• August 8, 2019 in Commercial Law

    ENTERING INTO A CONDUCT & COMPENSATION AGREEMENT: LANDHOLDERS BEWARE

    If you are a landholder of land with underground resources such as coal, minerals, petroleum, or coal seam gas present on it you may be lucky (or unlucky enough) to be approached by a resource company (such as Origin Energy or QGC) (tenement holder) who wants to gain access to your land to extract these resources in return for compensation to enter into a conduct and compensation agreement.

    WHAT IS A CONDUCT AND COMPENSATION AGREEMENT?

    A conduct and compensation agreement is an agreement which sets out the activities that will be undertaken on your land, the compensation you will receive for the losses you suffer as a result of those activities (as required under the relevant legislation), and the terms and conditions that will govern the tenement holder’s access to your property and the manner in which they carry out their activities.

    Under the relevant legislation tenement holders are required to enter into a conduct and compensation agreement with the landholder before accessing their property. The access terms and conditions and compensation terms that are covered in the conduct and compensation agreement are governed by the legislation, any environmental authorities issued in relation to the activities and the land access code.

    As part of the land access negotiation process tenement holders will provide you with their standard form conduct and compensation agreement.

    WHAT DO LANDHOLDERS NEED TO BE AWARE OF?

    Although the tenement holder will tell you that this is their ‘standard document’ there are some important things to note:

    • Firstly, the document provided by the tenement holders will almost certainly be weighted in their favour. These conduct and compensation agreements can last anywhere between 30 days and 30 years and, as they attach to your land title they will bind future owners of the land so it is crucial that they are thoroughly reviewed before you sign them by a solicitor with experience in negotiating agreements of this nature. It is important that you are provided with advice making you fully aware of your obligations under the agreement during its term.
    • Secondly, the document as originally proposed is not property, business or lifestyle specific and should be reviewed and amended to reflect your specific needs and requirements. Many landholders are not aware that conditions can be drafted into the agreement addressing issues such as water, specific access conditions or specific land management practices that reflect your personal and business needs.

    WHAT TERMS AND CONDITIONS TO WATCH OUT FOR?

    It is important that you fully understand you rights and obligations under the conduct and compensation agreement as it will govern the conduct of the parties for the years to come. There are a number of conditions in a conduct and compensation agreement that you should be aware of and fully understand before executing your conduct and compensation agreement.

    1. Waiver of entry notice – The Mineral and Energy Resources (Common Provisions) Act 2014 (the Act) requires tenement holders to provide landholders with at least ten (10) business days’ notice prior to entering their property for a continuous period of time (i.e. to undertake a particular activity that is part of their programme which may take 3-5 consecutive business days). Tenement Holders often include a ‘waiver of entry notice’ within their draft conduct and compensation agreements meaning they are then no longer required to comply with the statutory notice requirement within the Act. It is possible to agree to include a similar provision but to nominate an alternative entry notice timeframe that is more convenient to both parties (say five (5) business days).
    2. Alternative arrangement for noise – Tenement holders must comply with their environmental authority (this an authority granted by the government for environmentally relevant activities, which resource activities are). When undertaking the activities under a conduct and compensation agreement. You may have rights to take action against the tenement holder if the noise impacts caused by their activities exceed what is authorised under their environmental authority.

    Tenement Holders include ‘alternative arrangements for noise’ within their conduct and compensation agreements whereby landholders are required to acknowledge that they are already being compensated for the noise impacts and they relinquish their rights to make any further claim in respect of these impacts. Although this is now considered a standard provision of a conduct and compensation agreement it is important that you fully understand what rights you have and what rights the tenement holder has with respect to noise impacts – your solicitor will explain this to you when providing their advice.

    1. Access generally – The draft conduct and compensation agreement presented by tenement holders may allow them to access your property on any day, at any time, using any access track they deem necessary. This can make it extremely difficult and stressful for you to continue to operate your business or enjoy your property as you could be unaware of who is on your property at any time. It is important therefore to set reasonable parameters to this right of access as set out below.

