If you are starting a franchise, you should think carefully about how to supply the products your franchisees will sell. You will need to decide:

what products your franchisees will sell; and
where your franchisees will get these products.

Your decision will depend on the nature of your business and your own preferences. One approach is to restrict your franchisees to a set list of certain suppliers. This can ensure the consistency and quality of products across your franchise network. However, restricting which suppliers you permit franchisees to use may pose certain risks to your business. This article will explore some key considerations to think about before deciding how you will supply your franchisees with products.
What Are My Options?
There are three common approaches to the supply of products in a franchise. Each approach has different benefits and risks, and how you draft your Franchise Agreement is up to you as the franchisor. Generally, you can choose to:

supply or manufacture the product yourself. You can then sell the product directly to your franchisees. This is the most involved option but gives you the highest level of control;
provide your franchisees with a limited list of approved suppliers from which they may buy. This method requires less direct involvement and is popular amongst franchisors; or
suggest a list of preferred suppliers without strictly requiring franchisees to purchase from them. This method might be appropriate for generic products, but it provides the least control over quality.

What Type of Products Should I Supply To My Franchisees?
As the franchisor, you choose what products to supply and which suppliers to approve. The decisions you make will depend on what type of business your franchise is and what products it requires to operate.

For example, if you own a gym franchise, you may want certain equipment to be used in all franchises to ensure consistency and safety. You may also want to feature branded products in marketing campaigns from time to time.

What Are The Risks of Supplying Products Myself or Limiting Suppliers to My Franchisees?
Fulfilling Your Good Faith Obligation
If you are approving suppliers or supplying products yourself, you have an obligation to act in good faith. This means that you must be upfront and honest when dealing with new franchisees.

For example, you should be clear about any obligations and costs your franchisee will face if they purchase the products directly from you or your approved supplier.

If you mislead or deceive your franchisees about the supply of products, you could face legal action from franchisees or the industry watchdog, the Australian Competition and Consumer Commission (ACCC).
Your Responsibility for Production and Quality
If you manufacture your own products, you have an obligation under Australian consumer law to ensure that the products you supply are not defective or faulty. Failing to do so may also breach your franchise agreement with franchisees.
As the franchisor, it is in your interest to provide your franchisees with good quality products. You should ensure that either you or your approved suppliers give franchisees the products they need to run a successful business.
If you are unable to provide a sufficient quality and quantity of products to your franchisees as your business grows, you may need to find another approach.
Impacting Competition Through Third Line Forcing
Requiring that your franchisees purchase some or all products from a list of approved suppliers is known as third line forcing. As mentioned above, this can be an effective means of growing a franchise and maintaining a high quality of products.
However, the ACCC monitors third line forcing closely in case it reduces competition between suppliers in your industry.

Typically, setting minimum prices for products is prohibited. You may need to seek ACCC approval if you make an arrangement with a supplier that sets minimum prices.

Stricter Disclosure Requirements
If you plan to receive a benefit or rebate from any suppliers in exchange for requiring that your franchisees purchase from them, you must disclose this.
The law currently requires you as the franchisor to disclose:

any suppliers that you have a rebate relationship with;
whether the rebates are shared with franchisees or not; and
whether franchisees must purchase products from the supplier.

It is important to note that the recent Parliamentary Inquiry into Franchising Code recommended the disclosure of additional information, including:

the percentage rates of any rebates;
any commission you earn; and
any other payments you receive.

Key Takeaways
Before deciding how to supply products to your franchisees, you should consider:

how responsible you want to be for the provision of quality products;
who the best supplier of products is, and if this will change as your business grows;
whether your arrangement will affect competition between suppliers; and
what information you will need to disclose honestly and accurately.

You should think about these considerations and the risks they may pose carefully. However, maintaining a high level of control over the source of your products may be worth the risks. Taking this approach can:

improve the quality and consistency of products across your franchise;
ensure an efficient and cost-effective supply chain; and
provide a clear structure for your business.

If you have any questions about supplying products to your franchisees, contact LegalVision’s Franchise lawyers on 1300 544 755 or fill out the form on this page.

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If you have spent some time operating a franchise, you may feel confident enough to leave the franchise and start your own business. You may wish to do this in order to:

have greater control over business operations;
take your career in a new direction; or
receive a greater share of the profits.

You will face certain restrictions, however, if you intend to open a business that is similar to the franchise you currently run. You should consider these restrictions when planning your next move.
How Do I Exit My Current Franchise Agreement?
There are two ways to exit your franchise agreement. You can either:

negotiate an early termination with the franchisor; or
sell your franchise.

If the franchisor consents to early termination, you may be able to exit your franchise agreement. Some franchise agreements include a termination clause, which allows you to pay the franchisor an exit fee and terminate before the end of your term.
Alternatively, you may be able to terminate early if the franchisor has breached your franchise agreement. A breach could be any promise that a franchisor made under the agreement but did not comply with.
For example, the franchisor may have failed to:

provide a certain level of marketing or training support (e.g. the franchisor promised to provide training on an important piece of software but failed to do so);
disclose important information (e.g. the franchisor did not provide you with a current disclosure document); or
keep adequate records (e.g. the franchisor did not keep records of supporting material for your disclosure document for six years).

If you have a genuine claim against the franchisor, you may be able to use this as leverage to negotiate an early exit. Once you have negotiated the terms of your exit, you should record these terms in a formal agreement. This agreement is typically set out in a deed of settlement and release.
If you are unable to negotiate a favourable exit, you may be able to sell your franchise. Most franchise agreements permit the sale or transfer of the franchise with the franchisor’s consent. If this is the case with your agreement, the franchisor cannot deny a reasonable request to sell or transfer.
What Is a Restraint of Trade Clause?
Most franchise agreements will include a restraint of trade clause, which is sometimes also called a restrictive covenant or non-compete clause. A restraint of trade clause prevents you from leaving the franchise and joining or starting another business that competes directly with the franchisor. However, a restraint of trade clause will only be enforceable if the terms it sets out are reasonable. If your agreement seems very restrictive, it may not be enforceable.

For example, if you run a cafe franchise, a restraint of trade clause that prohibits you from opening a cafe for twelve months may be unenforceable because the length of time is not reasonable. A restraint of trade clause that prohibits you from competing with the franchisor for three months, however, may be enforceable.

If you breach a restraint of trade clause, the franchisor may threaten legal action. They could then take you to court to prove that the clause was reasonable if you continue to trade. If the franchisor is successful, you may have to cease trading and pay their legal costs as well as your own. This can quickly become very expensive.
If your franchise agreement contains a restraint clause, you should consider negotiating the terms of the clause. You may be able to negotiate a more favourable arrangement with your franchisor. Include any agreement you make in your deed of settlement and release.
Can I Offer My Current Employees Jobs in My Own Business?
Your franchise agreement may also include a non-solicitation clause. This generally means that you will need the franchisor’s consent to employ any current or former employees. In some cases, this clause will also extend to customers and clients of your franchise.

For example, if you run a gym franchise, your franchise agreement may specify that you are not permitted to train any members of the gym for a certain period after you leave the franchise. If you have spent years growing a loyal client base, this may present a significant challenge to your new business.

If you would like to start a business with similar clients to your franchise, you should try to negotiate the terms of your non-solicitation clause in your deed of settlement and release.
Can I Run My Own Business From My Current Location?
Whether you can open your new business in your current premises will depend on your lease agreement. When you entered into your franchise agreement, you will have either:

entered into a lease agreement personally; or
been granted a licence to occupy the premises from the franchisor, who holds the lease.

If you hold the lease yourself, you may be able to operate your new business from the same location. However, this will depend on whether you can negotiate the restraint of trade clause and continue trading in the same area.
If you have a licence arrangement with the franchisor, the franchisor is unlikely to allow you to remain in the same premises. If you are able to negotiate staying in the same location as part of your exit terms, make sure that your deed of settlement and release clearly states this.

Your location may be very important to your business. For example, your business may be well-known and liked by locals. Alternatively, you may benefit from a particular source of foot traffic, such as a nearby school or train station. You should consider the impact that moving to a new location may have.

Key Takeaways
Exiting a franchise and starting your own business is possible, but you should consider your options carefully. Your franchise agreement’s restraint of trade clause and non-solicitation clause may limit:

what type of business you can start;
who you can employ; and
which clients or customers you can take with you.

However, you may be able to negotiate an exit so that you will be able to start your own business on favourable terms. If you are a franchisee looking to exit your agreement and start your own business, contact LegalVision’s franchise lawyers on 1300 544 755 or fill out the form on this page.

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Online terms and conditions (T&Cs), or clickwrap agreements, are rarely read. When a T&Cs screen appears, most people will immediately click accept and proceed straight to their purchase or download. Because people ignore T&Cs, you may wonder whether your business’ online T&Cs are enforceable.
Fortunately, if set up and used correctly, you will be able to enforce your T&Cs. This article outlines some considerations you should have when drafting online T&Cs to ensure that they are enforceable.
Keep Your Online Terms and Conditions Short and Simple
T&Cs should be short and easy to read. Reading on a screen, especially a mobile device, is difficult. Your readers may be in a busy environment, or even walking, when your T&Cs appear.
Readers should be able to read your T&Cs relatively quickly and understand what their agreement means.
To improve readability, ensure that your T&Cs use:

plain English instead of complicated legal terms;
headings to direct readers; and
bullet points to space out text.

Make Readers Scroll Through Your Online Terms and Conditions
By forcing your customers to scroll through your T&Cs, you can ensure that your customers have at the very least seen them. This means that they should know that they have agreed to legal terms.
Making your customers scroll through your T&Cs also demonstrates that your business has taken steps to encourage your customers to read them. If a dispute about your T&Cs arises, this places your business in a far stronger position than a business that hides their T&Cs in tiny print or their website footer.

Have a pop-up scroll box so that customers are forced to read and agree to your T&Cs.

Highlight Any Important or Unusual Points
Any demanding or unusual clauses in your T&Cs must be made prominent.

For example, if you are a medical service provider, you should clearly state that customers must contact emergency services if there is a medical emergency. Because this is an important message and may not be obvious to some customers, you should include it in your T&Cs.

Some other important clauses in T&Cs are risk warnings and liability waivers.

For example, if you provide horse riding lessons and you take bookings online, your T&Cs should include a risk warning and a liability waiver.

Because these clauses will have a significant impact on the customer should they suffer an injury, you should make them very obvious to the customer. Making these clauses prominent will increase your chances of successfully relying on them if a horse riding accident occurs.

To give a statement prominence, you should:

include it at the front or top of the document;
emphasise it with design elements like borders, colours, bolding, capital letters and italics; and
include a short notice about the key terms in your T&Cs on your sales or booking page.

Remind Customers That Your Online Terms and Conditions Are Binding
Customers may not recognise that your T&Cs are a binding contract. Your customers enter this contract in exchange for your products or services.
Being clear about this in your T&Cs reduces the risk of a misunderstanding.
Notifying your customers that they are signing a legally binding agreement makes it easier for you to claim that the customer understood what they were doing when they agreed to your T&Cs. This improves your chances of relying on the terms in your T&Cs.

State that your T&Cs are legally binding:

at the very beginning of your T&Cs; and
as part of the click/tick to accept statement on your website.

