The price you charge for your product can make or break your business. Early stage businesses have slim (and often negative) margins. A small percentage change in price can be the difference between reaching your next funding milestone and running out of cash.
The process to discover the best price for your product is long, but essential. First, you need to decide what pricing model is best suited to your product and customers. Secondly, you have to determine the amount you’re going to charge. Finally, you need to continue to test your pricing, as your product and market conditions evolve.
Choosing a Pricing Model
It’s important to match your pricing model to your product. In order to make repeat purchases, customers need to feel like they’re getting good value. The size and frequency of payments should be matched to the moments when the customer is receiving the most value from the product.

For instance, restaurants charge a fixed fee per meal. Customers usually eat the meal very close in time to when they buy it; and they don’t receive any ongoing or periodic value from the meal. So a fixed fee per unit makes sense.
On the other hand, software is used more frequently by its customers. An enterprise communication tool, like Slack, is used for a few minutes (or hours!) every day – so a small ongoing subscription fee is suitable. 

Your cost structure will also help determine your pricing model. Businesses with high fixed costs (machinery, R&D, etc.) need predictable revenue streams to help with investment decisions – so subscription pricing fits well. High-variable cost businesses, like accounting firms, need to charge a price that reflects the cost to deliver one unit of their product or service – so they use an hourly rate model.
The table below lists some common pricing models and examples of when to use them.

Pricing model
When to use it
Example

Fixed fee per unit
Value to the customer is discrete, at a point in time
Restaurant

Percentage fee per unit
Value to the customer increases with the magnitude of use
Digital payments provider

Hourly rate

High-variable cost businesses;
Amount of work required to produce a valuable outcome is uncertain

Accountant;
Physiotherapist

Monthly subscription

High-fixed cost business; 
Ongoing or uncertain usage patterns
Software; insurance

Your pricing model needs to be reflected in your legal documents. This becomes particularly important when customers request refunds, exchanges or otherwise disagree with how much they owe you. 
How Much Should I Charge?
Now that you’ve chosen a pricing model, you need to decide how many dollars to charge.
Your goal is to price your product in a way that maximises your revenue over time. 

Revenue = price x units sold. 

A higher price usually results in fewer units sold and vice versa. But it’s almost impossible to find the ‘optimal’ price that maximises your revenue. So, what should you do?
You need to consider the factors that will help you determine how to price your product. These include:

Cost structure and profit margin: How much do you need to charge in order to make a profit?
Target customer: Who are your customers and how much money do they have to spend on your product?
Brand positioning: What does your pricing say about the quality of your product?
Substitutes and competitors: What customer need does your product address? What is the price of alternative solutions?

Many businesses use customer surveys to help determine pricing. Surveys can be a useful tool but you need to understand their limitations. There’s a gap between what customers say they’ll pay and what they actually pay. It’s better to rely on actual purchase data and then use customer interviews to provide a subjective overlay to your data.
Review Your Pricing Frequently
Pricing should be dynamic. As the factors that determine pricing change, so too should be the amount you charge for your product. Varying your pricing from time to time and measuring the change in sales volume will help you inch closer to your ‘optimal’ price. You can use promotional discounts to run pricing experiments.
While experiments can help you fine-tune your pricing strategy, you should avoid being overly reactive. The appearance of a new competitor with a more affordable product does not necessarily mean you need to reduce your prices. Rather, it should prompt you to zero-in on your product’s unique characteristics and then decide if these justify a price premium. 
Key Takeaways
Pricing is as important to your business as it is challenging. Your pricing should reflect your product, your customers, your cost structure and your competitors. Reviewing your pricing from time to time – as well as running pricing experiments – can help you to find the best price for your product.
If you need assistance with your business’ contracts and legal documentation, LegalVision’s commercial contracts lawyers can help. Call 1300 544 755 or complete the form on this page.

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A contract is a legally binding document that recognises and governs the rights and obligations of the parties to the agreement. Where both parties are located in a particular state, it makes sense that the laws that apply to that state govern the contract. It gets more complicated where one party is located in a different jurisdiction, whether that be another state or country, as each jurisdiction has different laws. This article looks at what governing laws are and how to select the right law for your contract.
What Is the “Governing Law” of a Contract?
The “governing law” in a contract is the law that applies to whatever it is that the contract covers.

For example, your contract is for the supply of goods. Here, the governing law would apply to the contract as a whole, including that supply.

It is important to note that every contract has a governing law. This even includes where one has not been specified in the contract.
My Contract Doesn’t Specify a Governing Law – What Applies?
Where the governing law has not been specified, a Court will need to determine which governing law applies. This is why it is always a good idea to agree to the governing law upfront. You should always aim to specify it in your contract.
There are generally two considerations:
a Court will consider whether the parties have intended that a particular governing law should apply. Where neither party has expressed the intent, the Court will need to look at other factors. These factors include the circumstances surrounding the parties entering into the contract; andif there is no evidence that a particular governing law was intended to apply, a Court will need to objectively determine which law has the closest connection to the contract.
In determining this, the Court might look at a number of things, including: 
where each party is located and operates;the place or places where you negotiated and entered into the contract;where performance under the contract has taken or will take place;the kind of contract and what it covers; andthe parties’ relationship, particularly at the time you entered into the contract.
How Do I Pick Which Governing Law Should Apply?
There are a number of factors to consider when determining which governing law should apply.
Context
Sometimes what your contract relates to might benefit from a particular law applying.

For example, not every jurisdiction recognises the concept of a trust. So, if this is relevant to what you are hoping to achieve, you will need to pick a governing law that recognises trusts.

Examples of other areas of law which differ significantly across jurisdictions include:
health safety laws;employment laws;business and tax laws;consumer protection laws; and environmental laws.
If you want to hold the parties to a particular standard, you should pick the law based on this.
Relevance
It might be tempting to pick a governing law so that a particular law applies. However, what you select must also be relevant. In other words, the law has to connect to the contract in a meaningful way.
If this connection is not there and the governing law is called into question, your selection of a particular governing law may be overruled by a Court. This is significantly more likely where you made the selection deliberately to ensure a law does not apply that otherwise would (and arguably should) have applied.
Familiarity
Ideally, you want the governing law to be something that you are comfortable with. As such, we recommend selecting the governing law that applies to the majority of your business operations.

For example, if most of your business takes place in New South Wales, you will have a good idea what to expect operating under those laws and how to make sure that you are compliant.

It is important to keep in mind that laws vary across jurisdictions, even from one state to the next. If you are thinking about commencing operations in a new jurisdiction, or are considering agreeing to a governing law that you are not familiar with, you should seek legal advice. This way, you know what to expect and can adjust your operations and secure any additional licences that you might need.
Dispute Resolution
The question of governing law is different from but related to the question of what forum disputes are resolved in.

For example, you could pick New South Wales law as the governing law but have your disputes determined by arbitration and have the seat of the arbitration as Auckland. 

In some cases, where disputes are resolved is of more significance to the other party than what the governing law is. Ideally, you want to avoid having the dispute resolved in a way or by someone who has no familiarity with the governing law. This, and improved enforceability, are two reasons why arbitration may be a good dispute resolution option.
Cost
Cost is also a factor when selecting the governing law. This is because there may be additional fees in becoming compliant. It can also be costly to obtain jurisdiction-specific advice if something does not work out as planned.
Preferences
If you are contracting with a party in another jurisdiction (particularly one that is overseas) and their business is predominantly in that jurisdiction, they may have strong feelings about choosing that law as the governing law.
While this may be less familiar to you, it could end up costing you more and might not be where you ideally want to be resolving disputes. Agreeing to such a request might be a commercial decision that you are willing to make in the circumstances. 

For example, if you know it is important to the other party, you might want to consider conceding the governing law point to get other things that you want, such as a better price.     

Key Takeaways
Governing laws are often misunderstood, and there can be a lot of value in being selective about which governing law you choose. Determining the governing law in a contract can have a large impact on the way you conduct your business relationships with international clients. If you have any questions or would like to know more about how governing laws work, get in touch with LegalVision’s contract lawyers on 1300 544 755 or fill out the form on this page.

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As a business owner, it is important that you understand your Australian Consumer Law (ACL) obligations. The ACL imposes duties and liabilities on manufacturers and suppliers of products. This includes obligations that businesses must comply with when dealing with “consumers”. Specifically, the ACL provides consumers with automatic guarantees. This means that if you supply a consumer with goods or services in Australia at any stage in the supply chain, you are legally responsible for ensuring the goods or services are of an acceptable standard. 
The question often is, however, who is a consumer? On 1 July 2021, the consumer guarantees threshold will change. This means more businesses will be accountable for providing goods or services of an unsatisfactory standard. This article explains:
what is a consumer guarantee;who is a consumer; how the definition is changing; andIts implications for businesses.
What Are the Consumer Guarantees?
Under the ACL suppliers and manufacturers automatically provide guarantees about the goods they sell, hire or lease, and services they provide to consumers. These rights exist regardless of any warranty provided by the supplier or manufacturer and cannot be excluded.

Whenever a business supplies goods or services to a consumer there are guarantees, including, that the:

goods are of acceptable quality;
goods will match their description, or any sample or demonstration model;
services will be provided with due care and skill and within a reasonable time; and
goods and services will be fit for any purpose made known to the supplier.

Where goods or services fail to meet a guarantee, a consumer has rights against the supplier.
If the failure to meet a guarantee on goods or services is minor, the supplier can choose the remedy, including a repair. However, if the failure is major, the consumer can choose a repair, replacement or refund or can recover compensation for any reduction in value.
Understandably, these rights are very powerful and can have strong implications for businesses.
Who is a Consumer Currently?
For the purpose of consumer guarantees, the ACL is very clear on who is a consumer.

The ACL provides that businesses must guarantee products and services they sell, hire or lease for:

under $40,000; or
over $40,000 that are normally bought for personal or household use; or
commercial road vehicles or trailers used primarily to transport goods on public roads.

A business will not owe the purchaser any consumer guarantees if the goods or services were acquired for more than $40,000, and are not goods or services of a kind ordinarily acquired for personal, domestic or household use or consumption.
Impending Changes to the Law
The definition of a consumer has been in place since 1986 but is changing to account for inflation. This will ensure the guarantees adequately protect consumers.

Under the amended definition, the threshold for goods acquired as a consumer will increase from $40,000 to $100,000.