    Broadly drafted, unclear or heavily biased conditions can result in disputes and poor working relationships between landholders and tenement holders. It is therefore important that clauses are carefully and accurately drafted to reflect each parties’ concerns in order to ensure a smooth and painless co-existence on your land in the future.

    WHAT ELSE SHOULD YOU CONSIDER?

    There are a number of matters/clauses which landholders often do not consider, or they are simply not aware that they are able to negotiate into conduct and compensation agreements. Some key terms and conditions that can be negotiated by your solicitor on your behalf may include:

    1. Better access terms – your conduct and compensation agreement can include restrictions on when, where and how a tenement holder can access your property. For example you may permit them only to access your property on business days only, between the hours of 9:00am and 5:00pm via pre-agreed access tracks. Inclusion of a provision such as this will give you certainty as to who is on your property and when.
    2. Exclusion Zones – you may wish to include exclusion zones around various locations on your property. For example, landholders with families and young children may wish to prohibit access within a certain radius from their homestead.
    3. Business activities – clauses can be included in your conduct and compensation agreement to mitigate the impacts a tenement holder’s activities may have on your business operations and to ensure you are being compensated for any additional costs incurred by you due to their activities. For example, terms can be negotiated around the de-stocking of livestock during certain phases of the tenement holder’s activities to avoid injury to livestock while heavy vehicles and machinery are accessing the property. Alternatively, you may require temporary stock proof fencing to be installed during these phases (at the cost of the tenement holder).
    4. Weeds and pathogens – we find that one of our client’s biggest concerns is the risk of declared weeds and/or pathogens being introduced to properties by tenement holders traversing between neighbouring properties and/or not complying with wash-down procedures. Clauses need to be included in conduct and compensation agreements allowing landholders to inspect vehicles proposing to enter a property and giving landholders the right to refuse access if they reasonably believe a vehicle contains traces of declared weeds.

    These are just some examples of the types of clauses that can be included in your conduct and compensation agreement to provide further protections for your land, business and family.

    Successful negotiations of a conduct and compensation agreement require an in depth understanding of your property, your business and your requirements. These unique features can be negotiated on your behalf to ensure that your needs, wants and concerns are represented in the final agreement. The good news is that tenement holders are required under the Act to pay your reasonably and necessarily incurred legal costs so that you are not out of pocket for the costs of your solicitor reviewing, advising on and negotiating a conduct and compensation agreement on your behalf.

    If you require any assistance with negotiating your conduct and compensation agreement or with any other commercial legal issue, please do not hesitate to contact our dedicated commercial team.

    Helen Kay
    Partner
    Ph:   07 3009 6555
    Email: 
    Tessa Knight
    Lawyer
    Ph:   07 4617 8777
    Email: 
  • August 6, 2019 in Commercial Law

    Farm Business Debt: What You Need to Know

    It is an unfortunate truth, but when it comes to Australian farmers, extreme weather conditions are a harbinger of tough economic times.  As a firm proud to represent regional Queensland, it is always a sobering experience to have to advise a fifth-generation farmer on insolvency problems and the end of the family business.

    Like many other States, Queensland has recognised the great wealth tied up in the regions, and the peaks and troughs that the climate can present to industries heavily reliant on near perfect weather conditions – enter the Farm Business Debt Mediation Act 2017 (Qld).

    This Act sets up a program to force, wherever possible, disputes between the banks and farmers into alternative dispute resolution.  This opportunity to mediate is important and revolutionary, as it forces the banks to face up (literally, face to face across a mediation table) to the human cost of their decision making on enforcement of farm debt loans.

    In this article, we will look at some of the basic features of the scheme and how it all works in practice.

    What is Farm Debt?

    Farm debt (or, as it is called in the Act, farm business debt) is a loan that is taken out by a farmer for the purpose of running a farm, and where that loan is secured over the farm (typically by way of a mortgage).

    As to what is included in the definition of running a farm, the net is cast wide: any agricultural, apicultural, dairy farming, horticultural, land-based aquacultural, pastoral, poultry keeping, viticultural or any other business that includes cultivating the soil, gathering crops or rearing livestock (this includes timber cutting).