Including this statement in the acceptance process will increase the chances of the customer noticing it.
Make Your Customers Give Active Acceptance
Some businesses only alert customers to their T&Cs by displaying a statement such as, ‘by signing up, you agree to our terms and conditions’. However, T&Cs are much more likely to be enforceable if the customer ‘signs’ the contract through a positive action. This positive action might be:

ticking an unchecked box; or
clicking an ‘accept’ button.

Where the customer indicates acceptance of your T&Cs, you should also have a statement such as, ‘I agree that by accepting these terms and conditions I am entering into a legally binding agreement for my use of this website’.
Affirmative acceptance creates a record of the customer’s acceptance. You can rely on this if a dispute arises.
It is also recommended to have the customer input a small amount of personal information before accepting the T&Cs. This step can:

show that the customer intends to sign up with you or purchase from you;
identify the customer; and
encourage the customer to properly consider the commitment they are making.

Have the customer fill in a web form with the details you require on your sign up or download page. Include an acceptance statement, a hyperlink to your T&Cs and a recordable click/tick to accept function on the page.

Give Your Customers Time
You must also ensure that you give the customer enough time to read and consider your T&Cs before accepting them.

For example, online ticket sales website Ticketmaster was found to be in the wrong because they did not allow customers time to read their T&Cs. Ticketmaster imposed a time limit on the check-out process by displaying a visible flashing counter. This pressured the customer to agree to the T&Cs before the clock ran out and was found to be legally unacceptable.

Avoid Unfair Terms
Under Australian law, you must not include any unfair terms in a standard form contract. A standard form contract is a contract that is:

provided in the same form to everyone;
non-negotiable; and
made for the supply of goods or services.

For example, your mobile phone plan or an airline’s conditions of carriage are standard form contracts.

The unfair contract term laws only apply if:

your T&Cs are a standard form contract;
either you or your customer is a business of fewer than 20 people; and
the upfront price payable is less than $300,000, or less than $1 million if the agreement will run for more than 12 months.

An unfair term will often affect one party positively or negatively and not the other.

For example, this could be a term that:

gives you the power to change the contract without your customer’s consent; or
outlines a penalty for breaching the contract that only applies to one party.

Check your current T&Cs for unfair terms. If you find any,  you will need to fix those terms.
Key Takeaways
It is important to ensure that your customers have read and understood your T&Cs and keep a record of their active acceptance. To improve the chances of your online terms and conditions being considered legally enforceable, you should:

keep your T&Cs short and simple;
make customers scroll through your T&Cs;
highlight any unusual terms;
clearly state that your T&Cs are a binding contract;
require active acceptance;
give your customers time to read your T&Cs; and
avoid unfair contract terms.

If you have any questions or need assistance with drafting your business’ T&Cs, please contact LegalVision’s contract lawyers on 1300 544 755 or fill out the form on this page.

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If you are buying a franchise, you should pay careful attention to the details in your disclosure document. A disclosure document discloses important information about your potential new business. It should answer many of the questions you have about the franchisor and the franchise. For example, it should outline:

what business experience the franchisor has;
whether the franchise has been involved in any disputes or litigation;
who the existing franchisees are;
how your franchise fees will be spent; and
how much training and support the franchisor will provide.

The franchisor is legally required to provide you with a disclosure document before you enter into a franchise agreement. The information it contains may determine whether you proceed with the purchase. This article will explain what your disclosure document should include.
What Is the Franchisor’s Business Experience?
Your disclosure document should outline the franchisor’s business experience. You should read this carefully, as you are likely to have greater confidence in the franchise as a whole if the franchisor can show you that they have extensive experience in the industry. The details given about the franchisor’s experience may run as far back as ten years. The franchisor should note:

whether they are operating a similar business to the franchise; and
if they are selling any franchises other than the one you are considering buying.

Does the Franchisor Have a History of Breaches or Disputes?
Before you enter into a franchise agreement with the franchisor, find out if they have a history of rule-breaking. The disclosure document may contain details of any:

disputes with former franchisees;
alleged breaches of the franchise agreement; or
general illegal activity.

A breach or dispute may be cause for concern. However, you may do some research and decide that the franchisor dealt with the dispute or breach effectively.
What Are the Details of Existing Franchisees?
It may be helpful to contact current franchisees to ask about how the franchise operates. In order for you to do this, the franchisor should provide details of current franchisees in the disclosure document. When you speak with existing franchisees, you should ask:

what level of training they have been given;
if the franchisor’s marketing is effective in bringing in business; and
what their relationship with the franchisor is like.

This is an important part of your due diligence because it shows you how the franchise works in practice.
How Are the Fees I Pay to the Marketing Fund Spent?
Under your franchise agreement, you will pay several different fees to the franchisor. One of these fees is a contribution to the franchise’s marketing fund. Typically, this money is spent on advertising, such as Instagram or Facebook advertisements. The franchisor is obligated to disclose:

which expenses the marketing fund may be used for; and
how funds were spent in the past financial year.

You should read these details carefully. You can also get an overview of how effective any marketing is by googling the franchise and looking at any social media accounts it operates.
What Are the Costs of Setting Up?
There may be significant costs required to set up your franchise.

For example, if you purchase a cafe franchise, you may need a coffee machine and industrial kitchen appliances. If you purchase a hairdressing salon, you may need new chairs and mirrors.

The disclosure document should provide details of any costs you might face before opening your new business. For example, this may include the details of costs relating to:

purchasing new equipment;
any required construction;
decor and signage;
rent;
insurance; and
any stock required to start operating.

If the franchisor has mentioned any set up costs to you that are not in the franchise agreement, it is a good idea to ensure that they are included.
What Is the Franchise Territory? Is It Exclusive?
The disclosure document will outline the details of your franchise territory, which is the area in which you are allowed to operate. It will either be:

exclusive, meaning the franchisor has promised that no other competing franchises may operate in your territory; or
non-exclusive, meaning that the franchisor has the right to open future competing franchises in your territory.

Before you buy your franchise, you should consider any other business that the franchisor owns in your area and whether they will affect your business.
What Suppliers Can I Use?
Owning a franchise means that you must provide customers with the same product or service as the rest of the franchise. This is so that people associate your business with the franchise brand.
Because of this, the franchisor may specify particular suppliers of a product or service you must use to run your franchise. The franchisor does this to ensure the safety, quality and consistency of the products, and these details should be in your disclosure document. It should also state whether the franchisor will receive any benefit from the supply of goods or services to franchisees.
What Rights Do I Have to Use the Franchise’s Branding and Intellectual Property?
A franchise’s intellectual property (IP) includes its branding, slogan, logo and any trade secrets. Because the franchise brand is what brings new customers to your business, how you will be permitted to use it is very important. The disclosure document will outline what rights you have to the franchise’s branding and any other IP. It will also explain any obligations you have relating to the use of the IP.

For example, you may need to notify the franchisor if you become aware of any unauthorised use of their IP. This might include the use of the brand, training manuals or any other intellectual property that the franchisor owns.

Key Takeaways
As a franchisee, it is important to be aware of what your disclosure document should include. This is because the information in this document may influence your decision to either buy the franchise or pass up on the opportunity. The disclosure document should include:

the franchisor’s business experience;
any past breaches or disputes;
the details of existing franchisees;
how your fees will be spent;
what the costs of setting up will be;
what your territory will be;
which suppliers you can use; and
your rights to the franchise’s branding and IP.

To make sure that this information remains current, the franchisor is required to update the disclosure document every year.

You should ensure that your disclosure document includes all the details that are required under the Franchising Code of Conduct. If you have any questions, contact LegalVision’s franchise lawyers on 1300 544 755 or fill out the form on this page.

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Setting up a Registered Training Organisation (RTO) such as a nursing school or first aid training centre can be a rewarding and profitable business. However, it is crucial to understand the regulations that you need to comply with. Over the last few years, the government has toughened its regulation of RTOs, leading to fewer successful applications. This article will explain the steps you can take to ensure you are complying with the necessary standards when applying for RTO registration and what you can do if the Australian Skills Quality Authority refuses your application.
What is the Australian Skills Quality Authority (ASQA)?
The Australian Skills Quality Authority is the body responsible for regulating the private education and training sector. Its primary functions are to:

oversee the entry of RTOs into the market;
accredit courses;
carry out compliance audits; and
penalise non-compliance including cancelling the registration of poor providers.

Over the past few years, there have been a number of scandals within the private education and training sector, resulting in a crackdown by ASQA on RTOs. Although this has been effective at catching out unethical operators, it has also meant that responsible RTOs are subject to more rigorous requirements. The ASQA now primarily acts as a disciplinary body in the sector. Therefore, it is critical that you are aware of the regulations and procedures you need to follow when applying.
Setting Up a Registered Training Authority
Most businesses seeking to be registered as an RTO engage external consultants as it is a complex process. When reviewing applications, ASQA will look at your:

course materials;
standards; and
Financial Viability Risk Assessment and Business Plan.

In the past, the regulator did not review the risk assessment and business plan in detail. However, since July 2018, ASQA:

reviews more extensive data about your financial viability;
asks for greater disclosure on the backgrounds of people associated with the organisation;
asks you to complete a comprehensive self-assessment to ensure you are ready to deliver training and submit evidence to support compliance;
does not give you an opportunity to correct any areas where you are not complying before it makes a decision on the application;
does not allow you to make changes to a submitted application; and
generally requires you to be registered for a two-year period.

If you engage an external consultant, they should be aware of these standards and should not be using outdated application templates.
Be Aware of Any Delays
Once you have submitted your application for RTO registration, you should take note of any delays in ASQA’s decision making. If you have put significant time and money into building your RTO business, any excessive delay may put your plans back months or years. The ASQA often outsources the evaluation of RTO applications to third-party contractors. You can contact ASQA and explain that your application is urgent. This may help your application increase in priority.
What You Can Do If Your Application is Refused
Even if you submit your application in good faith with the help of an external consultant, your application may still be refused. The ASQA’s statistics suggest one in four applications are refused. If this is the case, there are a number of steps you can take.
1. Apply to the Administrative Appeals Tribunal (AAT)
If your application is refused, you will likely not be able to seek a review of the decision from ASQA. However, you can appeal the decision to the AAT. Under the AAT rules, you can only apply to the AAT within 28 days of the decision. This 28 day period includes weekends. If you miss this deadline, you will need ASQA’s approval to appeal the decision which is in ASQA’s discretion and they may refuse. If you need more time, it may be advisable to ask for the decision to be reconsidered by ASQA. Even if ASQA responds and refuses to do so, this may restart the 28 day deadline to apply to the AAT. Regardless, it is important to seek a review as quickly as possible.
2.  Use the Correct Application Form
If you decide to appeal the decision through the AAT, you need to ensure you are applying with the correct form. You can find this form here. You will need to apply using the ‘Application for Review of Decision’ document. If you use the wrong form and it is refused, you may not have enough time within the deadline to reapply.

The application to the AAT does not need to be perfect. You can add further details using an affidavit later in the appeal process. It is more important to ensure you file the application within the deadline.