Therefore, businesses will be required to guarantee products and services they sell, hire or lease for under $100,000 regardless of whether they were acquired for personal, domestic or household use or consumption or not.
This will significantly increase the scope of protection for consumers under the consumer guarantees provisions of the ACL.
Key Takeaways
This reform does not come into effect until July 2021. This gives businesses sufficient time to ensure their internal policies regarding guarantees are updated in time. This gives you time as a business owner to start considering the implications of this reform and how it will affect your business.
You may need to:
implement staff training;change the terms and conditions or materials provided to consumers regarding return and refund policies; and ensure no representations are made on promotional materials or orally to consumers that could mislead them into believing they have no rights in this regard. 
Businesses that do not meet their ACL obligations could face enforcement actions by the ACL regulator, the Australian Competition and Consumer Commission (ACCC). If you have any questions about how the and consumer definition could affect you or your business, LegalVision’s expert regulatory lawyers can assist. Can 1300 544 755 or complete the form on this page.

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COVID-19 has resulted in a large percentage of the population working remotely, and physical distancing measures have made it difficult for individuals to meet in person. This means that the way we sign and witness documents have been disrupted. State governments have introduced legislation to try and make witnessing more practical during this unprecedented time. This article will unpack how signatures can be witnessed during COVID-19.
When Does a Signature Need a Witness?
A witness signature is the signature of someone who watches you sign a legal document, such as a person that watches you sign a lease. Whether or not a contract needs a witness depends on what type of contract it is. While most contracts do not require a witness, you will need a witness for evidentiary purposes in many circumstances. This helps prove that the person signing the document is who they say they are and actually signed it themselves. The following documents require a witness:
wills;mortgage documents and other financial documents;deeds (in most states);statutory declarations;affidavits and other documents in legal proceedings; andpowers of attorney.
What Are the Requirements of a Witness?
In general, a witness must:
be over 18 years old;know the person that they are witnessing the signature for;not be under the influence of drugs;be of sound mind;not be a party to the document or have any financial interest in it; andnot be a beneficiary if the document is a trust or self-managed superannuation fund.
Some legal documents need an ‘authorised witness’. This may include a: 
solicitor or barrister; justice of the peace; or notary public.
Correctly Witnessing a Signature During COVID-19 
New South Wales
New South Wales was the first state to introduce laws during COVID-19 to facilitate the witnessing of signatures and attestation of documents by audiovisual link. 
An audiovisual link is a technology that enables continuous and contemporaneous audio and visual communication between persons at different places. This includes video technology such as Zoom or Skype.
To properly witness the signature, the witness must:
see the act of signing in real-time;sign a counterpart of the document or a scanned copy of the signed document sent electronically by the signatory;be reasonably confident that the document they are signing is the same as the document the signatory is signing; andendorse the document or a copy of the document with a statement specifying the method of witnessing. It should also outline that the document was witnessed in accordance with the emergency COVID-19 regulations.
Australian Capital Territory
The regulations in the Australian Capital Territory largely mirror that of New South Wales. They permit remote witnessing as long as the signature is properly witnessed via an audiovisual link.
Victoria
Similar to New South Wales, signatures can now be witnessed electronically in Victoria. In Victoria, the regulations require the signing of a document electronically to occur in counterparts. This means that each party to the document will need to receive a copy of each signed counterpart.

Signing in counterpart means that duplicate copies of the document are printed so that each party can sign a separate copy of exactly the same document.

Queensland
In Queensland, some regulations have been introduced regarding:
wills;enduring powers of attorney; andto allow affidavits and statutory documents to be witnessed by a special witness (e.g. a solicitor, Justice of the Peace or Notary Public) over an audiovisual link.

However, the regulations have not been extended more generally. It is noteworthy that Queensland has removed the requirement for deeds to have a witness.

South Australia
While new regulations permit that a requirement for two or more persons to be physically present will be satisfied if the persons meet or the transaction takes place remotely using an audiovisual link, there are a number of exclusions. 
These include that a witness must be physically present to witness the signing, execution, certification or stamping of a document or to take an oath, affirmation or declaration in relation to a document. This makes it difficult for many documents to be witnessed during COVID-19.
Other States
The Northern Territory and Western Australia have not introduced any changes in relation to remote witnessing during COVID-19. Tasmania permits online witnessing for the taking or receiving, swearing, signing or witnessing of signatures of an affidavit, declaration or other statutory documents. 

Most state regulations are only temporary during COVID-19. They may be extended, but it is important to check before witnessing a document electronically.

When You Will Not Need a Signature
For simple contracts that do not need a witness, they can be largely executed electronically and without a witness. To ensure an electronic signature is valid, the following requirements must be met:
identification – the method of signature must be able to identify the person signing the document. It should also indicate their intention to be bound by the document;reliability – the method of signature must be reliable in light of the circumstances. This includes the type of document you are signing; andconsent – the parties to the document should consent to use an e-signature to execute the document. 
Key Takeaways
COVID-19 has created difficulties for documents signing and witnessing due to the limited face to face contact allowed. To assist with this, many states have introduced regulations around witnessing signatures electronically over an audiovisual link. If you are going to witness or have a document witnessed in this manner, it is important that you do it correctly to ensure that the document is valid and binding. If you have any concerns about executing contracts electronically or with a witness remotely, contact LegalVision’s COVID-19 legal team on 1300 544 755 or fill out the form on this page.

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When a company is raising capital, they may require a number of different legal documents as part of the investment transaction. Investors will be interested in a company’s shareholders agreement because it is one of the key governance documents for the company. However, a shareholders agreement is different from an investment agreement and will not itself be sufficient in documenting the terms of an investment. This article explains:

what investment agreements are;
what shareholders agreements are; and
the key differences between these two types of documents.

What Are Investment Agreements?
An investment agreement is a contract entered into between a company and an investor. This document sets out the terms and conditions of the investment transaction. It is very important to have an investment agreement because it covers the key terms of the investment, including:

the details of the company and the investor;
how much is being invested;
any conditions of the investment;
the actions each party is obliged to take in order to complete the investment (for example in an equity investment, the company’s obligation to issue shares to the investor, and the investor’s obligation to transfer funds to the company); and
the company gives warranties and representations to the investor, and by the investor to the company.

Types of Investment Agreements
The type of investment agreement you will need will depend on the nature of the transaction. The table below sets out different types of investment transactions and the associated investment agreement.

Type of Investment
Relevant Investment Agreements

Equity Investment

Share Subscription Agreement
A share subscription agreement will state that the investor will subscribe for shares in the company in exchange for an agreed investment amount. Then, the company will issue those agreed shares to the investor.

SAFE 

SAFE (‘simple agreement for future equity’)
A SAFE will state that the investor will provide certain funds to the company. In exchange, they have the right to receive shares in the company if certain trigger events occur.

Convertible Note

Convertible Note Deed Poll
The company signs a convertible note deed poll. It sets out the terms and conditions on which the company issues convertible notes.
Convertible Note Subscription Agreement
Under a convertible note subscription agreement, the investor will subscribe for convertible notes in exchange for an agreed investment amount. The issue of the convertible notes is governed by the terms of the convertible note deed poll.

Venture Debt

Loan Agreement
A loan agreement will set out the terms of the loan from the investor. This includes the:

amount the investor is lending;
term of the loan; and
repayment conditions.

Security Agreement
An investor will generally require the company to grant them security over the company’s assets. The terms of the security granted will be set out in a security agreement.
Warrant Deed
An investor will generally require the company to grant it a warrant. This is a right for the investor to receive shares in certain circumstances. The warrant deed sets out the terms of the warrant granted by the company.

What Is a Shareholders Agreement?
A shareholders agreement is a contract entered into by the company and all of its shareholders. It governs the relationship between the company and the shareholders. It also sets out the framework for decision making in the company.
Some key items covered in a shareholders agreement include:

decisions made by directors against shareholders;
who can appoint shareholders;
when the company can issue new shares;
when shareholders can sell their shares; and
what information the company has to provide shareholders.

How Are They Different?
Investors are often interested in what is contained in a company’s shareholders agreement. This is because it affects what rights they will have as a shareholder of the company. If they are not becoming a shareholder immediately as a result of the investment, it indicates what rights they may have in the future when they become a shareholder.
However, investment agreements and shareholders agreements are very different. They cover different subject matter and achieve different purposes.
Key Differences
The table below shows the key differences between investment agreements and shareholders agreements.

Subject
Investment Agreement
Shareholders Agreement

Purpose
The purpose of an investment agreement is to document the terms of the investment transaction.
The purpose of the shareholders agreement is to set out the relationship between the company and its shareholders. It also establishes a decision making framework which will be in place until the agreement is terminated.

Subject Matter
The terms of an investment agreement are limited to the particular transaction itself. It generally will not have terms which affect the company’s day-to-day operations or general decision making.
A shareholders agreement will govern how the company makes decisions on an ongoing basis. It will not contain the terms and conditions of any particular transactions.

Rights of Investors
An investment agreement will set out the obligations the company has to the investors in relation to that investment transaction. Generally, it will not require the investor to have any input in company decisions which are unrelated to the particular investment.
A shareholders agreement sets out the obligations the company has to its shareholders on an ongoing basis. Certain critical decisions, especially those related to the company’s shares, will likely need some input from shareholders.

Parties
An investment agreement is entered into by the company and the investor.
A shareholders agreement is entered into by the company and all its shareholders. This may or may not include the investor. It will depend on whether the investor is becoming a shareholder as a result of the investment.

Key Takeaways
Investment agreements and shareholders agreements serve distinct purposes for companies. They are both important, and one cannot take the place of the other. It is important for a company to have a shareholders agreement so it can set out the terms of the relationship between the company and its shareholders. Itis not a transactional document and will not address the terms of any particular transactions. If your company is raising capital, it is important to prepare an appropriate investment agreement to document the terms of the investment. If you require assistance in preparing a shareholders agreement or an investment agreement, contact LegalVision’s business lawyers on 1300 544 755 or by filling in the form on this page.

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If you are purchasing goods from a supplier, it is important that you pay attention to when risk and title to the goods transfer to you. This is important because you want to know when you will have complete ownership of the goods. This way, you can deal freely with your new goods. Knowing when risk passes to you is important so you know when you are responsible for loss or damage to the goods. This article explores how risk and title works in Australia. It also looks into Incoterms, which are commonly used when engaging in the supply and purchase of goods internationally.
What is Risk?
Risk describes whose responsibility it is to look after the goods. Once risk in the goods transfers to you, you will be responsible for anything that happens to the goods, including:
damage to the goods; andstorage and transport of the goods.
Often, you will take responsibility for the risk in the goods when they are physically transferred to you. This is regardless of whether:
you have collected the goods; orthey are delivered to you.
It is important you have adequate insurance in place from the time that risk transfers from the supplier to you.
What is Title?
Title describes who the legal owner of the goods is. When the title transfers from the supplier to you, it means you are now the owner of the goods. The supplier no longer has any rights to the goods. If you are purchasing large pieces of equipment or other items for your business, these clauses may have the effect of you being able to use the equipment and pay for it at a later date. Here, you will not be the legal owner of the equipment until you have paid for it. This is even though it is in your possession.
If you are expecting title to the goods to transfer to you, your contract with the supplier should include a warranty from the supplier that they have legal title to the goods and that the goods will be free from any encumbrances and any other third party rights.