    In addition, the farm property that the debt can be secured against is reasonably wide-ranging: land on which the farm is run, any water allocation under the Water Act 2000 (Qld) that is used to run the farm or any vehicle, machine, tool or other equipment that is used to run the farm.

    Does the Bank have to Mediate?

    The Act applies unless the farmer is bankrupt, has had a creditors petition (the first step of making someone bankrupt) presented against them by someone other than the Bank, or is an “externally-administered body corporate” under the Corporations Act 2001 (Cth).  Also, if you have resolved the dispute at mediation previously, then you can’t go back to mediation if you default on the resolution (in other words, if you go to mediation, settle with the Bank and then don’t carry out your side of the deal, then you don’t get a second go).

    Otherwise, if the Act applies, then the Bank cannot enforce the mortgage without mediating, or seeking the permission of the Queensland Rural and Industry Development Authority (QRIDA).

    The first step a Bank has to take under the Act is to give the farmer an enforcement action notice.  This notice tells the farmer what the Bank is proposing to do, and gives the farmer an opportunity to ask for mediation – the time in which the farmer might ask for mediation must not be less than 20 business days after the farmer receives the enforcement action notice.

    Once the farmer asks for mediation (called a request for mediation notice), the Bank has the opportunity to agree to, or refuse, mediation.

    If the Bank agrees to mediation, the farmer has the right to request documents from the Bank related to the debt – these documents must be provided within 30 days of being requested.

    At the same time, the farmer must give to the bank: the most recent Tax Return lodged with / prepared for the Australian Taxation Office; a listing of the farmer’s assets and liabilities; and the farmer’s cash flow projections for the coming year.

    If either the Bank or the farmer refuses to, or fails to, provide the documents that are requested/required to be disclosed, that party has failed to undertake mediation in good faith.

    QRIDA maintains a list of approved mediators for the parties to choose from – that list can be accessed at http://www.qrida.qld.gov.au/fbdm/finding-a-mediator.

    Once the documents are exchanged and the mediator is appointed, then the mediation can proceed.

    If agreement is reached at mediation, then the mediator will assist the parties to prepare a heads of agreement, which details what the outcome is, and what party is responsible for bringing it about.  The heads of agreement is subject to a cooling off period of ten business days (or a longer/shorter period if the parties agree), where the farmer can pull out of the deal – if the farmer withdraws, then the bank is entitled to compensation for any steps that they had already undertaken under the agreement.

    After mediation ends, the mediator has to give the parties a summary of the mediation, which, as it suggests, summarises what happened at mediation.  This must be given within ten (10) business days of mediation finishing.

    It is important that the parties remember that whatever happens at, or is said at, mediation is confidential – meaning it cannot be used in Court.

    What happens if the Bank refuses?

    If the Bank refuses to mediate, then one (1) of two (2) things can happen:  either the Bank can apply to QRIDA for exemption from mediation before enforcing their security, or the farmer can apply to QRIDA to stop enforcement for a period of six (6) months.

    QRIDA’s decision is reviewable, and the application must be made to the Chief Executive of QRIDA within 20 business days of notice of the decision being given.

    Curiously, notwithstanding that the Act provides that the decision must comply with the Queensland Civil and Administrative Tribunal Act 2009 (Qld), the Act does not provide for review of decisions by farmers or Banks to the Tribunal.  The Supreme Court has recently held that decisions of QRIDA are susceptible to judicial review (see Scriven v Queensland Rural and Industry Development Authority [2019] QSC 176), however it must be kept firmly in mind the difference between judicial review in the Supreme Court, and review before the Tribunal – the Supreme Court does not look to the merits of the decision, merely the process by which the decision was reached.  If the decision is wrong not because the decision maker made a misstep, then the Court cannot set the decision aside, not matter how wrong on the facts it is.

    How much does it cost?

    Each party is responsible for their own costs of mediating, and half of the costs of the mediator.  Of the (at the time of writing) 26 registered mediators, the average hourly rate is $370 plus GST, with the average daily rate being $3,000 plus GST.  That would mean that each party would be responsible for $185 plus GST per hour, or $1,500 plus GST per day.

    As to what each party’s individual costs would be, that would depend on what assistance they required from their professional advisors as to the mediation.