3. Take an Early Settlement
ASQA may reach out to you to negotiate an early settlement. This will generally involve you agreeing to correct mistakes in your application for RTO registration. It is generally not a good idea to insist that the application is perfect and does not need further work. You will be dealing with ASQA after you are registered so insisting that ASQA’s decision was wrong if they reach out with a potential settlement is not in your long term interests, even if you consider the ‘mistakes’ ASQA has identified were trivial or not mistakes at all.  
4. Engage a Lawyer
If ASQA does not reach out to you for an early settlement, then you may need to engage a lawyer to help draft the affidavit evidence that you need to submit as well as a formal response. After you have submitted the AAT application, ASQA has a legal obligation to provide a detailed explanation of its decision. This will help you get a more complete picture of the claims. It is a good idea to obtain legal advice on the next steps at this point to see if you can reach out to ASQA and negotiate an early settlement. If not, you will need to proceed to a hearing with the AAT which could take many months. Therefore, it is to your advantage if you can negotiate an early settlement with ASQA if your application was strong but there were some minor defects.
5. Seek a Partial Refund
If you had a poor application for RTO registration, you need to carefully consider your strategy. The application fees for an RTO registration application are high ($8800 at the time of writing) but appeals to the AAT can be expensive if experts and lawyers are needed at the hearing. It may be a good idea to try to obtain a partial refund on the application fee and simply correct the errors so you can submit it again.   
Key Takeaways
If you are applying to be registered as an RTO, there are a number of key standards you need to meet. The body responsible for approving your application, ASQA, will consider your course materials, standards and the financial viability of your business. However, if ASQA refuses your application, you should:

consider applying to the AAT;
try to negotiate an early settlement; or
seek a partial refund of the application and apply again.

If you need help applying for RTO registration or your application has been rejected by ASQA and you need assistance appealing it, you can contact LegalVision’s RTO lawyers on 1300 544 755 or fill out the form on this page.

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If you are a Registered Training Organisation (RTO) such as a nursing school or first aid training centre, you may be subject to an audit by the Australian Skills Quality Authority (ASQA). Over the last few years, ASQA has toughened its stance on RTOs, leading to more frequent and harsher audits. Therefore, it is crucial to understand the regulations that you need to comply with. This article will explain the steps you can take to ensure you are compliant and how to prepare for an audit.
What is the Australian Skills Quality Authority?
The Australian Skills Quality Authority (ASQA) is the body responsible for regulating the private education and training sector. Its primary functions are to:

oversee the entry of RTOs into the market;
accredit courses;
carry out compliance audits; and
penalise non-compliance, including cancelling the registration of poor providers.

Over the past few years, there have been a number of scandals within the private education and training sector, resulting in a crackdown by ASQA on RTOs. Although this has been effective at catching out unethical operators, it has also meant that responsible RTOs are subject to more rigorous requirements. The ASQA now primarily acts as a disciplinary body in the sector. Therefore, it is critical that you are aware of the regulations and procedures you need to follow.  
How to Approach an ASQA Audit
The ASQA may audit your business to ensure you are complying with various systems and processes. The audit will target the five phases of the student experience, namely:

marketing and recruitment;
enrolment;
support and progression;
training and assessment; and
completion.

If you are subject to an audit by ASQA, there are a number of steps you can take to ensure you have the best chance of success.
1. Treat It as a Legal Process
An audit is a legal process with serious legal consequences. Therefore, the ASQA can use an audit to withdraw your registration as an RTO. You should:

take careful notes of any meetings or telephone calls with ASQA auditors;
clarify and ask to review any documents or information that you are unsure of; and
ask for ASQA regulators to provide a request in writing for any documents so you have a record of the request.

2. Test Your Compliance Practices
It is a good idea to integrate compliance practice within the day-to-day running of your RTO business. You should conduct your own internal random audit of student files and even hire an external consultant to conduct a mini-audit for you. This test will improve processes and procedures and expose gaps in your documentation before the real ASQA audit takes place.
3. Stay Up To Date With ASQA’s Requirements
ASQA regularly updates their standards and requirements, which you can find on their website. However, audits can take place just weeks after new requirements are published. It may be possible to appeal the outcome of these audits in the Administrative Appeals Tribunal (AAT) as they may be considered overly harsh. However, this kind of appeal can cost thousands of dollars, so it is better to be aware of and comply with any recent standards to avoid going to the tribunal or court in the first place.
4. Review Your Documents
Documents that ASQA reviews must be correct as the regulator will not give you a chance to amend them. If you have any doubts, you should try to delay the audit so you can review the files before ASQA arrives.
5. Engage External Advisors
If you feel your systems need review, engage an experienced, respected consultant to review those processes and systems. However, if you feel the audit is not going well, it is a good idea to obtain professional legal advice early. This can help you ensure you are best positioned to respond to the outcome of the audit or to an AAT challenge.
Key Takeaways
Running an RTO can be a rewarding and profitable business. However, with ASQA’s ongoing crackdown on RTO standards, you should prepare for an audit and know to respond if you are subject to one. Fewer RTOs will be approved for registration and a number of RTOs will be deregistered in coming months. It is a good idea to invest in effective systems and processes to ensure you will not face consequences as a result of an audit. To prepare for an audit, you should:

treat it as a legal process;
test your compliance practices;
stay up to date with ASQA’s standards;
review your documents; and
engage external advisors.

If you have any questions about preparing or responding to an audit by ASQA, you can contact LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.

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Employers often wish to incentivise their key employees by issuing them with shares, usually at a discount. However, shareholders must pay market value for shares if they want to avoid significant and upfront tax expenses on the discount received.
In this article, we look at limited and full recourse loans as tax-efficient ways to provide share incentives to employees.
What is are Recourse Loans?
There are two types of recourse loans that your company can use to issue shares to employees: a limited recourse loan (LRL) and a full recourse loan (FRL).
In both cases, a company (lender) makes a loan to an employee (borrower) to buy a particular asset (e.g. shares). But if the employee defaults on the loan, different consequences result depending on if the loan was a LRL or FRL.
Limited Recourse Loan
If a borrower defaults on a LRL, the lender can only recover the assets which were purchased using the loan.
In the context of employee equity incentives, a company can make an LRL to an employee so that the employee can buy company shares. This is particularly useful if the employee has insufficient funds to pay market value for their shares upfront. If the employees defaults, the company can recover the shares.
Full Recourse Loan
If a borrower defaults on a FRL, the lender may recover any of the borrower’s assets to satisfy the debt.
In the context of an employee equity incentive, a company can issue shares to an employee and make a FRL to the employee to pay for the shares. If the employee defaults under the loan, the company can recover any of the employee’s assets, not just the purchased shares.

A FRL inherently favours the company over the employees. So if your purpose is to incentivise and benefit employees, you may prefer to use a LRL rather than a FRL.

Terms of the Loan
The terms of a LRL and FRL can vary but generally, employees:

can only use the loan to buy company shares;
pay no, or minimal, interest on the loan;
may use share dividends to repay the principal loan; and
can repay the loan early and without a penalty fee.

Issuing Shares with a Recourse Loan
To issue shares with a recourse loan, a company prepares a subscription offer letter with a FRL or LRL agreement. It is best practice to include an explanatory memorandum which explains the offer in easy-to-understand terms.
Once the documents are signed, the company or board must agree to:

issue the shares;
give the employee a share certificate; and
update both the share register and notify ASIC.

A company may issue shares using a recourse loan to:

a new shareholder; or
an existing shareholder.

Below, we discuss the specific tax implications for the employees or company in each scenario.
Issuing Shares to a New Shareholder: Tax Implications
Where a company issues shares with a recourse to an employee that is not a current shareholder, the recourse loan is treated as a loan fringe benefit. A loan fringe benefit is a loan to an employee where the interest rate is anything less than the statutory interest rate.
Consequently, companies that provide loan fringe benefits to employees must pay fringe benefit tax. You can calculate the taxable value of the loan fringe benefit by using the following equation:
      (Statutory interest rate  –   Interest rate paid by employee)  x  Loan Amount  =  Taxable Value of the Loan Fringe Benefit

For example, Barney’s Business issues a limited recourse loan to their employee Sam on 1st July 2016. The loan is for $100,000 at an interest rate of 2%. This is interest rate is lower than the statutory interest rate of 5.65%. Using the above equation:
(5.65% – 2%)  x  $100,000  =  $650.
This means Barney’s Business will have to pay fringe benefits tax on the amount of $650.

Companies may reduce the fringe benefit tax owing if the loan is made directly to the individual employees, rather than a trust or other related entity under the ‘otherwise deductible rule’. Under the ‘otherwise deductible rule’, the taxable value is reduced by the amount the employee could have hypothetically claimed as an income tax deduction.
Issuing Shares to an Existing Shareholder: Tax Implications
As a general rule, a private company cannot lend money to its employees, shareholders or their associates. So if a company issues shares to an existing shareholder using a FRL or LRL, the loan is treated as a dividend for tax purposes. This means it forms part of the employee’s assessable income for tax purposes, and could create a significant tax cost for the employee.
To avoid the tax expense, companies and employees may consider the following two exceptions.

A recourse loan to an employee is not treated as a dividend if the loan meets the following conditions:

Written Form: The loan must be recorded in a written agreement. Although there is no prescribed form, the agreement must set out the loan’s essential terms (principal amount, term, requirement to repay and the interest rate payable). It must be signed and dated by both parties.
Interest Rate: The interest rate must be equal to or greater than the benchmark interest rate for the year.
Maximum Term: The maximum term of the loan is 25 years if:

the loan is secured over real property; and
the market value of the property is at least 100% of the amount of the loan.
The maximum term of the loan is 7 years for any other type of loan.

A recourse loan made to an employee is not taxed as a dividend if the company does not have any distributable profits. This is because there would be no dividends to distribute and therefore be taxed on.

Key Takeaways
To benefit its employees, a company may choose to issue shares upfront with a full or limited recourse loan. This gives the employees an opportunity to repay the market value of the shares in the future. The company and employees must be wary of the tax implications of this arrangement. These will vary based on whether employees are existing or new shareholders. 
If you would like specific tax advice on recourse loans or how best to incentivise employees, contact LegalVision’s taxation lawyers today on 1300 544 755 or fill out the form on this page
 

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If your business has connections to another language, you may wonder if you can register a trade mark containing foreign words or characters in Australia. If you wish to do so, you should consider:

your target market;
how you intend to use the trade mark; and
which words you wish to use.

Generic or descriptive terms are difficult to register as trade marks. Using a foreign word or character does not make it easier to register these terms, because IP Australia assesses foreign words and characters according to their English meaning during the registration process.
Can I Trade Mark Words in Languages Other Than English?
You may be able to trade mark words in a foreign language. However, you are unlikely to be able to register foreign words that describe the nature of your goods and services. This is because many traders in your industry may need to use them.

For example, la deliziosa, which is Italian for the delicious one, was refused registration as a trade mark in Australia in 1991. This was because consumers were likely to be able to understand the term and what it suggested about the products. 
However, kiku, which is Japanese for chrysanthemum, was successfully registered as a trade mark in Ireland in 1978 for cosmetic products. This was both because the word is unrelated to cosmetic products and because the average person in Ireland at the time was considered unlikely to know what kiku meant.