For larger purchases, you should search the Personal Property Security Register (PPSR) to check whether any other parties have an interest in the title of the goods.

Example Clause

Title to the Goods will pass to the Customer on the date the Customer pays the Price for the Goods in accordance with this Agreement.
Subject to the terms of this Agreement, risk in the Goods will pass to the Customer when the Goods have been Delivered to the Customer or when the Customer has Collected the Goods (as applicable), and the Customer has not rejected the Goods, in accordance with this Agreement.

What is Retention of Title?
When suppliers are providing goods to you on payment terms, their key concern is ensuring they receive payment for the goods. Suppliers will often do this by:
including a retention of title clause in their supply contract with you; and registering their security interest on the PPSR.

For example, you purchase a commercial printer from a supplier. You receive the printer and start using it in your office, but you do not need to pay the full purchase price until 60 days after delivery. If a supplier includes a retention of title clause in the supply contract, they are asserting that while you may have the right to possess the printer, they retain ownership of the printer until you have fully paid the price to them.

To manage credit risk and further show that the supplier retains title over the goods, they may choose to register it on the PPSR. The PPSR is an Australian wide electronic system for registration of interests in personal property. This includes all sorts of property, such as: 
plant;equipment;vehicles; and company shares.
If the goods are registered on the PPSR, anyone can see this registration. Suppliers often do this because registration makes it easier for suppliers to recover the goods from you should you not pay them, as it shows that the supplier legally owns the goods. If you are to go into liquidation and a liquidator seizes your assets, the supplier will have priority over the goods they registered on the PPSR.
How Do Incoterms Work?
If you are contracting with an overseas supplier to purchase goods, it is common that the international commercial terms developed by the International Chamber of Commerce (ICC) will be used. Incoterms set out the obligations, risks and costs for both parties to a contract at the various stages of delivery. While incoterms are not a compulsory requirement for international trade, they provide standard concepts which ease the transfer of goods between countries.
Importantly, Incoterms only apply to the delivery of goods. They do not cover details of:
the ownership and transfer of the title of the goods;events beyond your control; termination; or the payment process.
As such, these terms will need to be clearly drafted into your contract.

Incoterms do not automatically apply and will need to be agreed between both parties within the contract to be effective.

As a customer, you will need to consider whether these terms are beneficial to your business. Practically, you will need to consider whether the relevant Incoterm makes sense. 

For example, you may not be able to arrange an export shipment from the supplier’s location, so agreeing to such Incoterm will put you in a position where you may breach the contract.

As such, before entering into any international arrangement, it is best practice to obtain insurance and tax advice.
Incoterms® 2020 Cheat Sheet
Incoterms® for Any Mode of TransportationEXWEx Works
The supplier’s obligations are fulfilled when the goods are made available to the customer.
The goods are collected by the customer at the supplier’s premises or at an agreed upon location and the customer takes the risk of the goods from that point. 
The supplier does not need to assist with loading the goods onto the customer’s vehicle or assist with export clearance, if applicable. The customer must pay all duties and taxes and other charges relating to the export of the goods.The customer arranges carriage of the goods.
FCAFree Carrier
The supplier delivers and loads the goods, cleared for export, on the customer’s transport at the supplier’s premises or delivers them to another premises (typically a forwarder’s warehouse, airport or container terminal) not unloaded from the supplier’s vehicle.
Risk in the goods transfers when delivery has been made.
The supplier is responsible for export formalities and the customer is responsible for import formalities and insurance from the time of delivery.
CPTCarriage Paid To
Supplier delivers the goods to the carrier nominated by the supplier at the agreed place of shipment, at which point risk transfers to the customer. The supplier must pay the costs of carriage to the agreed named place of destination. The customer will bear all costs after the goods have been delivered. 
The supplier must clear the goods for export and the customer will be responsible for paying for import clearance.
CIPCarriage and Insurance Paid ToThis Incoterm is the same as CPT however the supplier must procure insurance against the customer’s risk of loss or damage to the goods during the carriage of the goods. The minimum level of insurance is stipulated by Institute Cargo Clauses (A), beyond that, the customer needs to pay any additional insurance (unless otherwise agreed between the parties).DPUDelivered at Place Unloaded
The supplier clears the goods for export and bears the risk and costs associated with delivering the goods and unloading them at the named port or place of destination. The goods are delivered at the time of unloading at arrival by any means of transport. Risk transfers to the customer at this point. The customer is responsible for import clearance and any applicable local taxes or import duties.
DPU is the only Incoterms rule that requires the supplier to unload the goods at the place of destination. 
DAPDelivered at Place
The supplier must deliver the goods to the place named by the customer, typically the customer’s premises. The supplier must pay for carriage of the goods and the customer is responsible for unloading the goods. Risk passes to the customer on delivery of the goods.
The supplier must clear the goods for export and the customer will be responsible for paying for import clearance.
DDPDelivery Duty PaidThe supplier is responsible for clearing the goods for export, arranging carriage and delivery of the goods at the named place, unloading the goods, as well as clearing them for import and paying all applicable taxes. Risk transfers to the customer when the goods are made available to the customer at the arrival terminal.
Incoterms® for Sea TransportFASFree Alongside Ship
The supplier delivers the goods alongside the vessel at the named port of shipment. The customer bears all costs and risk to the goods from that point, including loading the goods onto the vessel.
The supplier must clear the goods for export and the customer is responsible for clearing the goods for import.
FOBFree on BoardThe supplier shall deliver the goods (at its cost) on board the ship selected by the customer at the named port of shipment. The supplier bears all costs and risks until the goods are loaded onto the ship including export clearance. The customer assumes all risks once the goods are on the ship, including the costs related to damage or theft of the goods after they are loaded on board and all destination port and import costs.CFRCost and FreightThe goods are considered delivered by the supplier when the supplier delivers the goods at the port of shipment. The supplier must clear the goods for export and pay for freight to transport the goods to the final port of destination, however, risk transfers to the customer when the goods are on board the vessel. The customer must pay for import clearance and formalities. CIFCost, Insurance, and FreightThis Incoterm is the same as CFR however the supplier also has to procure marine insurance against the customer’s risk of loss/damage during carriage which is at least the equivalent to the conditions of the Institute Cargo Clauses (c), beyond that, the customer needs to pay any additional insurance (unless otherwise agreed between the parties).
Key Takeaways
If you are purchasing goods from a supplier, it is important that you are aware of when you will:
take ownership of the goods; and be responsible for them.
Once you are responsible for them, you should consider taking out insurance to cover the goods. When ordering goods from a business within Australia, the contract generally clearly sets out when title and risk transfers. If you are purchasing goods from overseas, you and the supplier may choose to use an Incoterm to set out the obligations of both parties and when risk and title transfers. If you need assistance with your supply contracts, then call LegalVision’s commercial contracts lawyers today on 1300 544 755 or fill out the form on this page.

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COVID-19 has created a rise in online communications such as video conferencing. The remote working environment and physical distancing regulations have made it challenging to execute documents properly, including situations when there is a requirement to have a witness physically present. In response to this, many state governments have introduced legislative changes to allow documents to have online witnesses. This article will unpack how contracts, affidavits and statutory declarations may be witnessed online in New South Wales (NSW).
Signing Contracts
There are various requirements for certain contracts to have a witness (including deeds and wills). However, there is no general requirement for all contracts to have a witness. In many cases, contracts will require a witness purely for evidentiary purpose. This means the witness will confirm that the correct person actually signed the contract. A contract with be valid and binding if:
there has been an offer and acceptance of that offer;there is an intention to create legally binding relations;the parties exchange values, e.g. money for a service (although this is not always a requirement, for example with deeds);there is certainty around the terms of the contract; andthe parties have the capacity to enter into the contract.
E-Signatures
Most contracts can be executed electronically in Australia. To have a validly executed contract by way of e-signature, you must meet the following requirements:
identification – you must be able to identify the person entering into a contract and their intention to be bound by the contract. This avoids the wrong person signing a contract and making it invalid. For example, errors could occur if a company director was meant to sign a document and another employee signed it on their behalf;reliability – the method you use to obtain the e-signature must be reliable in light of the circumstances. Many businesses choose to use digital signing platforms such as DocuSign, as these are generally reliable; andconsent – the parties to the contract need to indicate they consent to the document receiving an electronic signature. 
There are some restrictions on when you may use e-signatures, including for:
deeds (in some states);some registration documents, for example, documents lodged with Land Titles offices; andcourt documents.
Given the ongoing updates and flexibility around these requirements during COVID-19, it is best to check what the requirements are before using an e-signature.
Requirements For Witnesses
In general, if a contract needs a witnessed, the witness must:
be 18 years old or over;know the person that they are witnessing the signature for;not be under the influence of drugs;be of sound mind;not be a party to the document or have any financial interest in it; andnot be a beneficiary if the document is a trust or self-managed superannuation fund.
Signing Affidavits
During legal proceedings, an affidavit is a written account of someone’s evidence or statement of facts. Affidavits are prepared before a trial and ensure each party is aware of what the other party’s witness will say at the trial.
An important part of giving evidence in an affidavit is having it witnessed. The witness’ role is to affirm that the contents of the affidavit are ‘true and correct in every particular’. For affidavits, the witness must be an ‘authorised witness’. An authorised witness may be:
court registrars;lawyers;justices of the peace;police officers above the rank of sergeant; andpublic notaries.
Signing Statutory Declarations
A statutory declaration is a statement of facts that you declare to be true. You usually use it in situations where there are no court proceedings, but some fact needs to be proved. Statutory declarations can be used for all sorts of reasons, including:
confirming your personal details;to prove a change of name;evidence for sick leave; andfinancial matters.
Statutory declarations must have a proper witness, or they will be invalid. The requirement to have an ‘authorised witness’ also applies to statutory declarations. 
Witnessing Contracts, Affidavits and Statutory Declarations Online
The NSW government introduced changes to the law to allow documents to be witnessed online in response to the challenges COVID-19 presented. The changes allow for the witnessing of documents online during the pandemic by audiovisual link, including:
Zoom;Microsoft Teams; and Skype.
This has made it substantially easier for people to witness contracts, affidavits and statutory declarations. However, if you would like to have a document witnessed online, it is still important to follow the new regulations to ensure that the document is a validly witnessed document.
Here, witnesses must:
watch the signatory sign the document in real-time;sign a counterpart (a document that is exactly the same) of the document or a scanned copy of the signed document sent electronically by the signatory;reasonably satisfy themselves that the document they are signing is the same document that the signatory is signing; andendorse the document or a copy of the document with a statement specifying the method of witnessing and that the document was witnessed in accordance with the emergency COVID-19 regulations.