    What can I do to protect myself?

    Experience tells us that there are two things that typically bring people unstuck in these situations:  putting their head in the sand, or not keeping their financial/taxation affairs in order.

    Bad news does not improve with time – that is a fact.  The sooner you recognise that you are perhaps heading towards trouble with the bank, it is important that you take early advice from a solicitor and an accountant.  Perhaps that way, the problem can be avoided before it arises.

    As we said above, there are certain obligations on farmers applying for protection under the Act, including the disclosure of current financial documents.  If you do not have these ready to go, it can easily prejudice your ability to protect yourself.

    If you would like to discuss how the Act might assist you, or issues you are having with your financier more generally, you should contact our Dispute Resolution Team on 07 3009 6555 or 07 4617 8777.

     

    Josh Mountford
    Associate
    Ph:       +61 7 3009 6555
    Email:    
  • August 1, 2019 in Commercial Law

    What is the effect of an undertaking in domestic violence proceedings?

    Domestic violence is one of the most topical legal issues in society.

    Magistrates in Queensland deal with tens of thousands of applications in any given year. The nature of one application differs to the next – some applications seek basic protection for an aggrieved person, whilst others seek a range of different conditions to protect not only the aggrieved, but named persons as well.

    What, however, happens, once an application is made? What options are available to a respondent to deal with the application?

    There are a number of different options available to an individual responding to proceedings – what follows is not an exhaustive list.

    Firstly, a respondent has the right to progress the matter towards a hearing and have a Magistrate determine whether or not it is necessary and desirable for an order to be made on a final basis. This option often incurs significant time and cost, and it may not be a viable option for a respondent even though they dispute the nature of the allegations leveled against them.

    A further option available to the respondent is to consent to an order on a without admissions basis. There may be some negotiation between the parties as to what conditions are contained on an order, but proceeding in this manner can often result in a matter being resolved in a more timely and cost effective way. Although there is no finding of fact, as such, the consequence of consenting to an order can impact on a respondent. For example, if a respondent is the holder of a weapon’s licence, they are unable to continue being the holder of a weapon’s licence as a result of the order made. Further, there would be an order of a court, and this could be used adversely against an individual in other proceedings, such as family law matters. Whilst resolving the matter by consenting to an order on a without admissions basis is a tool often used, it is not appropriate in every instance.

    So what happens to those who want to resolve the matter in another way, but do not necessary want to incur the time and expense associated with progressing the matter towards a hearing? Well, other than making a successful application to have the matter struck out, a respondent may be able to resolve the matter by entering into an undertaking.

    Resolving the matter by way of an undertaking, however, is not always simple. In order for an undertaking to be entered into, both the applicant and respondent need to agree to the matter being resolved on that basis. There are practical difficulties associated with this in circumstances where an applicant/aggrieved and respondent do not get along.

    An undertaking is, in simple terms, an agreement (in all almost all instances evidenced in writing) between the parties for the respondent to do, or not do, certain things. It is an informal agreement signed by the respondent. They can often be hand-written, which reflects the informal nature of the undertaking.

    A copy of the undertaking may be placed on the court file, however, it does not constitute an order of the court. Instead, proceedings are withdrawn, matters are discontinued, and there is no order from a Magistrate outlining conditions the respondent must adhere to.

    Given that there is no formal order of a court, what happens when an undertaking is breached?

    As stated above, an undertaking is not a formal order of the court. A respondent who breaches a condition of a protection order made by a court can be dealt with in the criminal courts for breaching such order, but the same does not apply to those who breach the terms of the undertaking.

    Should a respondent breach an undertaking, they do not get charged with breaching an undertaking. No such charge exists. There may be other consequences of their behavior (such as if they assault the aggrieved, they may be charged by the Queensland Police Service with an assault type charge), however, they will not be charged with contravention of an order.

    Instead, the only recourse available to an aggrieved person is to make a further application for a domestic violence protection order. Whilst an individual is not charged with breaching an undertaking, evidence of a breach is likely going to give strong grounds to support a finding that it is necessary and desirable for an order to be made upon a further application to the court.