If you would like to register a trade mark containing words in a foreign language, you need to consider whether:

the term is descriptive of the nature or quality of the products you intend to sell; and
an ordinary Australian citizen would be familiar with the term.

You should also check whether seemingly generic words in foreign languages have well-known meanings elsewhere in the world. This is because words commonly in use elsewhere may not be registerable as a trade mark in Australia.

For example, the Italian word diabolo was refused registration as a trade mark in 1908. At the time, English consumers used the word to refer to a popular game called ‘the devil on two sticks’.

Can I Trade Mark Non-Roman Characters or Letters?
Trade marks made up of non-Roman characters or letters must comply with the same rules as trade marks in Roman characters. Roman characters are the alphabetical letters the English language is written in. IP Australia may reject your trade mark application if:

the average consumer of your product would know or have a sense of the word’s meaning; and
other traders are likely to need to use the word given its meaning.

This ensures that other traders in your industry are not restricted from describing their products or services.
When registering trade marks that consist of non-Roman characters or letters, you will need to provide:

a transliteration of the characters into Roman letters (i.e. the phonetic reading of the characters); and
an English translation of the words.

For example, the Japanese characters こんにちは are transliterated into Roman letters as konnichiwa and translated into English as hello. In this example, you would need to provide IP Australia with both the transliteration (‘konnichiwa’) and the translation (‘hello’).
You may also need to protect your English trade mark overseas. If you trade in China, for example, the Chinese version of your brand is just as important as the English version. 

For example, the Australian wine brand Penfolds has traded in China since the early 1990s using the Chinese name Ben Fu. However, Penfolds never trade marked this name. When the brand attempted to do so in 2011, they discovered that a Chinese individual had already registered Ben Fu as a trade mark. It took Penfolds years of expensive legal proceedings to cancel this trade mark and secure the right to use the name.

Whenever possible, you should also register the transliteration and translation of your trade mark in non-English speaking countries to gain maximum protection.
Can My Trade Mark Be a Combination of Multiple Languages?
You may be able to register a trade mark that consists of more than one language. However, you will be unable to register the trade mark if the words or characters:

all share the same meaning; or
merely describe the products.

For example, IP Australia would consider a trade mark consisting of the same descriptive word in three different languages ( i.e. big grande gros) to be descriptive and confusing to consumers. It is likely that they would refuse to register it as a trade mark.

Key Takeaways
If you intend to register a trade mark that contains words in foreign languages or characters, you should consider whether the foreign words you wish to use are:

descriptive; and
easily understood by the general public.

When you apply for a trade mark, you may need to provide:

a transliteration of any foreign characters; and
an English translation.

Providing these does not mean that the English translation and Roman transliteration of your trade mark will be protected. To protect all three versions, you will need to register three separate trade marks. 
If you need help registering a trade mark, contact LegalVision’s trade mark lawyers on 1300 544 755 or fill out the form on this page.

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To incentivise your employees, you may be thinking of giving them discounted shares in your startup. However if they pay less than market value for the shares, they will be taxed upfront on the discount. This is because the discount will form part of their taxable income. Instead, you could take advantage of the tax concessions under an Employee Share Scheme (ESS) if eligible, and provide an outcome more beneficial to employees.
In this article, we look at the eligibility requirements and tax concessions available under an ESS.
Tax Concessions
If eligible for the ESS startup concession (discussed further below), your employees can benefit from two tax consequences.
1. No Upfront Taxation
The value of the discount will not be taxed upfront when the employee receives the shares, or exercises an option to receive shares. Instead, it is taxed when those shares are sold. This allows employees to plan for the tax expense, and possibly to use the proceeds of the sale to pay it.

For example, a startup offers 100 shares at $5 per share to their employee Sam in April 2015. The market value of a share is $10. Accordingly the taxable discount income is:
($10 – $5) x 100 =  $500
(Market value – discounted share price)  x  number of shares bought
Sam later sells these shares in April 2019. He will only be taxed on the discount value ($500) at this time (i.e. as part of his 2018-19 income).

The share sale also generally creates a Capital Gains Tax (CGT) event. This means a 50% CGT discount may apply if the shares are sold at least 12 months after the share issue or the grant of the options. 

Sam sells his shares in April 2019 for $1500. As he is selling these shares more than 12 months after the share issue (which was in April 2015), he will only have to pay CGT on:
($1500 – $500) x 50% = $500.
(Share sale value – discounted share price) x CGT discount
As Sam is an individual, the CGT tax rate that will apply to the $500 is the same as his income tax rate.

2. Safe Harbour Valuation
You may also reduce employees’ taxable discount income by issuing shares or options using the safe harbour valuation method.
Generally, market value of shares is calculated as the amount for which the shares can be sold on the date of valuation. However using the net tangible assets test, a startup’s valuation can be calculated using the following formula:
                                        (A – B) / C  = Valuation
where:

A means the company’s net tangible assets at that time;
B means the return on any preference shares on issue at that time if the shares were redeemed, cancelled or brought back; and
C means the total number of outstanding shares in the company.

For many startups, their tangible assets are minimal or nil. Often this is because their value relies on their intangible assets. So the safe harbour valuation is usually beneficial for employees as:

employees are more likely to afford to pay market value for the share; or
there is no or little taxable discount income.

ESS Eligibility
To be eligible for the startup tax concessions under the ESS, you must meet the following criteria. 
 

Criteria
Description

Shares Cannot be Listed
The company’s shares (and the shares of any holding company, subsidiary or sister company of the company) are not listed on a stock exchange.

Company Incorporation
Company incorporation (along with any holding company, subsidiary or sister company of the company) occurred in the last 10 years.

Aggregated Turnover
The aggregated turnover of the company (and any holding company, subsidiary or sister company of the company) in the previous income year was less than $50 million.

Payment Amount
If the proposed ESS scheme is an options scheme, employees must pay at least fair market value to exercise the right (unless eligible for the Safe Harbour Valuation).

If the proposed ESS scheme is a share scheme, the share price offered to employees must be at least 85% of fair market value (unless eligible for the Safe Harbour Valuation). 

Australian Residency
The company must be incorporated in Australia.

Employee Status
The company can only grant ESS interests to employees (i.e. not contractors) of the company or its subsidiaries.

Ordinary Shares Only
All the options or shares under the ESS relate to ordinary (not preference) shares.

Company’s Predominant Business
The company’s main business is not investing in other shares or investments (e.g. an investment bank).

ESS Operation
An employee must hold the ESS interest for:

three years; or
until they stop working for the company.

Maximum Share Limit
The company cannot grant an ESS interest to an employee who:

holds more than 10% of the shares in the company; or
controls more than 10% of the vote at a general meeting.  

Share Offer
If the proposed scheme is a share scheme, the company must offer shares to at least 75% of its Australian resident permanent employees who have completed at least 3 years’ service.

 
Valuation Test Eligibility
If your startup wants to use the net tangible assets test under the safe harbour valuation, you must also meet the criteria below. 
 

Criteria
Description

No Change of Control
The company reasonably anticipates that it will not be subject to a change of control within the 6 months after share valuation takes place.

Capital Raising
The company has not raised more than $10 million in capital during the 12 months prior to the valuation.

Incorporation
At the time of valuation, either:

the company has been incorporated for a maximum of 7 years; or
the company is a small business entity under the Income Tax Assessment Act 1997 (Cth).

Financial Reporting
The company must prepare a financial report for the income year in which the valuation occurs, that complies with the accounting standards under the Corporations Act 2001 (Cth).

 
ESS Ineligibility and Further Options
Even if your employees are ineligible for the ESS, you may still choose to issue employees with shares upfront. This may be the case if you issue shares early enough for their value to be low or nil, so that the discount itself is low or nil. 
Alternatively, you could consider using a deferral tax regime, recourse loan or premium priced option plan if:

the taxable discount income could create a significant tax expense; or
where the parties prefer to avoid paying market value for the share upfront.

Key Takeaways
Employee Share Schemes can be an affordable, tax-effective way of rewarding employees and granting them a real ownership stake in the business. If your startup meets the eligibility criteria, your employees will be taxed only when they make a financial gain in respect of their ESS interest.
If you want help determining whether an ESS is appropriate for your business, contact LegalVision’s startup lawyers on 1300 544 755.
 

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Over the past ten years, advancements in legal technology have changed the face of the legal sector. The invention of ‘the cloud’ and ‘software as a service’ (SaaS) has increased the ability for small teams to access technology. New technology is also being developed specifically for the needs of in-house legal teams. With this increase in technology, in-house teams can realign activities to ones that advance core business objectives and add demonstrable value. This means that the business can reach legal outcomes faster. In this two-part series, we will explore how to approach technology in your in-house legal team and better understand where it can help create value for your business.
What Problems Need Solving by Legal Technology?
When beginning to consider what technology to implement within your in-house team, do not look at the technology yet. Instead, ask yourself which problems need solving.
Answering this question should take the form of a diagnosis exercise which identifies the different pain points within your teams. As every legal process is part of a larger commercial one, both the in-house legal team and relevant commercial teams should be involved in this process.
The following questions are a good starting point for the exercise, and should be answered candidly by both teams:

Topic
Questions

Time Management
What are your most time-consuming tasks? Why?

Is this due to the volume, the complexity or the number of stakeholders involved?

How easy is it to track how much time your team spends on a task?

Collaboration
How difficult is it in your company to work with a high number of stakeholders?

What types of tasks take up your time when working with different teams or different individuals within the business?

How do you ensure everyone plays their role in the process?

What is the sign-off process?

Allocation of Resources
Where do you feel like your time is being spent inappropriately?  

Where do you feel like the time you are spending on a task is not proportionate to the value this task is bringing to the business?

Knowledge Management
How often do you require specific legal expertise?

How difficult is it to access the relevant data from the business?

Do you feel like you start from scratch each time or are there any records of decisions, documents and processes?

Workflow Management
At what point in the process do you most commonly face problems (e.g. preparing documents, getting sign-off)?

Who takes accountability for delivering legal services?

Are each team aware and aligned on the goals that they’re trying to achieve?

 
The answer to these questions will help identify which problems you need to solve. This will help you decide whether or not technology can assist in solving your problems.
Will Legal Technology Improve My Team’s Return on Investment?
Technology requires an investment. The problem is that it is difficult to quantify the return on investment (ROI) of legal technology because it is hard to quantify the gain generated by a lawyer. The quality of the drafting of a contract or the complexity of legal advice does not easily translate into a dollar amount.
The first step in investing in technology is to understand its potential in terms of ROI for the business. Then, it can be formulated accordingly. The easiest way is to put a dollar value on legal work by reference to a lawyer’s time.

For example, it currently takes five hours for a lawyer in your team to draft a contract, which costs the business $400. To make your case on investing in technology, you should highlight that implementing contract management technology will take one hour for that same lawyer to do that same task. Then, the $320 that you saved on could be allocated to another revenue-generating task.

What About the Rest of the Company?
Many teams will only implement legal technology within the legal team. However, there is often a much higher ROI outside of the legal team. Technology will not only enable you to do more and to do it faster, but it will also help you do it better. There is much higher value to be derived from efficient legal activities by achieving a better outcome across the business as a whole.

