Ipso facto clauses lose effectiveness post 1 July 2018

Standard form termination clauses such as “ipso facto clauses” (Ipso Facto Clauses) will need to be drafted with greater care in commercial contracts entered into after 1 July 2018.  The Treasury Laws Amendment (2017 Enterprise Incentives No 2) Act 2017 (Amending Act) was passed amending the effectiveness of Ipso Facto Clauses that are “self-executing provisions” (Self-executing Provisions).

This legislation also enacted the “safe harbour provisions” (Safe Harbour Provisions), which generally attempts to provide directors with some protection against liability for insolvent trading in certain situations if they are attempting to restructure the business.

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Do beneficiaries have a right to the trust deed?

In Queensland, the statutory rights and obligations of Trustees are contained in the Trusts Act 1973 (Qld)(Trust Act).  The role of the Trustee is fiduciary in nature and as such, there is a duty to act in accordance with both the terms of the deed of trust (Trust Deed) and the common law and statutory duties.  However, the Trust Act does not contain an express provision for a Trustee of a trust to provide a Trust Deed to beneficiaries. As a result, common law provides beneficiaries the right to make such requests to the Trustee.  This article will discuss the common law right of beneficiaries to access a Trust Deed upon request to the Trustee. [Read more…]

Counterclaiming in legal proceedings in Queensland

It is not uncommon for parties to a dispute to each believe that an action lies against the other arising from the same facts.  Where this occurs, and one party (Plaintiff) has commenced proceedings against the other party (Defendant) in Queensland, the Uniform Civil Procedure Rules 1999 (Qld) (UCPR) allows the Defendant to commence their own proceeding against the Plaintiff within the original proceeding, rather than requiring the Defendant to commence a separate legal action.  This is known as a counterclaim.   In this article we consider the nature of a counterclaim and the rules and circumstances that govern its use in proceedings in Queensland Courts. [Read more…]

What is a term sheet?

A term sheet (Term Sheet) is a document that sets out the basic terms and conditions on which parties intend to enter into a commercial agreement.  Term Sheets are 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.  Once parties reach consensus on the commercial terms of a Term Sheet, a legally binding contract is then drawn up.

 

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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…]

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