    It is important that both applicants and respondents receive detailed legal advice regarding the impact an undertaking may have on domestic violence proceedings prior to agreeing to finalise matters on this basis. Undertakings are just one avenue available to resolve domestic violence applications, however, they are not appropriate to be used in every case. Each case needs to be assessed on its own merit, and there may be additional factors present as to why an undertaking is, or is not, a good way of resolving domestic violence proceedings.

    Creevey Russell Lawyers have a dedicated team representing both applicants and respondents in domestic violence proceedings. We are happy to take enquiries regarding our domestic violence services at any time.

    Trent Jones
    Senior Associate
    Ph:       +61 7 3009 6555
    Email:   
  • July 24, 2019 in Commercial Law

    Flood Victims Urged to Seek Government Help

    Primary producers and small business owners impacted by the monsoon trough disaster in North West Queensland earlier this year have been urged to take up grants and assistance packages now being provided by the Queensland and federal governments.

    Creevey Russell Lawyers Partner Helen Kay said the firm can offer help and advice about eligibility to those wishing to apply for the government support packages.

    “Small businesses who suffered damage from the heavy rainfall and major flooding between 25 January, 2019, and 14 February, 2019, are now being provided assistance,” Ms Kay said.

    “The Queensland government has recently implemented a grant allowing for small businesses to gain funding of up to $10,000 to allow them to get back on their feet. The funding may be used to engage business consultants, mentors, coaches or an advisory service to assist those impacted by the natural disaster. These industry experts can advise on how to  rebuild and expand.

    “The grant is offered as a one-time payment that can be used to make business plans, train staff, obtain mentoring, get financial counselling and explore options for sustainability.”

    Creevey Russell Lawyers regularly represents primary producers and small businesses dealing with various issues.

     

    Helen Kay
    PartnerPh:       +61 7 3009 6555
    Email:    
  • July 19, 2019 in Commercial Law

    Dannielle Glaister Joins Creevey Russell Lawyers

    Leading Queensland legal firm Creevey Russell Lawyers has boosted its personal law team with the appointment of lawyer Dannielle Glaister.

    Creevey Russell Principal Clare Creevey said Ms Glaister has moved to Queensland from South Australia where she had been working for a successful boutique law firm in the Adelaide CBD.

    “Dannielle was admitted as a solicitor in 2017 and she primarily practices in family law, including property settlement litigation, as well as complex child custody and parenting matters, divorce applications and child support matters,” Ms Creevey said.

    “Dannielle also has had experience assisting with a number of criminal, commercial, estate planning and conveyancing matters and applies her experience with an empathetic, practical and no nonsense approach. We are very much looking forward to Dannielle’s contribution to Creevey Russell Lawyers.”

    Born in Adelaide but raised in Perth, Ms Glaister completed her Bachelor of Laws  at Curtin University and her Graduate Diploma of Legal Practice at the College of Law South Australia. She is a member of the Queensland Law Society and the Family Law Practitioners’ Association of Queensland.

    “I am very excited about the opportunity to join Creevey Russell Lawyers in their Brisbane office and I am looking forward to working with the personal law team to achieve successful outcomes for our highly-valued clients,” Ms Glaister said.

  • July 18, 2019 in Commercial Law

    Government Gets Tougher on Special Hardship Licences

    Motorists in Queensland now face tougher conditions if they obtain a special hardship order to continue driving while suspended, says legal firm Creevey Russell Lawyers.

    A special hardship court order allows (in certain instances) a driver with a suspended provisional or open licence to continue driving under strict conditions for work or personal issues if being denied the ability to do so would cause hardship to them or their family.

    Creevey Russell Principal Dan Creevey said as of July 1, 2019, the law in respect to special hardship licences has been amended with potentially harsher consequences for affected motorists.

    “While the previous law allowed motorists subject to a special hardship licence to have a minor infringement, the new law means that any accumulation of demerit points while subject to the restricted licence will result in an automatic disqualification period, which is twice the length of the initial period of disqualification,” he said.

    Creevey Russell Senior Associate Trent Jones said special hardship applications can be made following the accumulation of too many demerit points and a driver accumulating further points during a good behaviour period, or following a high-range speeding offence

    “Applicants need to be able to demonstrate that a disqualification of their licence would cause them, or their family, hardship,” he said.