For example, implementing tools to review all your leases and highlight key terms will help your bargaining power when negotiating with landlords. Furthermore, having standard non-disclosure agreements ready can help you be faster than competitors in accessing a new market or an opportunity.

Key Takeaways
To decide whether or not investing in legal technology is appropriate for your business, it is essential to understand what:

problems you are trying to solve; and
the business will gain from solving these problems by investing in legal technology.

This analysis is critical, as it will make it easier for you to decide which tools would assist your legal and commercial teams. We explore those tools and the selection process in Part 2 of this series. If you have any questions about implementing legal technology, contact LegalVision’s legal transformation lawyers on 1300 544 755 or fill out the form on this page.

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If you’ve received a construction contract from a client, it can be difficult to understand what each clause means for you and your business. Some clauses that affect your legal responsibilities will be clearly labelled, whereas others might be hard to spot. It’s normal to feel overwhelmed when reviewing contracts from clients. Some important clauses often within construction contracts that may affect your legal responsibilities include those regarding:

indemnities;
consequential loss;
liquidated damages;
time bars; and
warranties.

This article will explain how you can identify some of the critical issues that may be within your construction contracts so that you know what you should ask the other party to change.
1. Indemnities
An indemnity is an obligation for one party to compensate the other for:

damages;
losses;
expenses; or
costs caused by a specific event.  

When you breach an indemnity, the other party can then claim compensation. If you receive a construction contract, you might find many indemnities that go beyond accepted industry standards.

For example:
“The Contractor indemnifies the Principal for and against any loss, damage, cost, expense, fee, charge or liability suffered or incurred by the Principal or any claim against the Principal arising out of or in connection with a breach of the Agreement by the Contractor.”

This indemnity is extensive and will force you to compensate the other party for any breach of the contract, no matter how trivial the breach.
Some indemnities are acceptable, such as those for:

death;
personal injury; and
breaches of intellectual property.

Therefore, if you see an indemnity that you do not believe is acceptable, you should raise this with the other party and request them to change it.
2. Consequential Loss and Uncapped Liability
Consequential loss is a loss experienced by a party that is indirect and does not naturally flow from an event or breach.

For example, you were carrying out excavation works for a council and one of your workers hit electrical wiring. This caused a street-wide blackout, and a restaurant on the street lost profit as they were unable to open for dinner. This loss of profit would be considered consequential as it did not directly relate to the action of your worker.

Identifying which clauses affect your legal responsibilities regarding consequential losses can be difficult. There may be provisions which mention consequential loss, or there may be no mention of it at all. Therefore, you should make sure that, under the contract, you are not legally responsible for consequential loss and other losses of:

revenue;
profit;
use;
financial opportunity; and
economic loss.  

This exclusion of legal responsibility is particularly important if you agree to provide indemnities that favour the other party. Otherwise, you will be responsible for all losses, and your insurer will not cover those types of losses.
As a contractor, ensure you put a cap on liability. There must be a limit to your financial responsibility and this price is your financial decision. Also, ensure that you avoid any unusual exclusions to the cap that can put you in financial risk.
3. Liquidated Damages
When you are negotiating dates for the work to be completed, be careful on how the other party might charge for liquidated damages. Liquidated damages are the compensation that you might have to pay if you do not complete construction on time.
Liquidated damages usually represent pre-estimates of the loss they will likely incur if you do not complete the work on time. They are not meant to penalise you for finishing work late.

For example, you entered into a construction contract to build a shopping mall but did not complete the construction on time. Therefore, the rate of liquidated damages should reflect the other party’s costs of being forced to delay the opening of the mall. These costs might include the amount of rent they may have earned from future tenants of the shops if there was no delay.

The rate of liquidated damages in a contract should be reasonable. To avoid any legal responsibility to pay liquidated damages, your construction contract should include:

favourable extension of time provisions;
a practical date of completion that gives you sufficient time to complete the work; and
procedures that allow you to extend the period for practical completion without penalty.

You can also protect yourself by ensuring that you:

cap the amount that you must pay for liquidated damages; and
make it clear that the other party can only claim liquidated damages if there is a delay in the project.

4. Time Bar Clauses
A time bar clause limits the time within which you can enforce certain contractual rights.

For example, if you don’t meet your deadline and fail to ask for an extension of time within ten days, a time bar clause could stop you from seeking this extension without it being considered that you have breached the contract.

Construction contracts will often contain wording such as:
“Unless the Contractor complies with this clause #, it will have no claim against the Principal.”
“The Contractor must notify the Principal of a delay within 5 days of when it ought to have been aware of the delay, failing which it will have no claim.”
“Contractor must not bring a claim unless it provides notice within 5 days of becoming aware, or ought reasonably to have become aware, of a claim.”
You may not be able to negotiate out of these clauses so be sure to understand your time obligations when claiming:

extensions of time;
variations;
latent conditions; or
triggering a dispute resolution procedure.

Time bars are tough to overcome in a dispute, so be aware of how its wording might affect you before you enter into any construction contracts.
5. Warranties
The wording is important in construction contracts. Where you see the words “you warrant and agree that you will ensure the works are fit for their intended purpose” it has a different meaning to “you agree that you will ensure the works are fit for their intended purpose.”
In the first example, the contractor is asked to provide a warranty. Generally, if you breach a warranty (like in the first example), you will automatically have to pay compensation. In contrast, breaching a term under a contract (the second example) may not always result in you having to pay damages.
Ensure that you are aware of what you are warranting to the other party. If there is a warranty that goods be ‘fit for their intended purpose’, understand what the intended purpose of the goods is.

For example, you may warrant that the goods or services you provide when building a residential home is performed according to the contract as well as any relevant laws.

Key Takeaways
Parties will often include clauses that they know you will challenge. The five clauses you should be aware of include:

indemnities;
liquidated damages;
consequential loss;
time bars; and
warranties.

If you have any questions about the clauses within construction contracts, contact LegalVision’s construction lawyers on 1300 544 755 or fill out the form on this page.

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As discussed in Part One of this series, if you’re considering investing in legal technology, it is crucial that you first undertake a diagnosis exercise. This exercise will help you better to understand the challenges that both your legal and commercial teams face. 
Then, you can begin to select the technology you need, based on the problems identified during the diagnosis exercise. In this article, we will explore how technology can help your teams focus on both core and secondary tasks to improve overall profitability.
Tools to Assist Focussing on Core Business Activities
Once you have identified which issues you need to solve, you need to consider how to solve them. The list below outlines some tools that will assist your in-house legal team to focus on the legal activities that align with your business’ core objectives.
Collaboration
If one of the issues that frustrate your legal team concerns collaboration, you may want to implement document management software. This software can enable you to store, manage and track electronic documents. The main advantage of a document management system (such as LEAP) is that it allows you to keep track of the changes made to a document through version control.
Also, as multiple lawyers are likely drafting documents, it is critical to have a system that ensures consistency in style and layout. Using technology to organise your existing contracts into a clause library means that you do not have to draft every document from scratch.
Workflow Management
If your legal team experiences a lack of direction on projects, you may want to implement software that will assist with workflow management.
A matter management system enables you to keep all the information that is relevant to a matter in one place. This will help the team keep track of who is working on what. Also, it will facilitate handovers or on-boarding of new members on a matter. Where different levels of access are needed on a confidential matter, a matter management system allows you to grant this access.
Allocation of Resources
Sometimes, there can be gaps between the amount of time your team spends on a task and the value it brings to the business. To combat this, you can implement tools that will assist you to more efficiently allocate resources.
In-house team members will be assisting the business on a variety of legal matters on a daily basis. However, until they have a complete set of information, lawyers have no way of knowing how urgent or complex the matter is. This means they might not prioritise the right matter, which ultimately affects the business. Similar to an IT ticketing system, some technologies offer a streamlined intake system and can enable lawyers to take requests based on the area of expertise required.
Time Management
If time management is an issue in your legal team, time tracking could be a way to bring some clarity.
No one likes six-minute intervals, but it is crucial for a business to understand what their lawyers are working on. There are tools like Daily that enable time recording without having individuals typing in their specific tasks. Instead, this software regularly asks them what they are doing and generates a timesheet based on the information provided. It is with this data that a time management problem can be identified and resolved.
Knowledge Management
Your in-house team will likely need to research some legal matters. If your legal team does not have access to the appropriate resources to deliver their services, you should consider implementing knowledge management systems. Although companies like LexisNexis and Thomson Reuters have existed for a while now, their subscription scale has now improved so that membership is more accessible for in-house teams.
Tools to Assist With Secondary Activities
As highlighted in Part One of this series, spreading legal expertise across the business will enable you to reach legal outcomes faster. This is because business managers will not have to wait for legal to sign-off on simple issues. Below, we list how your commercial team can assist in secondary legal activities with the assistance of technology.
Access to Repeated Expertise
Generally, commercial teams do not have access to legal databases and, instead, keep asking your legal team for advice.
In this case, expert systems can be beneficial. These systems can replicate the thinking of human experts in a particular field (in this case, lawyers). Your in-house legal team will first need to build a process and then digitise it into an expert system. This system will adopt the same approaches to address any problems raised by the commercial team that the human lawyers would take.
Speed of Response
Some commercial teams continuously need to get legal sign-off on standard documents or recommendations. To solve this, you can implement technology that will help the commercial team operate without relying on the legal team.
One of these technologies is document automation. In most businesses, lawyers are systematically involved when it comes to producing simple legal documents. However, if that document is instead based on a template with different variables already built in, there is no need for lawyers need to get involved. Document automation software can generate contracts and documents from automated templates. This will reduce the risks inherent in manual drafting.
E-signatures, which are only going to become more common, can also be extremely helpful by transforming your document execution processes. Electronic-signing software like DocuSign makes this simple. If you set out which agreements can be signed electronically, your commercial team can execute documents more efficiently.
Project Management
Workflow management solutions can assist if your commercial team wants to:

quickly navigate approval workflows;
understand where their matter is at; or
know who they should follow up with.

Your business may want to implement collaboration platforms which enable you to coordinate workflow. This platform can be particularly helpful where you have multiple departments involved at different stages of a project. It will help coordinate business processes, such as document review, by tracking the individual tasks involved.
After contracts have been negotiated and approved, it is essential for the business to:

manage them;
monitor them; and
maintain them.

Weeks of negotiations can be wasted when contracts find their way into a bottom drawer. Using a contract management system to manage the contract needs of your sales teams will ensure that profit is not lost due to inefficiencies.
How Technology Can Enable Business Solutions
Technology alone will not transform the law. Technology can only help solve your business’ problems if it comes alongside change management and process improvement.
If the nature of your business does not allow you to go through a robust process improvement exercise, you can instead work legal design experts. These experts can assist with working the way through challenges and redesigning processes.
Technology has the potential to transform the way legal teams interact with their business. But, it requires in-house teams to adapt their processes and share their knowledge with the broader business. This is an excellent opportunity for legal teams to demonstrate that they contribute to strategic objectives. It shows that the law is not only about risk mitigation, but also revenue generation.   
Key Takeaways
There are many different types of technology available which can assist in-house teams in becoming more efficient and increasing profitability across the business as a whole. Regardless of the strategy you choose, technology is not a silver bullet. Effectively introducing technology will require legal process design to work effectively within your workflow. If you have any questions about implementing legal technology in your in-house team, contact LegalVision’s legal transformation lawyers on 1300 544 755 or fill out the form on this page.

