes the process of assessing the risks that your business would be exposed to in the terms and conditions if they are not amended. Once you have reviewed the terms and conditions, it is important to negotiate them if necessary. Negotiating can help you to get the best possible deal and ensure that you are not agreeing to anything that could put your company at risk.
  3. Ensure compliance: Negotiating the terms and conditions in the RFP will also help to ensure that your response is compliant with all of the requirements. This is important as non-compliance can prevent you from being awarded the contract.
  4. Avoid overcommitting: When reviewing and negotiating the terms and conditions in the RFP, it is important to avoid overcommitting. This will ensure that you are not agreeing to anything that you cannot deliver and will ensure that you are not putting your company at risk.

Conclusion

At Law Quarter, we understand the importance of carefully reviewing and negotiating the terms and conditions proposed in a Request for Proposal before submitting a response. Doing so can help to ensure that your response is compliant with all of the requirements, that you are not overcommitting, and that you are getting the best possible deal. If you have any questions or need help negotiating the terms and conditions in an RFP, please do not hesitate to contact us.

Do you map your contractual obligations?

Do you map your contractual obligations?

Commercial Law

As contracts become increasingly complex and interrelated, it is essential for businesses to have a structured and organised approach to keeping track of all of their legal obligations. Mapping legal obligations from contracts into a central register is a critical element of a well-run legal department. It helps to ensure that businesses comply with all of their obligations and helps to reduce the risk of costly litigation or other disputes.

At Law Quarter, we understand the importance of mapping legal obligations from contracts. Through our experience in contract management, we have seen first-hand the benefits that a central register can offer. In this article, we discuss the importance of mapping legal obligations from contracts and provide key recommendations for creating and maintaining a central register.

Key Recommendations

  1. Establish a Central Register: Establishing a central register is the first step in mapping legal obligations from contracts. The central register should contain all of the contracts that the business is a party to, along with key details such as the parties involved, the effective date, and any other relevant information. This information should be kept up-to-date to ensure that the business is aware of all of its contractual obligations.
  2. Monitor Obligations: The central register should be monitored regularly to ensure that all obligations are being met. This includes regularly reviewing the contracts to check for any new or amended obligations, as well as monitoring for changes in the law that may impact the contract.
  3. Track Performance: Tracking performance is also critical to ensuring that all obligations are being met. The central register should be used to track performance against the obligations set out in the contract, such as timely delivery of goods or services.
  4. Systemize the Process: To ensure that all obligations are being tracked effectively, it is important to systemize the process. This can include automating reminders to ensure that obligations are not missed, as well as creating reports to analyse performance and identify any potential contract breaches.

Conclusion

Mapping legal obligations from contracts into a central register is a critical part of a well-run legal department. It helps to ensure that businesses comply with all of their contractual obligations, reduces the risk of costly disputes, and helps to keep track of performance against contractual obligations. At Law Quarter, we understand the importance of mapping legal obligations from contracts and the key recommendations outlined in this article should help businesses to create and maintain a central register.

Why your business needs a contract playbook?

Why your business needs a contract playbook?

Commercial Law, Employment Law

A contract playbook sets out your company’s position on contract clauses.

A contract playbook is a single place where you set out your organization’s position on common contract clause categories such as indemnities, confidentiality, and warranties. It sets out what clauses can be accepted, rejected or amended and who has the authority to accept, reject or amend different types of clauses.

Your playbook should include:

  • A description of your contract processes and contact roles and responsibilities
  • Your organization’s risk profile
  • Your negotiation strategy – goods, services or both? What are important deal terms to focus on? Where are you comfortable compromising? Who handles negotiations?
  • Decision making authority levels – who can sign off on what decisions?
  • A list of standard clauses (accepted/rejected/amended) included in your template contracts

A contract playbook allows you to review contracts quickly and to remove bottlenecks in contract review.

A Contract Playbook allows you to review contracts quickly, and it helps remove bottlenecks in contract review. A contract playbook allows you to identify the areas of a contract that your sales team does not always know. You can then figure out how to make those parts of the contract easy for your sales team to understand by providing guidance on how they should respond when faced with those items in a contract.

Additionally, you can use your understanding of common items in contracts to structure your playbooks so that they automatically move contracts forward based on completed actions. For example, if all issues have been addressed and approved for a given section of the contract, your playbook could start the final approval phase automatically instead of requiring someone to manually do this step every time.

Your company needs to have a standardised approach to reviewing contracts.

