Unfair preferences and the set-off defence

Under section 588FA of the Corporations Act 2001 (Cth) (Act) an unfair preference is defined as a transaction, such as payment of an outstanding debt, between a company and an unsecured creditor which results in that unsecured creditor receiving more than it would have received if it had to prove in the winding up of the debtor company.  It is unfair because the payment results in the net value of the assets of the debtor company being reduced, to the detriment of the body of unsecured creditors as a whole.  One of the rarer defences is the Set-Off to an unfair preference claim. [Read more…]

Technology startups – top 5 legal considerations

The allure of generating income from a subscription base, operating a marketplace or your own e-commerce venture is strong and for good reason.   The success stories of tech startups and the unicorns in this space are many, but so are the failures.  If this is the path you are considering taking, these are our top 5 legal considerations. [Read more…]

Need a reseller agreement?

A reseller agreement (Reseller Agreement) is a contract that entitles one party (Reseller) to sell, market, distribute, or lease a product or service of another (Supplier).  Resellers Agreements are also known as distribution, supply or distributor agreements. Often the Supplier is also the manufacturer of the goods but they may be the importer, a developer of the service or a licensee of software or training programs. [Read more…]

Legal issues in software support agreements

Software developers (Developers) need to ensure that they consider how they provide support (both technical and product support) when taking their application (Software) to market.  This applies regardless of the system architecture, however it is usually more important in the case of mission critical systems and those used for businesses.  In the world of software as a service and robust mature systems how support is to be provided can often be overlooked until an important customer asks to review the terms of service, the SLA or the support contract (Support Agreement) with an eye to negotiating the levels of service they can expect. [Read more…]

Unfair preferences – the Doctrine of Ultimate Effect

Under section 588FA of the Corporations Act 2001 (Cth), an unfair preference is defined as a transaction, such as payment of an outstanding debt, between a company and a unsecured creditor which results in that unsecured creditor receiving more than it would have received if it had to prove in the winding up of the debtor company.  It is unfair because the payment the debt results in the net value of the assets of the debtor company being reduced, to the detriment of the body of unsecured creditors as a whole. [Read more…]

Use of a competitor’s confidential information

Many businesses try to increase market share by employing a competitor’s member of staff who may bring with them relationships and information acquired over the years.  Employees owe fiduciary duties to their employers meaning, among other things, that an employee cannot make a personal gain by using confidential information acquired in the course of their employment.  If an employee makes a personal gain by using their employer’s confidential information, the employer may be entitled to an account of profits, meaning the employee must pay the employer the amount of profit made as a result of the breach. [Read more…]

Unfair preferences and unperfected security interests

Take the scenario where your company has supplied a customer with goods on credit.  The standard terms and conditions of supply grant your company security over the goods supplied until they are paid for.  In order for that security to be perfected, the interest granted needed to be registered on the Personal Property Security Register (PPSR).  If for example, the interest was not registered or if it was, it was invalid for technical reasons then your company may be at risk. [Read more…]

A director’s duty to act in the best interests of the company: MG Corrosion Consultants Pty Ltd v Gilmour

The case of MG Corrosion Consultants Pty Ltd v Gilmour [2014] FCA 990 involved allegations of a director authorising unnecessary and excessive payments that caused detriment to a company and its shareholders.  This case serves as a reminder to directors of the importance of adhering to their duties under the Corporations Act 2001 (Cth) (Corporations Act).

[Read more…]

What is a bare trust?

From time to time we encounter clients that have various types of assets held by a trustee (Trustee) that are purportedly held pursuant to a bare trust (Bare Trust).  There are several questions which usually arise in relation to the rights and obligations of the parties involved that inevitably end up with Dundas Lawyers considering the taxation issues, (in particular the capital gains tax implications, for the Trustee. [Read more…]

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