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Smart contracts have the ability to disrupt the legal industry over the years to come. Enabled by blockchain technology, they can be quite complex and challenging to understand. Similarly to the Internet in the 1990s, some commentators think it is just a trend and won’t last very long. Due to their complexity, few legal practitioners and businesses have widely adopted using them. In this beginner’s guide to smart contracts, we look at what smart contracts are and how you can use them to benefit your legal practice.
What is Blockchain Technology?
Computer scientist Nick Szabo originally described the idea of blockchain technology in 1993, as a kind of digital vending machine. In his famous example, he described how users could input data and receive a specific item from a vending machine, like a snack or a soft drink.
In simple terms, a blockchain is a chain of blocks that contains information. Each block contains:

data – the type of data will depend on the kind of blockchain;
a hash – this is like the fingerprint of the block and is, therefore, unique to that block; and
the hash of the previous block on the chain – this is one of the reasons why blockchain technology is so secure. If someone alters the data on one of the blocks, the hash of that block will be modified and will no longer coincide with the hash of the next block in the chain.

Then we have a node. A node is an electronic device, such as a computer or a phone. This device is connected to a blockchain network. The role of the node is to support the system by:

maintaining a copy of the blockchain; and
processing transactions.

What Is a Smart Contract?
In practice, a smart contract is a computer program stored in a blockchain. It contains specific inputs and executes a set of instructions to come to one of the many outcomes that have been predetermined by its programmer.
They can help you exchange:

money;
property;
shares; or
anything else that is of value.

It does this exchange in a transparent way that avoids the services of a middleman. This is because someone codes the terms of the contract in a computer language that makes the terms automatically enforceable by a protocol that all nodes in the network follow.

Bitcoins are a basic type of smart contracts where the network can transfer value from one person to another. The system of nodes will only validate transactions if certain conditions are met.

A simple example of how smart contracts can be used in a different context is crowdfunding. Let’s say a startup would like to raise $100,000. This startup might determine that if the amount that they end up raiding is below the threshold of $100,000, the investors get their money back. Subsequently, the protocol that the smart contract will follow is that if the goal of $100,000 is:

reached then the money goes towards the startup; or
not reached then the money goes back to each investor.

Are Smart Contracts Legally Enforceable?
To be enforceable in Australia, a smart contract must meet the requirements of a normal contract:

offer;
acceptance;
consideration; and
intention to be bound.

If the entire process of a smart contract is fully automatic and a party to the transaction is not aware that it is taking place, they might not have the intention to be bound by the transaction. However, because parties understand the code’s rules, they are bound by the transactions that take place from that code.
How Can I Use Smart Contracts in My Law Firm?
At the moment, much of the focus around smart contracts is related to its use in the trading of financial instruments such as:

shares;
bonds; or
derivatives contracts.

For example, the International Swaps and Derivatives Association (ISDA) has taken significant steps in automating its standard form contracts in the derivatives market. They have been developing a framework on how to implement the use of automated contracts.

However, there are many more opportunities for the use of smart contracts within different industries. Smart contracts are particularly helpful in areas where many transactions begin because of specific events. For example:

supply chain management, where a smart contract can track products and manage the workflow of approvals, then automatically transfer payment;
real estate transactions and land registration, where once the purchase price is paid, the buyer receives the deed;
payment of insurance claims, where a certain event or incident triggers the payment of a claim to the insured; and
management of intellectual property rights, where a smart contract can calculate royalties and distribute payment to artists.

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Are Smart Contracts Better Than Normal Contracts?
The main benefits of using a smart contract are:

automated performance: once someone has coded the terms of the contract, they are automatically enforced;
transparency: the terms of the contract are visible to all parties;
secured transactions: smart contracts use the highest level of data encryption currently available;
speed: as smart contracts live on the Internet, they can execute transactions very quickly;
storage: the details of the contract are permanently stored in a digital database.

Are There Disadvantages of Smart Contracts?
It can be challenging to write large amounts of code to create a smart contract without making any mistakes. Therefore, if the contract is not producing the desired outcome, developers will need to amend the code.
However, one of the characteristics of smart contracts is that they cannot be altered. This comes as a significant advantage in most cases because it means that parties can rely on the contract itself, without having to rely on the trustworthiness of the other party. But, if there is an issue in the code, not being able to stop the performance of the contract will become an issue.
One way of addressing this risk is to ensure that the contractual parties agree on a process for how a smart contract can be overridden by a “new version” of that smart contract. The replacement smart contract would then sit alongside the original smart contract with additional code. This code will ensure that any input to the original smart contract would automatically flow to the replacement contract.
Will Smart Contracts Put Lawyers Out of Their Jobs?
Lawyers will always need to be involved during the process of drafting and amending contracts. Smart contracts are no exception to this need for lawyers. Developers of the contracts need to interact with lawyers to understand how to code appropriately. Lawyers will also facilitate the negotiation and assist their clients in understanding the consequences of the contract.
One of the most challenging areas for the development and evolution of smart contracts is when a smart contract references a real-life event as a milestone for activation.

For example, when a breach of contract may be severe enough to warrant the termination of the contract.

When the milestone is a piece of information that can be obtained on the Internet, this is straightforward. But, if the event happens privately, how will the smart contract know whether it has occurred? Here, the parties will need the assistance of lawyers to assess and determine whether or not the event warrants the activation of a contract term.
What’s Next for Smart Contracts?
Smart contracts are already increasing in number and in sophistication, but there is still some uncertainty around them. To set smart contracts up as a serious alternative to natural language contracts, we need some fundamental changes:

more trained experts in the field: as smart contracts increase in popularity and training is tailored to this technology, there will be a need for more developers;
recognition by courts: as smart contracts are used more, there will be more court decisions addressing them. This will increase clarity around how smart contracts are used and may encourage other industries to use smart contracts;
a focus from the regulators: regulators will pay increasing attention to how smart contracts can operate in a variety of contexts and provide the framework necessary for the success of smart contracts.

Key Takeaways
A smart contract is an automated contract designed to increase efficiencies within the legal industry. The terms of the contract are encoded in a computer language and are then automatically enforced by a protocol that the network follows. The main benefit of smart contracts is that they can automatically execute a set of instructions in a transparent environment. However, a number of crucial changes need to occur before smart contracts can be considered a serious alternative to natural language contracts. If you have any questions about implementing smart contracts within your business, contact LegalVision’s Legal Transformation lawyers on 1300 544 755 or fill out the form on this page.

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If you are selling your business, you may wonder whether you need to train the business’ new owners. In most cases, the new owners will require training in the management and operation of the business. Most business sale contracts will include an option for the seller to provide the new owners with training.
Standard form sale of business contracts in Queensland, New South Wales and Victoria all include clauses about a training period.
As the seller, you have specific insight into how to run your business. The amount of training and support you give the new owners will affect their ability to operate the business successfully.
This article explains what training you should provide the new owners of your business.
When Should I Train the New Owners?
Generally, training is either undertaken:

pre-completion; or
post-completion.

Completion, also known as settlement, is the moment when ownership of the business is formally transferred from you to the new owners. Once you and the new owners have both signed a business sale contract, a period of time generally passes before completion. Pre-completion training can take place any time from signing until the day before completion. In some cases, it may even begin before you sign the contract. Post-completion training takes place after completion.
Training generally takes place during business hours at the business’ premises for a few days either side of completion. However, the training period can be adapted according to the nature of the business and the level of training required.
This training is done at no further cost to the new owners. You should consider it as part of the purchase price.
What If My Business Requires Specific Training?
Your business sale contract may set out that you are to provide general training as discussed above. This might include:

training the new owners in the general operation of the business; and
introducing the new owners to key suppliers and customers.

However, the sale of business contract may also set out particular requirements.

For example, the new owners may request that you provide no less than 15 hours of training on the accounting software your business uses.

If the contract includes such an obligation, you must fulfil it. Failing to do so may mean that you have breached your contract. If the new owners request very specific training from you, you should consider how comfortable you are with being contractually obligated to provide it.
Should I Provide Pre-Completion Training?
After you sign a business sale contract, there are often conditions that must be met in order for completion to occur. If you provide the new owners with training before these conditions are met, you risk that training being a waste of time and resources if the sale does not go ahead. To avoid this, you may wish to negotiate that any training or support takes place once you have transferred your business to the new owners and they have paid the full purchase price.
Should I Provide Further Post-Completion Training?
You might need to provide more substantial training if:

your business is particularly complicated; or
the new owners are inexperienced.

You may be able to charge the new owners for additional training time. For example, the contract may set out that you must provide an additional 150 hours of training or that you must be available by phone for six months after completion. These more demanding obligations may entitle you to request payment for your additional time.
The new owners may ask you to stay on as an employee or contractor of the business after completion. This can be an attractive arrangement for you, as you are familiar with the business and can continue to earn an income, and to the new owners, as it allows them to use your insights and expertise. If you and the new owners agree on such an arrangement, you should enter into an employment or contractor’s agreement during the sale process. This ensures that your role, responsibilities and rate of pay are established before your engagement starts. You should also set out how to end the engagement to ensure that you will be able to do so on satisfactory terms. 
What If I Do Not Want to Train My Business’ New Owners?
The training period may be difficult for you as the previous owner of the business. After completion of the sale, you will no longer be in a position to make business decisions. It may be hard to move on from your previous role. Like many business owners, you may have an emotional attachment to your business and feel conflicted between wanting to negotiate the least amount of training and wanting to see the business succeed. If you want the business to be successful, it can be a worthwhile task to train the purchaser as best you can. You should feel comfortable including your training requirements in the business sale contract.
Key Takeaways
When you sell your business, the training you provide to its new owners may mean the difference between its future success or failure. Your training may occur:

pre-completion; or
post-completion.

Depending on your business, it may be general or highly specific.
Your training should provide the new owners with everything they need to know to operate the business successfully. This may require ongoing training or your engagement as an employee or contractor. It may be challenging to remain involved with the business but no longer have the ability to make business decisions. However, you should ask yourself whether you want your business to continue to be successful after the sale. If you do, you should be willing to provide the new owners with training.
If you have any questions or need help selling your business, contact LegalVision’s sale of business lawyers on 1300 544 755 or fill out the form on this page.

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If you want your advertising or marketing collateral to target children, you should be familiar with the relevant industry standards. The body that regulates advertising in Australia is Ad Standards. Ad Standards administers several codes on behalf of the Australian Association of National Advertisers (AANA), including the code for advertising and marketing communications to children (the ‘children’s code’). A panel appointed by Ad Standards will determine whether your advertising and marketing collateral targets children, and if so, whether it does so appropriately.
This article will outline which advertising guidelines affect advertising to children in Australia and what these guidelines prohibit.
How Will the Panel Determine Whether The Children’s Code Applies to My Business’ Advertising or Marketing Collateral?
Your marketing collateral includes any media you use to promote your brand, such as:

brochures;
press releases;
business cards; and
social media content.

The children’s code is likely to apply to your advertising or marketing collateral if it: 

is directed towards children (i.e. children that are 14 years old or younger); and 
has a ‘principal appeal’ to children (i.e. depicts goods or services that are most commonly used by children).