A standardised approach is particularly important when you have several people reviewing contracts. It means you’re more likely to achieve consistent outcomes, which reduces the risk that the company will be in breach of a contract.

It also helps protect against commercial risks. For example, if your company enters into contracts under which it will pay a software vendor for its services on an ongoing basis and that vendor has a clause entitling them to early termination for convenience (i.e. without cause), then this may create a risk that the vendor could terminate the contract and effectively walk away from any long-term commitment to your company. This can be mitigated by agreeing upfront that the vendor won’t be able to terminate for convenience unless it’s prepared to pay compensation to your company for any costs incurred as a result of early termination.

When dealing with vendors who have standard template agreements (for example, software vendors or banks), it’s beneficial to prepare a set of comments or even suggested amended clauses so there’s less back and forth during negotiations over each individual contract.

Your contract playbook can be used to inform sales-people what clauses will be accepted, rejected or amended.

A contract playbook can be used to inform your salespeople what clauses will be accepted, rejected or amended.

Your sales teams can use the playbook to negotiate better deals and to get contracts signed faster.

A contract playbook is a good way to increase the speed at which contracts can be reviewed.

Contract playbooks are a great way to increase the speed at which your contracts can be reviewed. They include a list of clauses that your sales teams can accept, reject or amend as standard, which makes them much quicker to review than going through each clause from scratch.

A contract playbook allows you to standardise the approach taken when reviewing contracts and means that your sales people will know what clauses are acceptable without having to change their pitch for each new customer.

Negotiating: how to respond to an unreasonable offer

Negotiating: how to respond to an unreasonable offer

Commercial Law

Negotiation is a key life skill, and it is a skill that can be life changing. We’ve worked with clients across multiple industries—from restauranteurs to real estate agents—and we’ve encountered just about every negotiation tactic under the sun. In this post, we look at the unreasonable, the stubborn, and the cantankerous counterparty, and we seek to answer the question ‘how should you respond to an unreasonable offer or unreasonable negotiating position’.

Have you been in a negotiation with someone who just kept… asking for more or who could not move past an unreasonable position? Negotiations can be everything from productive and useful to a complete waste of time. If you’re working a deal with someone who won’t budge, it can feel like they’re deliberately making the negotiation process difficult.

How do you respond? Well, there are a number of points to understand about this situation, and we’ll cover them below.

1. Don’t respond to unreasonable offers in an unreasonable manner.  Most offers are not there to be taken, they are clues, part of the communication and negotiation process and no more. See each offer for what it is, information that you can use to understand the counterparty, their concerns and their level of understanding of the negation. Oftentimes an unreasonable offer is a clear sign that your counterparty does not adequately understand the respective positions of the parties. It may also be a sign that they are angry and frustrated. 

2. To respond to an unreasonable offer made due to a lack of information: give the counterparty what they need to make a reasonable assessment. That may require specialist help, such as reports from advisors, accountants and others. In response the counterparty may then seek to distance their position from that independent information, a further sign that they are approaching the negotiation in an irrational way. 

3. Take time out. Aggressive negotiators believe that they get can an upper hand by their tone, and by pure rage. They can’t. When faced with aggression, take a break, slow down the process and don’t respond in kind. It is important to realise that everyone will need to ‘save face’ if a negotiation is to succeed, so don’t embarrass the angry chihuahua too much. 

4. Re-frame the discussion. Negotiations should be principles-based and the principles at play should be those that matter to the parties. Oftentimes negotiations get side tracked. Refocus discussion to state succinctly what each party is trying to achieve and then look to find creative ways to achieve that. 

Finally: Realise that not every negotiation will be successful. Sometimes it is time to concede and other times it is time to press on.

Complying with Australian Privacy Law

Complying with Australian Privacy Law

Commercial Law

Many businesses believe that once they have a privacy policy in place, they are compliance with Australian privacy law including the Privacy Act and Australian Privacy Principles. This is not the case.

Who is bound by the Privacy Act 1988?

The first step in determining your obligations under privacy law is to determine if you are required to comply with the Privacy Act.

Businesses that have had annual turnover of more than $3 million in any year since 2002 must comply with the Privacy Act. Annual turnover is calculated by including income from all sources but excludes assets held, capital gains, and the proceeds of capital sales. The Privacy Act also covers a number of business regardless of turnover where, for example, that business is a health services provider or trades in personal information.

What are your obligations under the Privacy Act?

if your business is required to comply with the Privacy Act, it must comply with the Australian Privacy Principles (APPs).

