Top 7 common mistakes in commercial contracts

When negotiating the terms of commercial contracts there are many pitfalls even for those of us with significant experience in these matters.  For this reason, we’ve put together what we consider to be the ‘Top 7 common mistakes” we see in commercial contracts. [Read more…]

What is a Services Agreement?

A services agreement, also known as a contractors agreement, or a contract for services (Services Agreement) is an agreement under which one party (Supplier) agrees to provide services to another party (Client) in exchange for remuneration.  It is different from a contract of service which is the technical name for an employment contract.   A Services Agreement is often issued in response to a request for proposal.  The Supplier agrees to provide services to the Client by providing a proposal, which the Client rejects or accepts by providing purchase orders.  A suite of documents like this should be read together to fully comprehend the legal relationship between the parties. [Read more…]

Is your liquidated damages clause really a penalty?

It is common for drafters of liquidated damages clauses in commercial contracts to run a fine line between a genuine pre-estimate of damages and a penalty.  The case of Paciocco v Australia and New Zealand Banking Group Limited [2014] FCA 35 (Paciocco) provides some guidance on when a liquidated damages clause can be enforced. [Read more…]

Avoiding liability for resale price maintenance

It was held in Australian Competition and Consumer Commission v Mitsubishi Electric Australia Pty Ltd [2013] FCA 1413 (ACCC v Mitsubishi) that resale price maintenance (RPM) refers broadly to conduct of suppliers in attempting to induce distributors or resellers of their goods not to resell them at a price less than that which is prescribed by the supplier.  Section 48 of the Competition and Consumer Act 2010 (Cth) (Act) states that: [Read more…]

What is a retention of title (ROT) clause?

In commercial transactions involving the sale of goods, including intellectual property (IP), a seller should consider protecting themselves against the risk that a buyer may default on payment.  In Queensland, one such protection method is provided by section 22 of the Sale of Goods Act 1896 (Qld) (SGA), which states that a seller may reserve the right to transfer title to the property.  At common law, such a clause is known as a Romalpa clause after the case of Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd [1976] 2 All ER 552 (Romalpa case). [Read more…]

Term Sheets and Share Subscription Agreements

A share subscription agreement (Share Subscription Agreement) is a promise by a company with existing shareholders (Company), to issue and allot a number of shares at a certain price to a subscriber (Subscriber), in return for the Subscriber promising to advance funds to the Company in an agreed number of “tranches”.

A term sheet (Term Sheet) is a document that sets out the commercial terms and conditions under which a Share Subscription Agreement will be entered into.  A Term Sheet is generally not intended to create legal relations between the parties, but rather to form the basis of further discussions, which may be exclusive for a period of time and on a strictly confidential basis. [Read more…]

What is an Incorporated Joint Venture?

An incorporated joint venture, also commonly referred to as a corporate joint venture, an equity joint venture or a joint venture company (Incorporated Joint Venture) is a type of joint venture where the participants (Joint Venturers) arrange for the incorporation of a separate legal entity to pursue an agreed business objective.  The Incorporated Joint Venture may acquire assets of the Joint Venturers in exchange for the issuance of securities. [Read more…]

Federal Court rules on unfair contract terms

The recent decision of the Federal Court of Australia in Australian Competition and Consumer Commission v JJ Richards & Sons Pty Ltd [2017] FCA 1224 serves as a reminder to businesses that use standard form contracts to carefully review their terms.

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Managing pre-contractual representations in franchising

The activities of franchisors and franchisees are strongly regulated by Franchising Code of Conduct.  However, the recent decision in Guirguis Pty Ltd & Ors v Michel’s Patisserie System Pty Ltd & Ors [2016] QDC 117 (Guirguis case) serves as a reminder of why franchisors should also take care in managing their pre-contractual representations to potential franchisees. [Read more…]

ASIC v Macdonald – have the lessons been forgotten?

The case of Australian Securities and Investments Commission v Macdonald (No 11) [2009] NSWSC 287 (ASIC v Macdonald) decided in the New South Wales Supreme Court, highlights the importance of strict adherence to the requirements of the Corporations Act 2001 (Cth) (Act) when preparing minutes of Directors’ meetings (Board Meetings) for them to be relied upon as evidence in a proceeding. [Read more…]

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