The panel will look at several factors, including but not limited to the:

combination and effect of any visual techniques;
product you are promoting; and
age of the characters or actors in the advertisement.

The children’s code works in conjunction with several other AANA codes, including the AANA:

code of ethics;
food and beverages advertising code;
environment claims code; and
wagering advertising code.

What Does The Children’s Code Prohibit?
The children’s code upholds strict regulations relating to advertising or marketing collateral that targets children. For example, your advertising must not:

be misleading or deceptive towards children;
include words like ‘only’ or ‘just’ when communicating the price of your goods, services or facilities;
include sexual images or imply that using your goods, services or facilities will enhance a child’s sexuality;
fail to clearly explain any disclaimers or qualifiers to children;
portray images that may unduly frighten or distress children;
use popular personalities (including any animated personalities) to advertise or market your goods, services or facilities to the extent that it is unclear whether it is a commercial promotion or program content; 
imply that your goods, services or facilities will suit every family’s budget;
be for, or relate in any way to, alcohol products or companies that supply alcohol products;
undermine parental or carer’s authority or judgment;
imply that children who have your products are superior to those that do not have your products;
portray images that show unsafe use of your goods, services or facilities, encourage dangerous activities or create unrealistic impressions about safety; or
promote unhealthy eating and drinking habits (see also the AANA food and beverages advertising code).

Privacy
If your advertising or marketing collateral collects a child’s personal information, you must include a consent statement. A consent statement requires that the child obtains his or her parent or guardian’s consent before the collection or disclosure of the child’s personal information.
What Type of Advertisements Attract Complaints?
Even if you have the best intentions, your advertising or marketing material may still attract public scrutiny over whether it is:

considered advertising or marketing material aimed primarily at children; and
compliant with the children’s code.

For example, a billboard advertisement promoting Streets ice cream recently faced complaints. The advertisement showed a bitten-off ice cream in a bikini showing white ice cream underneath a green coating. A speech bubble with the words, “I CAN SEE YOUR WHITE BITS” came from another ice cream. A complainant claimed that ‘white bits’ was a euphemism for women’s ‘pink bits’, i.e. genitalia. The complainant argued that ice cream products are predominantly marketed to young children and that the advertisement breached the children’s code in respect of sexualisation and social values.
However, the Advertising Standards Board, as Ad Standards was then known, did not find that the advertisement breached the children’s code. The Board found that, although the image was attractive to children, the depiction of an ice cream in a bikini was directed more towards adults than children.
The Board also found that the words “I CAN SEE YOUR WHITE BITS” would be understood by children as a factual comment (i.e., the viewer can see the inside of a green ice cream). Finally, the Board considered whether the products depicted in the advertisement targeted children and primarily appealed to children. They found that the products appealed more to adults. The complaint was unsuccessful.

Key Takeaways
There are many ways for you to promote and market your business effectively to children. However, you should ensure that your advertising and marketing materials targeting children comply with relevant industry codes and AANA codes.
You should also note that your advertising and marketing materials are subject to consumer laws. For example, these laws prohibit you from engaging in misleading or deceptive conduct. You must also not make false or misleading claims or statements about the supply of your products or services.
If you have any questions about how the AANA codes apply to your advertising and marketing material, or if you need assistance in dealing with Ad Standards, contact LegalVision’s marketing compliance lawyers on 1300 544 755 or fill out the form on this page.
 

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If you own a sports or social club, you should think about trade marking the key elements of your brand. Many businesses trade mark important intellectual property (IP) such as mascots or logos. This article will explain how trade marks work and why you should consider using them for your sports or social club.
What Are Trade Marks?
A trade mark allows you to both identify and distinguish your goods and services from competitors. Many different types of IP may be successfully trade marked. A trade mark might be a distinctive:

name;
word;
logo;
symbol;
slogan; or
device.

For example, McDonald’s has trademarks for its name (McDonald’s), slogan (“I’m Lovin’ It”) and logo (the famous golden arches).

Why Do They Matter?
Registering a trade mark can help your business in several ways. Trade marks can give your club:

the exclusive right to use that mark in relation to your goods or services;
legal protection if another business attempts to copy or benefit from your brand; and
a valuable asset to license if you hope to one day expand or franchise your business.

If you do not trade mark your club’s branding, there is nothing to stop another club or business from adopting similar branding.

For example, if you have a famous mascot, another club could create a similar mascot to promote their club. If this club then decides to trade mark their mascot, they could potentially stop you from using your mascot, even though you came up with the idea first.

How Do Sports Clubs Use Trade Marks?
Pride in your club’s culture is probably very important to you and your fans. Branding is central to achieving a strong sense of identity in your club’s community. If your local sports club becomes more successful and begins to compete in national or international competitions, you will need more than local recognition to distinguish your brand. As your club’s brand grows, so too does the need to protect it.
Sports clubs may have a wide range of IP to protect. Your fans and competitors probably associate many different aspects of your brand with your club. These recognisable aspects might include:

uniforms;
jerseys;
colours;
mascots; and
nicknames.

For example, the Queensland state of origin team in rugby league is famously nicknamed ‘the Maroons’. Even though the Maroons is not their official team name, ‘QLD Maroons’ is registered as a trade mark to protect this distinctive element of their brand.
Other famous sports clubs that have registered trade marks include the:

Chicago Bulls;
Wallabies; and
New York Yankees.

Many local sports clubs in Australia, such as the Marconi Stallions in Sydney’s south-west, also have registered trade marks for their names and logos.
Regardless of whether your sports club is local or global, you should take the time to consider your club’s popularity, brand exposure and merchandise. You may need to protect these assets with trade marks.
How Do Social Clubs Use Trade Marks?
Social clubs are an important feature of the Australian community. Well-known examples of social clubs include:

bowling clubs;
RSL clubs;
golf clubs; and
religious clubs.

Given the popularity and number of social clubs in Australia, having a recognisable brand is key to making your club stand out and growing a dedicated community.
If you own  social club, you should consider how your reputation, tradition, code and image can help you to:

attract new members;
build loyalty; and
build a brand.

Protecting your brand ensures that your club is distinguishable from its competitors and remains able to offer members unique goods and services.
Key Takeaways
Trade marks allow you to distinguish and protect your brand. As the owner of a sports or social club, your brand may consist of:

images;
names;
logos;
uniforms;
mascots; or
nicknames.

Without a trade mark, your club will not have exclusive rights to these aspects of your brand. This can weaken your brand and allow competitors to steal your IP.
If you have any questions about trade marks, contact LegalVision’s intellectual property lawyers on 1300 544 755 or fill out the form on this page.

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If you have ever bought goods or services using credit from a third party, you may have been a party to a linked credit contract (LCC). An LCC sets out an arrangement between a:

supplier of goods or services;
linked credit provider (LCP), i.e. a third party that pays the supplier upfront on behalf of the customer; and
customer.

This article will set out how an LCC works and what steps you can take to resolve a dispute.
How Does a Linked Credit Contract Work?
Under an LCC, the customer can ‘shop now and pay later’ for goods or services. 
This arrangement is becoming an increasingly popular way for suppliers to increase sales. For customers, an LCP provides a way to purchase products or services that they might otherwise be unable to afford.

For example, it is likely that you have been a party to an LCC if you have: 

purchased a car using finance from a third party but had the loan finalised at the car yard or dealership;
bought furniture from a department store using an interest-free finance deal; or
used a service such as Afterpay to pay for goods or services.

Typically, LCPs profit from:

late payment of instalments; or
payments declining on a customer’s nominated card.

Some LCPs also charge interest on the purchase price, but most are interest-free and rely on fees and interest from late or declined payments.
What Rights Do I Have Against a Linked Credit Provider?
If you encounter issues with the supplier of goods purchased through an LCC, you may be able to take legal action against both the supplier and the credit provider. A business has rights against an LCP relating to the:

LCP’s obligations to the business; and
supplier’s obligations.

Your business’ contract with an LCP will state the rights and obligations of:

you, as the consumer; and
the LCP, as the credit provider.

For example, your LCC may state that:

the LCP will provide your business with the exact amount of finance requested;
you will make repayments to the LCP on particular terms (such as in regular instalments);
the LCP has a claim to property that they finance if you fail to make your repayments;
you are liable to pay a specified interest rate if you fail to make repayments on the due date;
if the parties wish to change the terms of the credit arrangement, the changes must be put in writing and signed by both parties; and
the parties must follow a specified dispute resolution process if a dispute arises.

Due to the three-way commercial relationship in an LCC between an LCP, a supplier and a consumer, you may be legally protected as the consumer by both the:

LCP’s obligations to you as a consumer; and
supplier’s obligations to you as a consumer.

As a consumer, you may also be able to hold an LCP liable for:

the misrepresentations of a supplier (for example, if a supplier promised that a ute could carry a particular weight in its tray but upon loading the tray with that weight, part of the tray broke);
a supplier breaching a contract with a consumer; and
a supplier failing to fulfil part of the contract (for example, if a furniture supplier provided you with an incorrect item of furniture or a key component was missing).

How Can a Business Enforce Its Rights Against a Linked Credit Provider?
If you have concerns about a contract your business has with an LCP, first consider the terms of the contract. Many service providers’ contracts state that if a dispute arises, the parties must follow an internal dispute resolution process.
Typically, a dispute resolution clause will require you to make a written complaint to the organisation. The organisation will then investigate and attempt to resolve the complaint within a set period. This period may range from several business days to over a month.
What if I Am Unhappy With the Outcome of the Internal Dispute Resolution Process?
If you are not satisfied with the outcome of the internal dispute resolution, you may need to approach the financial ombudsman services (FOS). FOS offers free assistance to consumers who are unable to resolve their disputes using a member financial services organisation’s internal dispute resolution process. FOS has broad powers to resolve disputes, such as ordering that:

a sum of money be repaid or a debt forgiven;
security be released;
fees be varied, repaid or waived; or
a contract be reinstated or rectified.

It is important to note that you must follow and complete an organisation’s internal dispute resolution process before approaching FOS. 

Because the financial service providers are paying members, FOS is free for you as the consumer. This is a compelling commercial reason to engage FOS before you commence any court proceedings, which can quickly become very expensive.
Even if FOS is unable to resolve the dispute and your matter does require court proceedings, having followed FOS’ process can help your case. Typically, a court will require that you have first attempted to settle the matter before it takes your case. Often mediation must take place before a hearing. A court is likely to view following the FOS dispute resolution process as a good faith attempt to settle your dispute with an LCP.
Key Takeaways
If an LCP has breached your contract, consider whether you have rights under the law as well as those set out in your contract. Whether you have other legal rights depends on whether you are a party to an LCP. If you are a party to an LCP, you may also have rights against the LCP in relation to the supplier.
Even if you do have legal rights, it is advisable to take a commercial approach to settling the dispute. Resolving a dispute typically starts with the supplier or LCP’s internal dispute resolution process, which your written contract is likely to set out. However, you may need to engage FOS for further assistance and maybe even proceed to Court.
If you have any questions about a linked credit contract, please contact LegalVision’s contract lawyers on 1300 544 755 or fill out the form on this page.