An example statement for witnessing a signature is:
“This document was signed in counterpart and witnessed over audiovisual link in accordance with clause 2 of Schedule 1 to the Electronic Transactions Regulation 2017.”

The regulations only apply for a limited time, although the government has the power to extend the timing of the regulations. If the government does not repeal or extend the regulations, they will expire on 22 October 2020.
Key Takeaways
Changes to NSW regulations have made it easier for individuals to have documents witnessed remotely. This includes: 
contracts;affidavits;statutory declarations;wills; and powers of attorney. 
It is important that if a document is witnessed online, that it is done properly and in accordance with the regulations so that the document is valid and enforceable. Given that the regulations are subject to change, you should double-check the regulations before using an online witness. If you have any concerns about executing contracts electronically or with a witness remotely, contact LegalVision’s experienced lawyers on 1300 544 755 or fill out the form on this page.

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If a business owes you money, you have the option to have them wound up. Winding up a company that owes your business money is very serious. Businesses often only consider this option when all other debt recovery attempts have failed. This article will explain some of the pros and cons of winding up a company that owes you money.
When Is Winding an Option?
A company that owes you money is known as a debtor. You must meet a number of preconditions before you can commence winding-up proceedings against your debtor. These preconditions require that:
the company who owes you has ASIC registration;the debt exceeds $2,000; andthere is no genuine dispute in relation to the existence of, or amount of the debt the company owes you.
Once meeting these preconditions, you can commence the multistep process of winding up the company, which includes:
issuing a creditors statutory demand to your debtor; andgiving your debtor 21 days to make payment (or to file an application to have the creditors statutory demand set aside).
If the debtor fails to make the payment or file an application to have the creditor’s statutory demand set aside within 21 days, the company will be presumed insolvent. You may then rely on the presumption of insolvency to commence winding up proceedings in a court of competent jurisdiction.
Temporary COVID-19 Arrangements
Temporary changes to insolvency laws are currently in place due to COVID-19. While your business can still issue a creditor’s statutory demand, the time frame for compliance, and the minimum monetary thresholds have changed considerably.

 

Pre COVID-19

Current Temporary Changes

Creditor’s Statutory Demand

Debt exceeds $2,000.
21 days to comply.

Debt exceeds $20,000.
Six months to comply.

These changes will remain in force until 25 September 2020, unless extended further.
What Are the Pros?
1. Motivate Your Debtor to Settle the Debt
Once you have wound up (or liquidated) a company, they cease to exist. If the directors of your debtor company wish to continue trading, they must take some action. In many instances, this will result in your debtor attempting to settle the debt owed to you if they have the means to do so.
2. Appointing a Liquidator
Appointing a liquidation over an insolvent company allows that independent registered liquidator to take control of the debtor company.
The liquidator will administer the company’s affairs so that it can be wound up in an orderly and fair way to the benefit of creditors.
3. Liquidator’s Powers
As the applicant creditor, you have the opportunity to choose which liquidator is appointed to the company. The role of a liquidator is to protect, collect and sell the debtor company’s assets and to distribute dividends to creditors.
Liquidators have significant powers and responsibilities which include:
investigating and reporting to creditors about the debtor company’s affairs;taking action to recover any unfair preference payments (payments made to creditors in preference over others);taking action to set aside any uncommercial transactions;making claims against the directors for breaches of their director duties, including in relation to insolvent trading; andtaking action in relation to illegal phoenix activity.
This list is not exhaustive.
What Are the Cons?
1. No Guaranteed Payment
Winding up a company does not guarantee that you will receive payment of the debt. There is a possibility that you will only receive a small portion of the debt owed to you. In some instances, you may receive nothing at all.
2. Difficult to Assess Your Debtor’s Financial Position
Prior to commencing winding-up proceedings, there is no clear way of knowing:
what funds or assets the company may own;the amount of equity held in any property or other significant assets; orthe number of other creditors that are owed money or the amounts owed to them.
3. Other Creditors Might Receive Payment Before You
Your debtor company might owe a number of businesses money. Even if you initiated the winding-up process, you will not be paid in preference to other creditors. A liquidator has a duty to all creditors equally. Dividends are paid out in a clear order of priority, which is mandated by law as follows:
the costs of the liquidation;secured creditors;any employee wages, salary or leave entitlements; andunsecured creditors.
Each category must be paid in full before the next category is paid. If there are insufficient funds to pay a category in full, the available funds are paid on a pro-rata basis (and the next category or categories will be paid nothing). This means that there is no guarantee that your debt will be repaid.
Is Settlement Still an Option?
You are able to negotiate and accept a commercial settlement at any time prior to making a winding-up order.
However, if you reach a resolution with your debtor and you choose to discontinue the winding-up proceedings, another creditor can take steps to continue the proceedings in your place. In this scenario, there is a risk that any settlement payment you have received may later be deemed to be a preference payment, and clawed back by the liquidator to repay creditors in the priority order set out above.
Key Takeaways
It is clear that there are both pros and cons to consider before winding up a company who owes you money. Liquidation may:
incentivise your debtor to settle their debts to avoid being wound up; orallow you to recoup some of your debts through the actions of a liquidator.
However, there can be no guarantee that you will receive payment in full, or at all. If you need advice about winding up your debtor, contact LegalVision’s insolvency lawyers on 1300 544 755 or fill out the form on this page.

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JobKeeper is the federal scheme that assists businesses during the COVID-19 pandemic. Eligible businesses receive an amount to subsidise the wages of their eligible employees. In addition to the subsidy, the JobKeeper scheme includes changes to the Fair Work Act, which create flexibility for employers to manage employees. These changes will not extend past 27 September 2020 (including with respect to employers’ ability to stand down employees).
Recently, the federal government announced it will extend the JobKeeper subsidy from 28 September 2020 to March 2021, but with some changes. There are two extension periods:
Extension 1: 28 September 2020 to 3 January 2021; andExtension 2: 4 January 2021 to 28 March 2021.
This article outlines:
the changes to JobKeeper;what the two key extension periods include; andanswers some common questions related to the scheme.
What Are The Changes to JobKeeper?
The Eligibility Test
The eligibility test for businesses is broadly the same. Businesses now only need to demonstrate the effect of COVID-19 on their revenue in the period of three months before the relevant extension period (rather than for two consecutive quarters before the relevant extension period). 
To receive JobKeeper, businesses will need to show their actual GST turnover has fallen during:
Extension 1: in the period July to September 2020. Extension 2: in the period October to December 2020.
On that basis, you could be ineligible for Extension 1 but eligible for Extension 2 (or vice versa).
The Subsidy Amount
The amount of the subsidy has been reduced from the original $1,500 amount.
For Extension 1: employees who are employed for 20 hours or more per week on average receive $1,200 per fortnight. Other eligible employees receive $750 per fortnight.For Extension 2: employees who are employed for 20 hours or more per week on average receive $1,000 per fortnight. Other eligible employees receive $650 per fortnight.
Which Employees Are Eligible for JobKeeper Payments?
Under the first iteration of JobKeeper, employees were eligible to receive payment if:
they had been working in the business as at 1 March 2020 as a permanent employee; or as a casual employee on a regular and systematic basis for the 12 months before March 2020.
Under the new iteration of JobKeeper, the same eligibility criteria applies except the relevant date is 1 July 2020.
The same eligibility criteria otherwise applies under the first and second iteration, including (without limitation) whether the employee:
is receiving parental leave pay or dad and partner leave pay;nominated the relevant employer; andwhether they are an Australian resident or a resident for tax purposes and hold a special category visa.
JobKeeper Q&A
Q: Can JobKeeper Cover Staff Annual Leave? 
A: Yes, the employer can use JobKeeper to pay for annual leave. The employer still remains eligible to receive JobKeeper in respect of the period and payments it has made to the employee on annual leave.
Q: Do We Pay Superannuation on the JobKeeper Payments? 
A: In short (and as a general rule), the employer must pay superannuation on the employee’s ordinary time earnings. That is, the amount the employee receives for their ordinary hours of work. 

For example, if the employee works 38 hours and receives $2,000, the employer must pay super on $2,000.

With respect to JobKeeper, the employer may still receive the JobKeeper amount to subsidise payment of wages.
This means that if the employee ordinarily receives an amount less than the JobKeeper amount, super is not strictly payable on the ‘top-up’ amount (i.e the difference between their wage component and the JobKeeper amount).

For example, if the employee is stood down and currently works zero hours, then the employee has zero hours of work and so the employer pays no super.

Q: Do We Pay PAYG Tax on the JobKeeper Payment?
A: Yes. As an employer, you pay PAYG tax on the amount you pay to your employee (as per normal).
Q: Can Workers on Short-Term Skilled Visa Receive JobKeeper? 
A: In short, no. Oversees employees on a TSS 482 Short-Term Skilled Visa (Formerly 457 Work Visa) are not eligible for JobKeeper.
An eligible employee must either be as at 1 March 2020 (or the new eligibility dates outlined above):
an Australian resident; ora resident of Australia for the purposes of the Income Tax Assessment Act 1936 and was the holder of a special category visa. A special category visa generally refers to a New Zealand citizen who holds an New Zealand passport and is not a behaviour concern non-citizen, nor a health concern non-citizen.
Q: At What Point Can an Employer Make a JobKeeper Enabling Direction?
A: Subject to meeting certain conditions, you can make a JobKeeper-enabling stand down direction before receiving confirmation that you are eligible for JobKeeper. However, make sure you are confident that you are eligible.
It is best practice to wait until your employee has confirmed that they nominated you as their employer before making the direction. However, you can choose to commence the consultation process before the employee has confirmed who they have nominated.
Q: Can I Reduce Employee Hours to Match Their JobKeeper Payment?