    “Those reasons may include medical reasons, such as an individual being a carer for a spouse or family member who is heavily dependent on them, or it may include financial reasons, such as impacting on their employment.

    “There are time limitations associated with making applications for a restricted licence and generally, the courts will consider imposing certain restrictions in the event a restricted licence is granted. The consequences of these restrictions can occasionally result in an individual being impacted in a greater way than what they would have otherwise been impacted had they accepted the initial disqualification period.”

  • June 13, 2019 in Commercial Law

    POST-HAYNE REFORMS GAP

    We have identified an apparent gap in Post-Hayne Report Reforms.

    As part of the Hayne Report Reforms, changes are to be made to the jurisdiction of the Australian Financial Complaints Authority (AFCA) from 1 July 2019 to extend the normal 6-year limitation period to commence litigation by permitting AFCA to deal with matters arising after 1 January 2008.

    This extension in the jurisdiction of AFCA is however limited to Credit Facilities not exceeding $5m.

    We have raised this matter with the Department of Treasury which is dealing with this area of Post-Hayne Reforms and they have advised that they are considering whether and how they will deal with this gap.

    Our view is that, as a matter of common sense, it would be inconsistent to not implement an extension of the normal 6-year limitation period similar to the extensions of time in relation to Credit Facilities under $5m under the AFCA.

    Aggrieved businesses and farmers with facilities over $5m are likely to have suffered greater losses. They may well now be in a worse financial position than parties with Credit Facilities under $5m who are able to seek compensation through AFCA.  It would appear to be inconsistent and inequitable to not provide a similar extension to these businesses and farmers.  Additionally, these parties would need to fund their own actions so that there would be no cost to Government.

    We think this matter needs to be raised with politicians by aggrieved farmers and on their behalf by bodies such as the National Farmers Federation (NFF) to ensure this unfair and unjust gap is closed.  We have notified the NFF of this issue of concern.

  • June 10, 2019 in Commercial Law

    50% Female Partners for Creevey Russell Lawyers

    Special Council Helen Kay has accepted a position as a Partner with Creevey Russell Lawyers, with the leading Queensland legal firm’s partnership ranks now 50 per cent female.

    A highly experienced senior commercial and property lawyer, Ms Kay joined the firm as a Special Counsel in January this year and has moved into partnership alongside Co-Principals Dan Creevey and Clare Creevey and accredited specialist personal injuries lawyer Tom Rynders.

    Dan Creevey said Ms Kay accepting the partnership with the firm was an exciting development for Creevey Russell Lawyers, which this year is celebrating its 10th anniversary.

    “Helen has been a tremendous asset for the firm since she came to Creevey Russell after working within top tier firms in the United Kingdom and Australia as well as running her own legal practice and heading up various other successful commercial practices,” he said.

    “Creevey Russell has benefited from Helen’s experience in corporate and commercial matters including business sales and acquisitions, leasing, franchising, corporate structuring and commercial property transactions. Helen is passionate about working closely with her clients to understand their business and help them to achieve their strategic goals.”

    Clare Creevey said the firm was proud and delighted that 50 per cent of its partners were women.

    “It’s very exciting to have Helen become a Partner with Creevey Russell Lawyers as she has already brought so much to the firm,” Ms Creevey said.

    “It’s also a proud milestone for the firm to have women as 50 per cent of our equity partners. We have been committed to building a gender equal firm, and addressing economic inequality for women is an important issue for the legal community.”

    Ms Kay said she was excited about the opportunity to be a Partner with Creevey Russell Lawyers.

    “Creevey Russell is a forward thinking law firm which offers its clients exceptional service across all areas of the law,” she said.

  • June 9, 2019 in Commercial Law

    Changes to warranty documentation in force from 9 June 2019

    If you supply services or goods combined with services and offer your customers warranties against defects, you will need to comply with new warranty requirements which came into effect on 9 June 2019.

    The Office of Fair Trading explains that a warranty against defects is “a representation to a customer that if goods or services provided (or part of them) are defective, you will provide a remedy. A representation only counts as a warranty against defects if it’s made at the time the goods or services are provided.”