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A company owes you money and you have tried everything to get them to pay. It is time to take formal legal action. You have been told that you can either issue a creditor’s statutory demand or file a statement of claim. This article will explain the difference between these options, how each of these work, their pros and cons, and when you should file them.
What is a Creditor’s Statutory Demand?
A statutory demand is a notice issued by a creditor (the party owed money) to a debtor company where the debt is more than $2000. The Statutory Demand requires the debtor company to pay the debt within 21 days. If the company fails to pay, it is presumed to be insolvent and can be wound up. However, there are cases in which the debtor company can apply to the court to have the order set aside. These include if:

the debtor company believes the debt is not due;
the debtor company disputes the debt for some reason; or
there are any defects in the form of the statutory demand.

In these cases, the company needs to apply to the court to have the demand set aside within 21 days of receiving the statutory demand.
Advantages of Issuing a Statutory Demand
There are significant cost and time benefits of issuing a statutory demand. For example:

you do not need a court judgment to issue a statutory demand;
you can issue a statutory demand with invoices or other documents confirming a debt is owed;
there is no large filing fee;
it is a relatively quick process as it requires the Defendant to pay within 21 days; or
there is a good chance the debtor will respond, even if it is to offer a payment plan to pay the debt.

Disadvantages of Issuing a Statutory Demand
However, you can only issue a statutory demand if the debt is due and owing. You cannot issue a statutory demand if there is any dispute over the debt. In addition, if the debtor company does not respond to the statutory demand within 21 days, your only option to enforce the debt is to wind up the company. This can be time-consuming and expensive, with no guarantee the debt will be paid.
There are many circumstances in which a debtor company can seek to set aside a statutory demand. These include where there is a:

‘genuine dispute’ as to the debt;
offsetting claim that puts the debt amount below $2000; or
defect in the form of the demand.

If the debtor company applies to set aside the statutory demand, you may face further court proceedings. They can also seek orders that you pay their costs of the application, which may be substantial.
What is a Statement of Claim?
A statement of claim is the first document filed in legal proceedings. It is used to make a claim against another party, such as a claim for payment of a debt. Below is the rough process of issuing a statement of claim:

A court will issue the statement of claim. The exact court will depend on the amount of your claim. The Local Court usually issues smaller claims, while the Supreme Court typically issues claims of more than $100,000.
The statement of claim is served on the other party, known as the defendant.
The defendant must respond or file a defence to the claim within a certain timeframe, usually 28 days.
If the defendant files a defence then the matter goes to trial and the court will decide which party is successful.
If the defendant does not file a defence or otherwise respond to the statement of claim, you can apply for a ‘default judgment’. A default judgment is a court order that the defendant owes you the amount claimed.

Advantages of Issuing a Statement of Claim
The one key advantage of issuing a statement of claim is that it can be issued for debts of less than $2000. This is great if the debt owed is a small sum of money. As long as you can prove that the defendant owes a debt and the defendant does not dispute the claim, you can apply for a default judgment from the court ordering that the defendant owes you the amount claimed. This is both time and cost efficient, allowing you to reclaim your debt quickly with minimal proceedings.
Disadvantages of Issuing a Statement of Claim
However, there are several disadvantages to issuing a statement of claim, particularly if the debtor files a defence or disputes the claim. In particular:

you need to prove the debtor owes a debt, which may be difficult if the debtor disputes it;
it can be expensive to run court proceedings if the debtor files a defence;
it can be time-consuming to get a result (it can take up to several months or more if the matter goes to trial); and
if you are successful at trial and the court enters a judgment against the debtor company, you still need to take steps to enforce the judgment.

Key Takeaways
Statutory demands and statements of claim can both be effective ways of pursuing a debt owed by a company. However, there are limitations to both. A dispute over the debt could result in significant costs and lengthy proceedings. If you are unsure about what you should file, we recommend you seek legal advice if you are considering either of these options. If you have any questions about creditor’s statutory demands, statements of claim or recovering a debt, contact LegalVision’s debt recovery lawyers on 1300 544 755 or fill out the form on this page.

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You have chased someone who owes you money (a debtor) through court and you have won the case. The court has ordered that the debtor owes you the money and has to pay your legal costs. However, the battle is not always over here. Getting a debtor to pay a judgment debt can be as much work as winning in court. A judgment debt is the name of the court’s order to pay you the outstanding debt. Often creditors (the person who is owed money) need to take further legal steps recover their debts. In this article, we explain your options if you want to get a debt paid.
Examine Their Finances
Firstly, find out if the debtor can afford to pay you. You can obtain a court order that requires the debtor to provide documents and answer questions about their financial situation.
The procedure varies slightly in different states, but the general process is the same. With the information you gain, you can decide on the next steps to get the judgment paid.
After examining their finances, you may find that you can order a garnishee order of their wages. You can also find out if they have significant debts, assets or savings. Alternatively, you can find out whether an order to seize their property is an option.

For example, you can find out if they are employed, the name of their employer and how much they earn.

Garnishee Their Wages or Bank Account
A garnishee order can require that the debtor’s employer or bank pay you from the debtor’s salary or bank account. A garnishee order basically instructs a third party, such as an employer or bank, to redirect the debtor’s earnings or holdings to you in order to pay the debt.
Before seeking a garnishee order, you need to get the details of the debtor’s employment or any bank account that they hold. You will need to confirm that the debtor is employed with a certain employer or that their bank account contains sufficient funds to pay the debt. Also, be aware that there are limits on the amount that can be deducted from wages. However, the garnishee order stays in place until the debt is paid.
Get a Court Order to Seize Their Property
If you know a debtor owns property, you can seek an order to sell the debtor’s property at an auction and pay the judgment debt from the sale proceeds. This is called a writ for the levy of property and is an order for personal property only. This includes:

cars;
boats; and
some household furniture.

A property writ cannot include:

rented or hired items;
clothing and household items that are essential;
items the debtor uses to earn a living; and
land.

Commence Bankruptcy or Winding Up Proceedings
If an individual owes you more than $5000, you can apply to make them bankrupt. Once they are bankrupt, an appointed bankruptcy trustee will look after their estate. You may be paid if their estate has enough money to pay. Similarly, if a company owes you money and the debt is more than $2000, you can apply to wind the company up.
An appointed liquidator will wind up the company and you may be paid if the company has sufficient assets. Both bankruptcy and winding-up proceedings are expensive to issue. You will only recover the debt if there are enough funds to pay your debt and essential payments. These include payments like those to a secured mortgage or to employees.
Do I Need to Pay to Enforce the Judgment?
Most steps to enforce a judgment require you to make up-front payments such as:

court filing fees;
sheriff’s fees and;
any legal costs.

However, you can add most of these costs to the judgment debt. This way, you recover your costs if the judgment debt is paid. You are also entitled to charge interest on the judgment debt from the date of the judgment until the time it is paid.
Key Takeaways
If you are seeking to chase the payment of a debt, you have a few options, including:

seeking a garnishee order from the debtor’s employer or bank;
seeking an order to seize the debtor’s property; or
commencing bankruptcy or winding up proceedings.

Obtain as much information as you can about a debtor’s financial situation before you spend more on further court orders to chase the debt. An examination is a sensible place to start if you don’t have enough information. Unfortunately, there are no guarantees the judgment debt will be paid, so weigh that up before taking the time and expense of further court proceedings. If you have any questions about how to enforce a judgment debt, contact LegalVision’s debt recovery lawyers on 1300 544 755 or fill out the form on this page.

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Your logo is a key element of your brand and business. As a result, you want to ensure that you are using your logo to its full potential to build a strong brand for your business. This will, in turn, secure future growth and success. Registering a trade mark for your logo protects your intellectual property and grants you exclusive rights to use your logo in the marketplace. This means other companies and other people cannot use your logo without your authorisation.
This article sets out some tips on how to make the most of your logo.
1. Ensure Your Logo Is Visible
Firstly, ensure that your logo is visible on all of your products and associated with the provision of your services. There are numerous ways you can display your logo. This can include on your:

website;
letterheads;
stickers;
email signatures;
envelopes;
presentations;
marketing materials;
invoices;
trade fair banners;
brochures;
receipts;
posters;
business cards;
merchandise;
packaging;
stationery;
clothing; or
social media accounts.

This will help customers recall and recognise your brand more easily, and will help your brand gain traction over time. The more visible your logo is to customers, the more powerful it will become as a branding tool.
2. Use Your Logo Consistently
Secondly, it is important to use your logo in a consistent manner. Your logo is a critical element of your visual identity and you want to build a strong visual identity for your brand. Therefore, it is important that there is consistency in the way you use your logo, whether it is on or offline. Being consistent will prevent confusing customers and help build stronger brand associations with your business.
In addition, it is a good idea to ensure that there is not only consistent use of your logo, but that it is also consistent with your message and brand values. This will further help customers to build stronger and more favourable brand associations. Ensuring consistency in the use of your logo will help you gain recognition and help you appear more professional.
3. Display Your Logo in New and Innovative Ways
Think of new and innovative ways of displaying your logo to give you an edge over your competitors.

For example, think about:

sponsoring events (e.g. a trade showcase);
teams (e.g. a local sporting team); or
charities or charity event in your local community (e.g. a charity raffle).

This will often provide you with the right to display your logo and promote your brand at those events. Ideally, you want to associate your brand with an event that resonates with your target audience and is consistent with your message and brand. You could incorporate this with branded merchandise, prizes or special offers.
Alternatively, you could also use your logo on branded merchandise to give away to your customers. For example, you can display your logo on everyday items to give away to your customers, such as:

mugs;
t-shirts;
keyrings;
lanyards;
stress balls; and
umbrellas.

Your customers will appreciate the freebie and your business will benefit from greater exposure. When it comes to using your logo at its full potential, continue to think outside the box to stay one step ahead of your competitors.
4. Rebrand From Time to Time
Finally, while building an easily recognisable and consistent brand is important, do not be afraid refine and refresh your logo from time to time. Rebranding allows your company to keep up with changes in societal needs and wants. Some of the world’s most recognisable brands have logos that were developed over time, for example, Starbucks and Airbnb. However it is always important to rebrand strategically as it can be an expensive exercise and can cause more harm than good if poorly executed.
5. Register A Trade Mark For Your Logo
Registering a trade mark for your logo will help protect your brand in the market. Your brand is one of your most valuable intangible assets, and you want to prevent your competitors stealing it. By registering a trade mark for your logo, you prevent others from using your logo without your authorisation. As a result, they will be unable to use your logo, a key symbol and visual representation of your brand. In order to make the most out of your logo, you need to ensure you are the only company using it in the market.
Key Takeaways
As a business owner, it is easy to allow brand building and protection fall down the priority list when competing with priorities such as revenue raising. However, you have invested time and money in developing your logo and brand. Considering ways to get the most out of your logo is time well spent and will pay dividends in the future as your business grows.
Remember that a logo is more effective when it is:

visible on all your product and service offerings;
used in a consistent way and is aligned with your values and messaging;
used in new and innovative ways that distinguish you from your competitors;
refreshed and refined over time as part of a long-term rebranding strategy; and
registered as a trade mark.

If you have questions about registering a trade mark for your logo, contact LegalVision’s trade mark lawyers on 1300 544 755 or fill out the form on this page.

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