For example, if a full time employee is earning $3000 per fortnight can I reduce the hours down to meet the $1500 (or lesser amount) per fortnight? 

A: As a starting point, a permanent employee is must receive payment in accordance with their employment contract.
If eligible, the employer will receive and must pay:
the JobKeeper amount to the employee;the balance owed to the employee under the terms of their employment. 

For example, the employer will pay $3,000 (before tax) for 38 hours per week and receive $1,500 (before tax) to subsidise the employee’s salary.

To reduce the hours down to meet the JobKeeper amount i.e. $1,500 (or a lesser amount), the employer has the following options:
Option 1 – The employer can reduce the employee’s hours under a JobKeeper-enabling stand down direction. However, the employer must meet certain conditions, including that:
the employee cannot be usefully employed; and the employer has complied with its consultation obligation.

For example, if your business’ operating hours have decreased resulting in the employee’s hours being halved and the employee cannot be usefully employed in other parts of the business, the employee:

cannot be usefully employed; and (subject to meeting other conditions)the employer can likely rely on the JobKeeper enabling stand down direction.
Option 2 – The employer could vary the employee’s hours of work by agreement. 
Note: as an employer, you cannot coerce the employee into agreeing to this variation.
Q: If An Employee Has Two Part-Time Jobs, Are They Eligible for Two JobKeeper Payments?
A: No, the employee can only nominate one employer to receive the JobKeeper payment.
Q: Are Employees Who Take Leave Without Pay Eligible For JobKeeper?
A: If, prior to the JobKeeper amendments being introduced, you agreed to the employee being on unpaid leave, the employee may still be eligible if the conditions are met.
If you have made a JobKeeper-enabling stand down, resulting in your employee having zero hours’ work, the employee is still entitled to receive payment.
Q: If I am Both the Business Owner and Employee, Am I Eligible For JobKeeper? 
A director or co-founder of a company may still be an employee and therefore may be an eligible employee subject to the conditions.
The situation is different for other business structures including where the person is a partner in a partnership, for example.
Key Takeaways
The federal government’s JobKeeper supplement has been very important to the survival of many businesses during the COVID-19 pandemic. However, there are some complexities around how it is applied and who is eligible to receive it. If you have any legal questions about how JobKeeper applies to your employees, our experienced employment lawyers can assist. Call 1300 544 755 or fill out the form on this page.

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A heads of agreement (HOA) is the document which summarises the key commercial terms of a leasing transaction. It is usually the first document you will sign before receiving the lease. As a national tenant, there are two key considerations to be aware of when you receive the heads of agreement:

standard national clauses (whether there are any standard clauses specific to your business which needs to be included); and
premises specific clauses (whether there are any additional clauses to be included due to the specific requirements or limitations of the premises).

Ensuring that the HOA addresses all key clauses means that you will not need to worry about making amendments or negotiating changes to these issues when you receive your lease.
Standard National Clauses
If you operate on a national level, there are certain clauses which you may need to include in the heads of agreement and as part of all of your leases, to ensure there is consistency across all states and territories. Some common clauses are set out below.
Permitted Use
One of the most important terms of a lease is the permitted use of the premises. When you operate on a national level, we recommend that you have a standard and consistent permitted use terms across all of your leases to avoid any issues in the future.  

For example, if you are running a hairdressing salon and the permitted use of one lease allows you to sell related shampoo and hair products while the permitted use of another lease does not, this means your businesses will not be able to operate the same way across all states.  

Ensuring that your heads of agreement has the correct permitted use across all your leases means that the landlord is clear about the operation of your national business from the beginning and you will not have issues with negotiating or amending the permitted use for your lease.
Trading Name
Your trading name is important, as it is the brand that your customers or clients will recognise your business by. If you are planning to attach the name of the centre or location to your trading name at the premises, you should ensure that you have obtained landlord’s consent. Some landlords may prohibit a tenant from using the name of the shopping centre or building in its trading name without consent, so it is important that both parties are aware of the trading name and your intentions upfront.
Signage
If your business has particular signage requirements, you should include this in your HOA. 

For example, if all your business outlets have signs which are in a particular style or size, you should clarify with the landlord whether or not this will be permitted. 

Some shopping centres or buildings may only allow you to install signs visible from the outside which are in the same consistent style as other shops in the same building. Any signage which the landlord has consented to should be expressly included as part of the HOA and lease.
Preconditions
If operating your business requires you to meet certain conditions, it is important to include this under your HOA as a condition before the lease may commence. 

For example, if you are running a restaurant which sells alcohol and you require a liquor licence.

Ideally, the HOA will state that the lease will provide you with a termination right if you do not obtain that condition within a set period of time.  
Franchising
If your business is a franchise, or if you are planning to turn it into a franchise in the future, you might want to consider including a franchising clause as part of your HOA. This is a clause which essentially allows you to licence out the premises to a potential franchisee. The franchisee will be permitted to provide any required bank guarantees, bonds and insurance.  
Premises Specific Requirements
While it is best to make certain terms of your lease as consistent as possible across all states, it is important to bear in mind that each premises will have its own specific limitations or requirements. You should ensure that where premises do not meet your operational needs, you address these issues in your HOA.
Services and Utilities
Each premises will have different provisions in terms of the services or utilities it can provide. This might include water and electricity connections to your premises. Depending on the type of business you run, you might require specific connections in order to run your business.  

For example, if you are running a gym and know that you will require additional air conditioning, you should check any relevant electricity supply or connections to ensure this will not be overloaded. 

It is important that when inspecting each individual premises, you check what services are available and include any additional connections in your HOA.
Trading Hours
The trading hours will differ between centres or buildings. If you require certain trading hours to apply to your business which are outside of the centre’s set trading hours, it is important to include this as part of your HOA.  

For example, if you run a 24/7 gym, you must make this clear to the landlord.

Landlord’s Standard Lease
Some landlords may include statements in the HOA requiring the tenant to use its standard lease. This is particularly the case where you are dealing with a major landlord, such as the landlord of a big shopping centre like Westfield.
A common statement to this effect may be, “the landlord’s standard centre lease will apply amended only to reflect the commercial agreement contained in this HOA”.  If this is the case, it is prudent to amend or delete this in order to state that the lease will be agreed by the parties’ legal representatives. If you fail to do so, it may be difficult to negotiate changes to the landlord’s standard lease.
Key Takeaways
As a national tenant, the most important point to remember when negotiating and signing a heads of agreement is consistency across key terms for all the leases you will enter into. Additionally, you should always inspect a premises to be aware of any site-specific requirements or limitations that you need to address early on in the HOA. If you need help with a lease, contact LegalVision’s leasing lawyers on 1300 544 755 or fill out the form on this page.

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minutes to complete and all responses are anonymous. We would appreciate your input. Take the survey now.

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Tips for Managing Your Business’ Cash Flow During COVID-19

LegalVision, in partnership with Grant Thornton, is hosting a free webinar to help businesses navigate the cash
flow challenges arising from the COVID-19 pandemic. You will learn about the most important business metrics to
keep an eye on during COVID-19, how to manage your cash flow and strategies to access cash during an economic
downturn. Register for free now.

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COVID-19 has been a very difficult time to keep many businesses afloat. If you are currently running a business, you have likely had to quickly adapt to maintain your cash flow. To assist businesses throughout this time, the Federal Government introduced changes to insolvency laws as of 25 March 2020, for a six month period. However, this period may be extended. The Government made these changes to offer temporary relief to directors of companies. This article will explain what those changes are and how they may affect your business.
Changes to Insolvency Laws Summary
personal liability of directors for any company debts which are acquired while the company is insolvent has been suspended for six months from 25 March 2020;only individuals with eligible debts over $20,000 (up from $5,000) will receive bankruptcy notices. They will have six months to comply with the notice; andonly companies with debts over $20,000 (up from $2,000) will receive statutory demands. They will have six months to comply with the statutory demand.
Personal Liability of Directors
Directors of companies have a statutory duty to not trade while insolvent. Insolvency essentially means you do not have the cash flow to pay your debts when they are due.
Before these protections, if a business was trading while insolvent, the director would be held personally liable for the insolvent trading and the debts their company incurs while insolvent. A director does not need to have direct knowledge that the company is insolvent at the time. It is enough to say that there were reasonable grounds that they knew that the company was insolvent or would potentially be insolvent by incurring further debts.
In acknowledgement of the unknown circumstances due to the COVID-19, directors are now temporarily relieved from the duty to not trade while insolvent. It should be noted that, while directors are being temporarily relieved from their duties and will not be held personally liable, the company will continue to remain liable for the debts incurred. 

Debt that has been incurred fraudulently or dishonestly during the six months will still be open for criminal prosecution and is not included in the temporary suspension. 

Statutory Demand Changes
Statutory demands are an effective debt recovery tool for a business as it can create a sense of urgency for a debtor to pay your debt. Before the changes, you could issue a statutory demand for debts that were $2,000 or over, and the debtor had 21 days to respond, or they would be presumed insolvent. Once you had issued the statutory demand, you could then make an application to wind up the company presumed insolvent. The recent changes to the laws have raised the threshold for issuing a statutory demand.
From 25 March 2020, a statutory demand can only be issued in relation to outstanding debts over $20,000. On top of this, the debtor has six months to comply with the statutory demand and repay the debt. This replaces the 21 day limit that was originally in place.
Bankruptcy Law Changes
If you are a business that operates as a sole trader, bankruptcy laws changes may be relevant to you. 

Prior to the new legislation, if you were owed a debt by a sole trader of $5,000 or more, you could send them a bankruptcy notice. Similar to the statutory demand process, they would have 21 days to respond to the bankruptcy notice.

From 25 March 2020, a bankruptcy notice can only be issued in relation to outstanding debts over $20,000. In addition to this, the debtor has six months to respond to the bankruptcy notice. This is similar to the changes to statutory demands.
What Does This Mean for My Business?
These changes aim to reduce the financial pressure on businesses and individuals who have had to adapt to new restrictions. These changes also provide businesses with more breathing room to work out the next steps. If this is true of your business, the recent temporary changes to insolvency laws will be good news for you.

That being said, you must use this time to make a realistic assessment of your business and its future viability. If your business is struggling to stay solvent and repay ongoing debts, even with these temporary changes to insolvency laws, you may be considering voluntary administration as an option. If closing your business is inevitable, the sooner you do this, the better it will be for you and your business.