    These warranties are voluntary but, if given, will apply in addition to any consumer guarantees which are mandated under Part 3-2 of Schedule 2 of the Competition and Consumer Act 2010 (Cth) (Australian Consumer Law or ACL).

    The changes

    From 9 June 2019, any document that ‘evidences’ a warranty against defects, such as a warranty card, warranty statement or any other document that sets out, or refers to, the terms of an express warranty against defects must comply with the prescribed form and content requirements.

    What you need to do

    You will need to include mandatory wording in all your warranty documentation, for example, your:

    • customer contracts;
    • terms and conditions/terms of trade;
    • marketing materials;
    • website;
    • receipts; and
    • product packaging.

    Suppliers of goods only

    The ACL already requires businesses who supply goods to consumers and offer a warranty against defects to include mandatory text in their documentation.

    There will therefore be no change to the current mandatory text that traders use for warranties against defects when supplying goods alone.

    Suppliers of services only

    If you offer a warranty against defects when supplying services, you will need to display the following mandatory text with the service:

    Our services come with guarantees that cannot be excluded under the Australian Consumer Law. For major failures with the service, you are entitled:

    · to cancel your service contract with us; and

    · to a refund for the unused portion, or to compensation for its reduced value.

    You are also entitled to be compensated for any other reasonably foreseeable loss or damage. 

    If the failure does not amount to a major failure, you are entitled to have problems with the service rectified in a reasonable time and, if this is not done, to cancel your contract and obtain a refund for the unused portion of the contract.

    * Note that the above mandatory wording must be available with the service itself. It is not sufficient to refer your consumers to information on a website or in-store.

    Suppliers of goods combined with services

    If you offer a warranty against defects when supplying goods combined with services, you will need to display the following mandatory text with the goods and services:

    Our goods and services come with guarantees that cannot be excluded under the Australian Consumer Law. For major failures with the service, you are entitled:

    · to cancel your service contract with us; and

    · to a refund for the unused portion, or to compensation for its reduced value.

    You are also entitled to choose a refund or replacement for major failures with goods. If a failure with the goods or a service does not amount to a major failure, you are entitled to have the failure rectified in a reasonable time. If this is not done you are entitled to a refund for the goods and to cancel the contract for the service and obtain a refund of any unused portion. You are also entitled to be compensated for any other reasonably foreseeable loss or damage from a failure in the goods or service.

    * Note that the above mandatory wording must be available with the goods and services. It is not sufficient to refer your consumers to information on a website or in-store.

    Other warranty requirements

    The ACL requires that you present your warranty documentation in a particular way and requires it to include specific information.  For example, your warranty documentation must also:

    • be written in plain language and legible;
    • be provided to your customers where the supply takes place, or at the time it takes place or be made available with the product;
    • include details of what your business will do if the goods or services are defective;
    • explain clearly what your customer must do when a defect arises;
    • set out your contact information;
    • state how long the warranty will apply for;
    • explain how your customer must make a claim under warranty;
    • state who is responsible for any expenses in making a warranty claim (e.g. postage); and
    • contain a statement that the warranty is additional to the consumer’s rights and remedies at law.

     

    Contact us

    The ACCC may impose penalties on businesses that do not comply with these requirements, therefore you should seek legal advice before offering a warranty against defects to ensure that you are complying with the ACL requirements.

    Our commercial team can provide advice regarding your obligations and assist with reviewing or drafting your warranty documentation.

    Please contact Helen Kay on or call (07) 3009 6555 for assistance.

  • May 22, 2019 in Commercial Law

    HOW TO SELL A FRANCHISE BUSINESS

    Many business owners worry that they will be unable to sell their franchise if they want to exit the business for whatever reason. Understanding what you would need to do to sell your franchise, even if you are not thinking about it just yet, is important for the owner of any franchise business.

    The sale of a franchise business is much the same as a normal business sale but is complicated by the addition of a few extra hurdles to jump over before money and keys can exchange hands between buyer and seller. You will need to comply with both the franchise agreement and the Franchising Code of Conduct throughout the sale process and ensure that all requirements are met.