The APPs include various obligations setting out how you must collect, store, de-identify, use, and disclose personal information.

The concept of personal information is broad and it can be difficult to determine whether information is personal information. Personal information is defined in the Privacy Act to be information or an opinion about an identified individual, or individual who is reasonably identifiable: whether the information or opinion is true or not; and whether the information or opinion is recorded in a material form or not.

Personal information is further categorised into sensitive information, health information, credit information, employee record information, and tax file number information. Additional obligations apply to each of these further subcategories. If you would like to understand this area better, contact us for a complete guide. 

Is a Privacy Policy All that is Needed?

A business that is required to comply with the Privacy Act must have a clearly expressed up-to-date privacy policy pursuant to APP 1.3. Our sister business Compliance Quarter has developed a tool that reviews privacy policies against the requirements set out in APP 1.4 giving you a report with recommendations in a matter of seconds. To access the privacy policy tool, click here.

Businesses obligations under the APPs do not end with the publication of a privacy policy. The business must ensure that it takes reasonable steps to implement practices, procedures and systems so as to comply with the APPs. In practice this means ensuring that you, for example,  must only collect personal information that you require and for the purposes disclosed, that you securely store personal information, that you destroy or de-identify personal information when it is no longer needed, and that you are careful about how you disclose personal information.

GST clauses

GST clauses

Commercial Law

GST clauses are an essential feature of a contract as they allow a vendor/supplier to claim GST from its purchaser/customer.  Despite their significance and the fact that these clauses are found in almost every contract, they are frequently ill-drafted, and insufficient consideration is given to the wording and whether it properly reflects and protects the GST position of the party.

When GST clause is missing

When a GST clause is missing from a contract then the vendor’s duty to pay GST and the purchaser’s entitlement to claim GST is reliant on GST legislation. Without such a clause the vendor does not have a contractual right to a GST reimbursement nor the purchaser the right to a GST credit.

The inclusion of the GST clause recognises that GST is a matter that the parties are conscious of and can make an informed assessment on.

Drafting considerations

When a GST clause is badly drafted, it may not be defended in court.  As a consequence, one of the parties may end up incurring an additional 10% charge of the purchase price which may lead to further unintended charges such as stamp duty.

The following points should be considered when drafting a GST clause:

  • The basis of the clause will depend on the parties entering the contract, so give careful consideration to the parties’ roles before drafting.
  • Ensure that the contract is clear on whether the contract price is inclusive or exclusive of GST.
  • Ensure that the specific requirements of the GST Act are considered. For example, ensuring that requirements that satisfy exemption have been included if the sale is being treated as GST free supply of a going concern.
  • Include a provision which allows the price to be increased by 10% if it turns out that GST is applicable; and the vendor to issue a tax invoice to the purchaser at such time. This will provide the vendor with the opportunity to recover GST from the purchaser if it becomes payable (in addition to the contract price).

However, it is a good idea for practitioners to draft on the basis that the transaction is subject to GST until it is otherwise satisfied.

IP Assignment clauses

IP Assignment clauses

Commercial Law

IP Assignment clauses are featured in contracts when an owner’s intellectual property rights are to be assigned or transferred to another entity or individual, usually in return for some type of consideration.

When an IP Assignment clause is missing

IP Assignment clauses are a valuable contractual provision employed to enable the assignment of IP.

Unlike the licensing of intellectual property, which may be terminated, once assignment occurs it effectively brings to an end the original owner’s involvement with the assigned intellectual property.

Drafting considerations

When drafting an IP Assignment clause, the following points should be considered:

  • Confirm that the assigning party is the owner of the IP or has been assigned the rights to it. If rights were assigned, confirm that there are no limitations on their ability to assign the acquired rights.
  • Confirm whether the assignor will warrant its rights and necessary third party consents.
  • Decide what consideration (payment) is being provided for the intellectual property and whether payment will be made in lump sum or periodic payments.
  • If consideration is by way of periodic payments, consider and ensure that the clause is clear in relation to when the title will transfer.
  • Outline the logistics of when, where and how the intellectual property will be delivered.
  • Confirm whether the assignment will be a full or partial assignment. If only partial rights are being assigned ensure that the clause is clear in relation to which part/s.
  • Verify whether there will be any limitations on the assignment.
  • Confirm whether the assignor will provide indemnification in the event the rights are disputed or for any other terms or conditions.

Finally, it should be noted that most assignments need to be recorded with the relevant intellectual property office and the relevant register updated to indicate the new owner’s details.