Collecting outstanding debts was already a difficult task prior to COVID-19, and it has just been made even more difficult. Further legal restrictions on debt recovery may also occur in the near future. If you are relying on repaying your outstanding debts, there are still ways to recover your debts legally. Here, you should expect it to take longer than usual.
Key Takeaways
The temporary changes to insolvency laws aim to assist businesses that are struggling due to the COVID-19. The change is only temporary, so you must make a realistic assessment of the viability of your business. It is always better to make these decisions earlier rather than later. If you are struggling to maintain your business during COVID-19 or have questions about these new changes to insolvency laws, contact LegalVision’s COVID-19 legal team on 1300 544 755 or fill out the form on this page.

COVID-19 Business Survey

LegalVision is conducting a survey on the impact of COVID-19 for businesses across Australia. The survey takes 2
minutes to complete and all responses are anonymous. We would appreciate your input. Take the survey now.

RSVP for our August 26 webinar:

Tips for Managing Your Business’ Cash Flow During COVID-19

LegalVision, in partnership with Grant Thornton, is hosting a free webinar to help businesses navigate the cash
flow challenges arising from the COVID-19 pandemic. You will learn about the most important business metrics to
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Open banking is a regime being implemented around the world, and now in Australia. It is driven by the idea of providing consumers with control over their data. Open banking is also referred to as the ‘consumer data right’. While it is starting in the banking sector, there are plans to roll out the consumer data right across the Australian economy, with the energy and telecommunication sectors next on the list. This article looks at what open banking means for businesses and how your business may be affected.
Open Banking Explained
On 1 July 2020, phase one of opening banking came into effect for the big four banks. Under phase one, consumers can request consumer usage data on:
credit cards;debit card;deposit accounts; andtransaction accounts.
From 1 November 2020, this will also include a right to request mortgage and personal loan data. Over time, the data-sharing requirements will also include further financial institutions.
The implementation of open banking is based on the consumer data right legislation passed by the Federal Government in August 2019. The key regulator managing and enforcing the legislation is the Australian Competition and Consumer Commission (ACCC). Notably, the legislation also includes data privacy provisions which the Office of the Australian Information Commissioner, the key federal privacy body, will assist with. 
Open banking aims to give consumers new impetus to search for a better deal, to consider switching banks and even transition to using fintech businesses. It aims to do this by allowing consumers to:
easily transfer their bank data between banks or to fintechs; and use their bank data to more effectively compare products.
Which Businesses Are Affected?
Data Holders
The consumer data right will impact banks, starting with the big four. Over time, it will include other authorised deposit-taking institutions. Under the consumer data right, these businesses are classified as ‘data holders’. 
The CDR Rules identify data holders. Accordingly, being a data holder is not a choice. This means, if your business is a data holder, you will have obligations imposed on you by the new legislation which you must comply with.
It is worth noting that businesses which hold consumer bank data for data holders will also need to take steps to help data holders comply with the consumer data right.
Data Recipients
Businesses which receive consumer bank data are also affected. Only accredited businesses can receive consumer bank data from a data holder. If your business is accredited under the consumer data right, it will be listed on the accreditation register and referred to as an “accredited data recipient”. To become accredited, you must apply for accreditation and be approved by the ACCC. 
Whether you apply for accreditation is entirely optional. In considering whether you should apply, you should consider the time and expense of applying as well as how you will benefit from the receipt of consumer bank data. 

For example, it offers fintechs invaluable opportunities because the receipt of consumer bank data will allow for:

easier assessment of customer risk;
better promotion of comparison deals; and 
a painless transition for customers.

What Is Changing?
The key changes for your business will be determined by the role your business will play in the open banking regime. This is because the impact on data holders and data recipients are different.  
Changes for Data Holders
As a data holder, you need to be aware of your new legal obligations, such as:
when you must share data;which data you must share; and what data privacy protections you must comply with.
Outside of your legal obligations, you also need to be prepare technology to identify and transmit the data via approved channels. You also need to train staff to accurately communicate the new rights.
Changes for Data Recipients
If your business desires to become an accredited data recipient, you need to apply for accreditation. You will likely need to perform some internal checks and potentially make changes to meet the accreditation requirements. 
These include, for example:
information security;insurance and internal; and external dispute resolution requirements.
Once accredited, you must be ready to maintain your accreditation, by meeting ongoing reporting obligations and the requirement to submit to audits. You will also need to be capable of:
receiving an influx of consumer data;storing such data securely; and helping consumers benefit from your receipt of their data.
How to Prepare
To prepare for open banking, there are four key steps which all financial services businesses should take. These are to:
identify your legal obligations and take all steps to comply with them;identify commercial opportunities and take action to capitalise on them;train your staff, especially customer-facing staff; andreview and upgrade your technical IT capabilities.
1. Legal Obligations
You will best understand your business’ legal obligations through bespoke legal advice which:
considers your current practices against the new requirements; and identifies the practical changes you must make. 
A notable legal obligation which you will need to be ready for is the publication of a customer-facing CDR policy for your business.
2. Commercial Opportunities
It is important to identify commercial opportunities after understanding your business’ legal obligations. This is because you need to ensure that any opportunities you pursue align with the applicable legal requirements.
3. Training
Staff must be aware of the new consumer right to request bank data, and you must ensure that staff:
communicate with consumers accurately about these rights; andallow consumers to exercise these rights.
This is an important step in reducing the risk of legal complaints and is also key in ensuring customer satisfaction.
4. Assessing Your IT Capabilities
You then need to assess your current IT capabilities. This is because it is critical that you have the required IT capabilities to support you in carrying out the above steps. If not, then it is likely an upgrade in such capabilities is a vital investment.
Key Takeaway
Open banking is an exciting time for consumers and businesses in the financial services sector. Businesses which are impacted need to take steps now to prepare for the changes. This is driven by a legal need to do so, and the commercial opportunities the consumer data rights provide. If you have any questions about how the consumer data right will affect your business, contact LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.

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Equity crowdfunding is a relatively new way for startups to raise funds. It involves issuing company shares to a large number of investors in return for small to medium-sized investments via a licenced platform. Equity crowdfunding can be a great way for a startup to raise capital if large investments by wealthy investors or venture capital funds are not suitable or possible. However, an equity crowdfunding campaign is very different to a traditional capital raise. This article explains how to prepare for and conduct an equity crowdfunding campaign. 
Prepare for Capital Raising
Just like any form of capital raising, a startup looking to raise funds via crowdfunding will need to ensure that it has an: 

appropriate business structure (i.e a company that will allow an investor to receive shares in return for their investment); and
attractive offering. 

The large majority of startups will operate out of a proprietary limited (i.e private) company. To equity crowdfund, a proprietary limited company must: 

have a minimum of two directors; and 
be a small to medium-sized unlisted company (having less than $25 million in consolidated assets and $25 million in annual revenue). 

It also goes without saying that in addition to the appropriate corporate structure, you will need a great idea, a strong team and a well-polished business case to attract investors.
Find an Equity Crowdfunding Intermediary
An Australian company can only conduct an equity crowdfunding campaign through an intermediary that holds an appropriate Australian financial services licence. The intermediary will:

perform checks on your company to ensure that it complies with the regulations; 
advertise your campaign within the rules (advertisements must direct potential investors to general risk warnings and the offer document);
ensure that your campaign complies with the regulations; and 
operate the platform (including listing the offer, holding the investors funds until the campaign is complete and facilitating the investments). 

You can only use one intermediary for the same offer. 
Legal Documentation
An experienced equity crowdfunding intermediary will be able to assist with some of the necessary documentation, but not all. It is therefore important that you seek the appropriate legal support. To undertake an equity crowdfunding campaign you will need to complete the following steps.
Obtain the Necessary Approvals
Look at your existing constitution and/or shareholders agreement and determine what approvals are necessary to conduct the campaign and issue shares to your investors. Generally this will involve board approval and shareholders waiving their pre-emptive rights, but each company’s circumstances can differ. 
Update Your Company’s Governing Documents
A proprietary company will generally have a constitution and shareholders agreement. A constitution is often a standard form document, which deals with general company processes (i.e holding a meeting). A shareholders agreement is a bespoke document which deals with how the particular company will operate. It may include:

who can appoint directors;
how decisions are made; and
what happens when shares are issued or transferred.

A constitution is adopted and amended by vote of shareholders. A shareholders agreement is entered into and amended by shareholders signing the document. Where a company is taking on a very large number of shareholders, it is not practical to have a shareholders agreement in place that requires hundreds of signatures. Therefore, a company that is going to undertake an equity crowdfunding campaign will need to:

update its constitution to be more bespoke to the particular circumstances and needs of the company, by including many things normally contained in shareholders agreement; and
terminate its shareholders agreement.

Consider Your Existing Shareholders
If your company has existing shareholders, you may have arrangements in place with them that were contained in the shareholders agreement. 

For example, you may have vesting conditions on founder shares, or special rights for early investors. 

When terminating your shareholders agreement and updating the constitution, it may not be appropriate to put these bespoke conditions into the constitution and you may instead want to establish a side agreement with the relevant shareholders and the company to set out these rights and restrictions. 
Prepare the Offer Document 
An offer of shares to your investors as part of an equity crowdfunding campaign must be made under an offer document that complies with the regulations. Your intermediary may assist you with preparing a compliant offer document and legal advisors can also assist.
Additionally, the Australian Securities & Investments Commission (ASIC) has published a template offer document to help companies ensure that they comply with the regulations when preparing this document. An offer document will contain:

information about the company;
a risk warning;
information about the offer; and 
information about the investor rights.

Comply with Post-Campaign Obligations
A company that has raised funds by way of equity crowdfunding will have continuing financial and reporting obligations. These requirements differ depending on whether your company is a proprietary limited or public company. You should ensure you consider your obligations in detail, beyond the key features described below. 
A proprietary company must ensure that it:

records certain details about shares issued to crowdfunding investors in its share register; and 
notifies ASIC of changes to its share register and share structure (including when it starts to have or ceases to have crowdfunding shareholders). 

It must also have at least two directors at all times. If it has more than two directors, it must ensure that the majority of these directors ordinarily reside in Australia.
Your company will also need to prepare annual financial reports and directors’ reports at the end of each financial year and lodge these with ASIC. These reports must comply with accounting standards and must be readily accessible on your website. You must appoint an auditor to audit your company accounts if:

your company is a large proprietary company; or
you have raised more than $3 million from equity crowdfunding offers. 