    The sale of a franchise business also means that there is another party involved in the transaction (namely the franchisor and/or their solicitors) who will have certain requirements which need to be met during the process. This can pose additional challenges.

    Conditions in your Franchise Agreement

    The most important step in selling a franchise business is to understand the requirements of your franchise agreement, the steps to transfer your business and the franchisor’s rights.

    The franchise agreement you entered into when you became a franchisee will more than likely include a provision which restricts you from selling your franchise without first obtaining consent from the franchisor. Before providing consent your franchisor may want to obtain and review certain information from the prospective franchisee to determine if they are a suitable candidate for the franchise business. Your franchisor’s consent could also be subject to a number of other conditions including the prospective franchisee undertaking any relevant training, all amounts owing to the franchisor being paid up to date and the execution of any documents the franchisor deems necessary to document the assignment of the franchise agreement.

    Your franchise agreement could also include a ‘first right of refusal’ requiring the business to be offered to your franchisor before it is offered to the public and the process for this to occur. Not adhering to these requirements could result in a breach of the franchise agreement affecting both the sale and your franchise business.

    Requirements of the Franchising Code of Conduct

    It is also crucially important that you understand the requirements of the Franchising Code of Conduct when selling a franchise business, this will help put you in the driving seat with the franchisor and the buyer.

    The Franchising Code of Conduct sets out a number of requirements with respect to the transfer of a franchise agreement including that:

    1. a request for franchisor’s consent must be in writing;
    2. the request for franchisor’s consent must include all information the franchisor would reasonably require and expect to be given to make an informed decision;
    3. the franchisor must advise in writing whether consent is given and if it is not given the reasons why not; and
    4. the franchisor must not unreasonably withhold consent.

    Often, franchisees worry that their franchisor may simply not co-operate with their proposed sale after-all what is in it for them?

    However, the Franchising Code of Conduct seeks to prevent this and requires that if the franchisor does not advise in writing that consent has been given within 42 days (of the later of the date the request is made; and the if the franchisor seeks further information – the date the last of the information is provided to the franchisor) then consent is taken to have been given and that consent is irrevocable.

    These are just some of the conditions that the Franchising Code of Conduct sets out with respect to a transfer of a franchise business. It is imperative that the requirements under the Franchising Code of Conduct are understood and met in order to ensure a successful sale of your franchise business.

    Carefully Drafted Contract Conditions

    In order to protect your interests, the business sale contract must state that the settlement of the sale is subject to and conditional upon you obtaining franchisor’s consent to transfer the business. The business sale contract must also allow you sufficient time to obtain franchisor’s consent.

    If your franchisor does not consent to the transfer of the franchise this will leave you unable to complete settlement. In those circumstances, if your contract does not include a condition which makes settlement of the sale conditional upon you obtaining your franchisor’s consent, the buyer may seek damages from you for losses they have suffered, including but not limited to their legal costs.

    Other matters to consider

    1. Restraint of trade – your business sale contract will likely include a restraint of trade restricting you from conducting certain activities that are in competition with those of the business you are selling, within a certain distance from the business premises and for a certain period of time following completion of the matter. When selling a franchise business it is important to review the restraint of trade contained in your franchise agreement (if any) as this restraint could be for a longer period of time, within a broader area from the business premises and may even restrict additional activities.
    2. Transfer of Lease – if the business operates out of leased premises, you will also need to consider the assignment of your lease for the premises. This process will be dependent upon whether you or your franchisor is the tenant under the Lease. If your franchisor is the tenant there will likely need to be an assignment of the licence to occupy and the landlord will drive this process. If you are tenant you will need to assign the lease yourself and your landlord will provide the documents for the assignment.

    These are just a number of key issues that you will need to be aware of when selling your franchise business and, as you will see, knowledge of your legal documents and the statutory requirements under the Franchising Code of Conduct are key to a successful sale.

    If you require any assistance with the sale of your business or with any other commercial legal issue, please do not hesitate to contact our dedicated commercial team.

    Tessa Knight
    Lawyer
    Ph:         +61 7 4617 8777
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