Your company must ensure that it complies with the rules relating to related party transactions (e.g obtain shareholder approval to give a financial benefit to a related party unless an exemption applies).
Exemptions
Finally, you should be aware of circumstances where the exemptions afforded to your company by the crowdfunding regime will cease to apply.
For example, a proprietary limited company that raised funds via equity crowdfunding will be exempt from the 50 shareholder limit until its shares start to trade on a financial market. It will also be exempt from the takeover rules (rules regulating the purchase of shares in a company that impact on the control of the company) until it:

has over 50 shareholders but no longer has any shareholders who acquired their shares through equity crowdfunding;
is no longer eligible to make an equity crowdfunding offer (i.e because its shares are traded or it has more than $25 million in consolidated assets or revenue); or 
converts to a public company. 

Key Takeaways
Equity crowdfunding can be a great way for a startup to raise capital. If you are considering an equity crowdfunding campaign, it is important to understand the very specific rules and regulations that apply to the campaign and your company moving forward. When embarking on an equity crowdfunding journey, ensure you have the necessary support from an intermediary and legal advisors. If you need help with equity crowdfunding, contact LegalVision’s startup lawyers on 1300 544 755 or fill out the form on this page.

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Climate change is becoming an increasingly significant issue. Businesses are now expected to consider environmental factors in their everyday decisions and long-term growth. Not only do directors duties now include considering climate change, but many investors regard climate policy to be an integral component of a company’s value proposition. The Australian Securities and Investments Commission (ASIC)’s updates to its Regulatory Guidance on Operating & Financial Reviews (RG247) has followed this investor-led interest with regulatory requirements for public companies. As a result of this increasing market pressure for companies to better address climate change, the Task Force on Climate-related Financial Disclosures (TCFB) was formed in 2015. The TCFB provides a number of helpful recommendations for companies looking to better address and report on climate change in their immediate and long-term growth. 
This article will:

explain what the TCFD is; and 
set out some of its key recommendations relevant to the governance of both private and public companies.

What is the TCFD?
The TCFB was formed by the Financial Stability Board, which is an international body that seeks to strengthen global economic systems. The purpose of the TCFD is to develop frameworks for companies and interested stakeholders to use when evaluating and disclosing climate-related risks and opportunities.
The TCFD has structured its recommendations for climate-related financial disclosures into four main categories:

governance;
strategy;
risk management; and
metrics and targets.

These recommendations help companies to integrate sustainability into their business model in a way that remains competitive and marketable.
Governance Recommendations
The TCFD recommends that when making financial disclosures, companies should describe the board’s active oversight of climate-related risks and opportunities. Further, each company should ensure that information is readily available to interested stakeholders about how its management manages climate-related issues.
Delegating responsibility to specific management positions is an effective way of integrating a company’s sustainability policy as a core aspect of its business. Having specifically appointed positions will also mean that environmental and social governance outcomes are better communicated throughout the business, with clearer reporting structures and processes. 

For example, appointing a specific sustainability manager will ensure that a company strives towards innovative and efficient ways of becoming an environmentally conscious organisation.

Strategy Recommendations
The TCFD recommends that companies should be able to identify and report on climate-related risks and opportunities over the short, medium and long term. These risks and opportunities should shape the company’s climate-change strategy.
After identifying particular risks and opportunities within their respective business models, companies should develop a corresponding climate strategy that considers factors such as:

products and services;
supply chain and value chain; 
adaptation and mitigation activities;
investment in research and development; and
operations (including types of operations and location of facilities).

Risk Management Recommendations
In order to effectively identify and respond to climate-related risks and opportunities, the TCFD also recommends that companies have a clear, consistent and flexible approach to assessing risk management and environmental liabilities.
Companies should be able to describe how they identify and manage climate-related risks. This should include how their management decisions approach the mitigation, transfer, acceptance and control of these risks. Wherever relevant, companies should integrate reference to specific industry regulations and standards when developing risk management policies.
Metrics and Targets Recommendations
Climate-related company disclosures should be measurable and clear. This is because both internal and external company stakeholders will respond to quantifiable results more positively. These metrics and targets should relate to an organisation’s: 

use of water, energy and land; and 
waste management procedures.

The TCFD recommends that when considering metrics and targets for climate-related risks and opportunities, companies should:

establish and remain accountable to key time-frames;
introduce and maintain key performance indicators to assess progress against targets; and
provide transparent explanation of how climate-related metrics are captured and how targets are set.

Key Takeaways
The establishment and increased prominence of the TCFD both in Australia and on a global scale highlights that climate-related factors are becoming a more significant consideration for businesses. Both internal and external stakeholders are placing greater importance on how companies respond to environmental issues. Measurement of company success has moved beyond a sole focus on profit margin.
By following the recommendations of the TCFD, companies can ensure that they take progressive, competitive and marketable steps towards becoming more environmentally conscious businesses that better address climate-related risks and opportunities. If you have questions about implementing the TCFD’s recommendations, contact LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.

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There are multiple types of intellectual property rights. Depending on what you are trying to protect, your business will likely need to rely on several different types. This article will explain:

what the different types of intellectual property are; 
when you may need to use them; and
how to register for each type. 

Copyright
Copyright is a type of intellectual property (IP) right that protects the original expression of ideas or subject matters in a material form. Most businesses will own copyright, whether it is the content on a website, marketing material, or software developed in-house.
Other common forms of work that are protected by copyright are:

books;
drawings;
paintings;
photographs;
music;
films; and
computer programs.

In Australia, copyright is governed by the Copyright Act 1968 (Cth) and is a free and automatic right to use and exploit the creative work. It is not necessary to register copyright in Australia.
However, it is important to understand that copyright does not protect ideas themselves. For works to be protected, the work or subject-matter must “originate” with the author and not be derived or copied from someone else. Further, the idea must be expressed in a material form before it can be protected by copyright.

For example, a new story idea for a book will not have copyright protection. However, the moment the idea is documented, it will automatically be protected by copyright in Australia, including the text of the book when written down.

As an owner of copyright, you will have the exclusive right to use the creative work, including the right to:

reproduce the work;
publish the work;
perform the work in public; and
adapt the work.

It is also your responsibility as the creator to monitor potential infringers and enforce your rights. This will ensure that your copyright work retains its value, especially if the work is commercialised.
While it is not mandatory in Australia, you may consider having a copyright notice on your work (e.g. © Mary Smith 2020) to indicate that you are the owner of the copyright and deter potential infringers.
Depending on the form of work, copyright protection generally lasts for the life of the creator plus 70 years.
It is also important to remember that copyright laws differ from country to country. You should consider the requirements for copyright protection in other countries if you intend on reaching an international market.
Trade Marks
Trade marks can protect any marks that you use to distinguish your business from another. They will often be some of the most valuable IP that a business owns.
In most cases, a trade mark will be a business name and logo, but can also be a:

word;
letter;
number;
slogan;
picture;
sound;
scent; or
colour.

There are two key requirements to qualify for trade mark protection, amongst other criteria.
First, your mark must be unique and distinctive, rather than purely describing what your business provides. 

For example, a furniture business could not protect the name “Your Local Furniture Warehouse” with a trade mark as: 

it describes the goods and services they provide; and 
other traders will need to use these words in connection with their business.

Second, your mark must not be identical or similar to an earlier trade mark within the same or a similar class of goods or services on the Australian Trade Mark Database. 

For example, if you want to register a trade mark for “Aqua Skin” for cosmetics under class 3 and there is an existing trade mark for “AQUA” under the same class, this will make it difficult to register your trade mark.

As a registered trade mark owner, you will have an exclusive right to use, license and sell the mark. This also means that you will have the right to stop someone else from using the same or a similar trade mark, especially if you believe it will create confusion in the market.
In Australia, the trade mark registration process takes around seven and a half months and involves multiple stages. Once registered, your trade mark will be protected for an initial period of ten years.
Business Name
A business name is the name under which your business will operate. Choosing the right name is an important decision as customers will use it to identify and distinguish your business from others.
In most cases, you will need to register your business name with the Australian Securities and Investments Commission, unless you decide to trade under your personal name.
However, it is important to be aware that registering your business name does not stop another business from using the same name. To have exclusive use of your business name, you will need to register the name as a trade mark (as discussed above). Generally, it is much easier to stop someone from using the same or similar business name to you if the name is a registered trade mark.
Domain Name
A domain name is the address of your website and the face of your business’ online identity. In most cases, domain names for businesses will reflect the registered business or company name. Otherwise, customers may find it confusing if your online and offline names are different.

For example, if your business name is “Your Plants and Garden Centre” but your domain name is “gardencentre.com.au”, this may confuse customers and make it difficult for them to find you online. Accordingly, you should check whether your proposed business name is available to register as a domain name, especially if you are planning to have a business website.

Once you have decided on a domain name, you will need to register your domain name through a registrar or reseller listed on the .au Domain Administration Ltd (.auDA) website.
While having a registered domain name provides you with a license to use the name, you will not have an exclusive right to use the domain name unless it is registered as a trade mark (similar to business names).
In particular, you should register your domain name as a trade mark if you intend to trade as the domain name.

Some examples of popular domain names that are protected with a trade mark are:

realestate.com.au; and
AMAZON.COM.

You should also ensure that the trade mark applicant and domain name owner are the same person, otherwise IP Australia may refuse your application.
Key Takeaways
There are several different types of intellectual property. Depending on your business’ needs, you will likely need to use more than one of these types of intellectual property rights. You will need to go through a registration process for most of them. If you have questions about protecting your business’ intellectual property rights, contact LegalVision’s IP lawyers on 1300 544 755 or fill out the form on this page.

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Setting up a café is a major step for anyone in the hospitality industry. Having a thorough understanding of the risks and legal considerations surrounding the set up of a café will assist you in planning your business. This article will provide a summary of a few of those legal considerations for setting up a café.
Location, Location, Location
Naturally, one of the first steps in setting up a café is finding the right location. A café may be located in a shopping centre, the main street, or anywhere where you would be permitted to operate a retail business. The location is important as it plays a major factor in the number of potential customers you may have. When searching for a location for your café, you should:

determine whether a café can be operated from that location. You may need to contact the local council to determine if you will require any consents, approvals or certificates;
assess whether the location will be ideal to operate a café. You may do this by looking at the amount of foot traffic, access to public transport or assessing the number of businesses nearby that will require their daily coffee fix; and
review the lease for the location.

If the Lease Fits
You may have found the right location for your café, but you will need to make sure that the lease fits with your business plan.
Commercially, you should be looking at the:

rent and other costs that you will have to pay and whether this is within your budget. You should also determine whether there is a possibility that rent and other costs will increase over time and plan accordingly;
term of the lease and whether this is enough time for you to build up your business or whether you can terminate the lease in case the business is not doing well;
costs you will need to invest and whether the landlord will make any contributions towards fitting out the location. You should also consider who will own the fit-out of the café; and
security deposits, bank guarantees or personal guarantees that you may need to provide. Here, you need to understand the risk in providing these. For personal guarantees, this may impact on your own personal finances so be sure to receive financial advice, if necessary.

The lease should also be reviewed as a whole. This way, you understand your obligations and rights under the lease. This is particularly important when it comes to:

repairs in the location (e.g. air conditioning);
maintaining the location; and 
understanding what you can expect from the landlord.

Food and Safety
Food and safety is important to ensure the compliance of your business with relevant food safety laws. Your customers will be expecting nothing less of you too. 
Be sure that you have done your research and understand the standards of operating a kitchen from a food and safety perspective. The Food Standards Code will apply, with state and territory government bodies having the authority to inspect and enforce the Food Standards Code. Being compliant with the Food Standards Code is not only important for the health of your customers, but also to ensure that your business maintains a good reputation.
Connecting with Contractors and Suppliers
Unless you operate a business that can be involved in absolutely everything in the operation of a café, it is very likely that you will be engaging contractors and suppliers, such as:

contractors who assist with designing and fitting out the café; and
suppliers who sell you kitchen equipment, furniture or ingredients.

You should ensure that you have contracts in place with contractors and suppliers that would cover the aspects of your arrangement, such as:

what goods or services will be provided;
the price you will be required to pay for the goods or services;
for goods, the delivery terms and details of when risk and title in those goods will transfer to you;
any warranties or guarantees that you will be able to rely on in relation to those goods or services; and
details of what you can do if the goods or services are not supplied in accordance with the contract. For example, whether you have the ability to return a product and obtain a refund.

These details are best clearly set out in a contract to avoid confusion as to what you have agreed to. You may receive some big-ticket kitchen equipment by way of lease or equipment hire. Here, the contract may have additional terms as to the payment and maintenance obligations for the equipment.
Working in a Team
Your team of employees will be the people representing the café, and it is likely that you will need more than one of them. For cafés, a modern award will likely apply for your engagement of an employee. You should ensure that you have a contract in place with your employee to set out their terms of engagement and ensure that it complies with the relevant award.
You may also wish to consider having policies in place to address:

safety;
discrimination;
harassment; and
bullying.

Planning For the Future
If you are starting a café, but foresee a future where you may be starting more cafés or expanding your business in another way, now is the time to start the process for registering a trade mark for your name or logo. 
By registering a trade mark, you will have the exclusive right to use that trade mark. This will be valuable if you wish to license the trade mark for others to use. You could also consider setting out your systems and processes in a formal manner, which can be adapted by other businesses if you ever wish to start a franchise of your café.
Key Takeaways
Setting up a café can be daunting, but it does not have to be if you put the work in beforehand in understanding the risks and legal considerations. You must have an understanding of your legal obligations surrounding:

the location;
your lease;
food and safety;
your supplier contracts;
employment obligations; and
intellectual property.

If you have any questions about the legal requirements for your cafe, contact LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.

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A company resolution is a formal written statement that documents decisions made by: 

the board of directors; or 
shareholders of the company. 

Resolutions are short legal documents that briefly set out any decisions made by these stakeholders, along with the context and reasons for those decisions. Although you would generally pass resolutions in the context of a meeting, a meeting is not always required. It is important that you understand the process of passing a company resolution so that you can comply with your business administration requirements. This article explains the different types of company resolutions and the process for passing them.
Board Resolutions
A board resolution is simply a resolution passed by the board of directors. As the board of directors is responsible for day-to-day operations of the company, these resolutions are used to make most company decisions. 
Examples of decisions that are typically made by board resolutions include:

approving the company to enter into a contract with a third party;
authorising the company to borrow or lend money;
issuing dividends to the company’s shareholders; or
approving capital expenditure.

Ordinary, Special and Unanimous Resolutions
Most board resolutions only need to be passed by a simple majority of the company directors, which is called an ordinary resolution. Decisions which are more consequential for the company may need to be passed by a larger majority of the directors (usually over 75%), in which case they are known as special resolutions. If a decision requires approval from all of the company directors, it is called a unanimous resolution. 
Your company’s constitution and shareholders agreement will set out what types of decisions you need to make via a special or unanimous resolution. It will also specify what the percentage threshold for a special resolution is. 
Common examples of decisions for which companies may require a higher threshold of approval from the board include:

merging with or acquiring another business;
issuing shares in the company;
adopting a business plan and/or budget for the company; or
restructuring the company.

For some types of decisions, it may be appropriate to include a financial threshold to determine whether an ordinary, special or unanimous resolution is required.

For example, if the company proposes to lend up to $100,000 to another entity an ordinary resolution may be sufficient. However, if it proposes to lend more than that amount, a special or unanimous resolution may be more appropriate.

You should think carefully before requiring decisions to be made by unanimous resolution. This is because any single director will be able to prevent that decision from being made if they object.
Shareholder Resolutions
Shareholder resolutions (or member resolutions) are resolutions passed by the shareholders of a company. Normally a shareholder has one vote for every share they own in the company. This ensures that their voting power is proportional to their ownership stake.

For example, the vote of a single shareholder with a 20% stake in a company will outweigh the votes of ten shareholders with a collective 19% stake in a company. 

However, it is possible to amend the voting rights of particular shareholders by issuing them with different classes of shares, that each have different voting rights.
Shareholders are not normally actively involved in the day-to-day decision making of a company, so shareholder resolutions are used less often than board resolutions. They are also typically used for more fundamental decisions about the company. 
Your company’s constitution or shareholders agreement can set out the types of decisions requiring a shareholder resolution. However, federal legislation requires you to make certain decisions by a special resolution of the shareholders, including:

changing the company name;
winding up the company;
changing the company type (e.g. taking a private company public);
adopting, repealing or amending a company constitution; and
changing the rights attached to shares (e.g. converting ordinary shares into preference shares).

How Are Resolutions Normally Passed?
A resolution is normally passed at a meeting of the board of directors or shareholders. In order to pass a resolution at a meeting: 

you must call the meeting properly; and 
a minimum number of directors/shareholders must be present (i.e. you must meet quorum). 

Your company’s constitution or shareholders agreement will set out the: 

correct process for calling a meeting; and 
quorum required.

If a special resolution of the shareholders is required, the company must usually give the shareholders at least 21 days’ notice.

If the resolution is passed by the required majority, you should put it into the company records within a month of the date of the meeting. You should also include the minutes from the meeting at which the resolution was passed, which must be signed by the chair of the meeting. It is important to follow these requirements, as failure to do so may result in the invalidation of your resolution.
Circular Resolutions
An alternative to calling a meeting is passing a circular resolution. A circular resolution is a written resolution that is distributed to and signed by the different directors or shareholders, without the need for calling a meeting. 
Circular resolutions are particularly helpful when: 

a large number of signatures are required; 
the company’s directors or shareholders are in different places; or 
calling a meeting would be impractical for any other reason.

By default, companies can pass circular board and shareholder resolutions. However, you can amend your company’s constitution or shareholders agreement to set out whether circular resolutions are permitted. You can also limit the types of decisions that can be made and define the process for passing them.
Notifying ASIC
Depending on the decisions made, it may be necessary to notify ASIC of the company’s resolution by lodging a: 

Form 205 Notification of Resolution; or 
Form 2205 Notification of Resolutions Regarding Shares. 

Some examples of the decisions that require ASIC Forms to be submitted include:

changing the company name;
conducting a share split;
providing financial assistance to someone to acquire shares in the company; and
changing the company type (e.g. a company limited by shares to a company limited by guarantee).

Key Takeaways
When making important decisions within your company, it is important that you follow the process of passing a formal company resolution. Most decisions concerning your day-to-day operations can be passed by a board resolution. This will require ordinary, special or unanimous support, depending on the significance of the resolution. Any decisions that substantially affect the company will likely require a shareholders resolution, which is passed by those shareholders with voting rights. Finally, you can use circular resolutions to collect the votes of directors or shareholders when it is not possible to call a meeting. It is vital that you understand when to use each of these different processes, so that your resolution remains binding. If you would like advice about how to pass a company resolution, contact LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.

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A true casual employee is one whose employment is ad hoc and irregular, where the employee has no reasonable expectation of continuing employment. By contrast, a permanent employee is one whose employment is regular and systematic. This means that the employee has a reasonable expectation of continuing employment. Although your casual employees do not receive paid annual leave or sick leave the way your permanent employees do, they may be entitled to long service leave. This article sets out whether casual employees are entitled to long service leave and the obligations this would impose upon your business.
What is Long Service Leave?
Long service leave rewards employees who have been employed in a company for at least ten years, or seven years in the ACT and Victoria. This entitles them to take paid time off work, acknowledging their loyalty to the business. 
Long service leave is different from other types of leave because it is not legislated by the federal government under the Fair Work Act 2009 (Cth). Rather, each state and territory has its own long service leave legislation. This means that each state or territory has different requirements as to:

whether a casual employee is entitled to long service leave;
when a casual (or other) employee is entitled to long service leave;
the amount of this entitlement;
whether employees can access long service leave before ten years of service (or before seven years in the ACT and Victoria); and
when the employee has broken their service.

Are Casual Employees Entitled to Long Service Leave in My State or Territory?
We have considered whether casual employees are entitled to long service leave in the following states. The upshot is that all of the following states account for casuals. However, you should consider whether any exclusions apply to each specific employee.
New South Wales
Under the Long Service Leave Act 1955 (NSW), employees are entitled to long service leave based on their length of service. ‘Service’ is defined as continuous service regardless of whether the service is on a permanent, casual, part-time or another basis. In this sense, casuals can take long service leave.
Queensland
Similar to NSW, under the Industrial Relations Act 2016 (Qld) employees are entitled to long service leave based on their length of continuous service. The law specifically provides that an employee’s service is continuous even though:

the employee is engaged in casual employment;
any of the employment is not full-time employment; or
the employee has engaged in other employment during that period.

Importantly, you should carefully consider each individual case because the list above is not exhaustive.

Casuals are therefore entitled to long service leave. Further, the law includes specific provisions for the calculation of long service leave for casuals.
Victoria
In the Long Service Leave Act 2018 (Vic), employees (defined to include casual employees) are entitled to long service leave if they have completed seven years of continuous employment. The definition of continuous employment also contemplates casual employees, meaning that they are entitled to long service leave.
Australian Capital Territory
Similarly to Victoria, the definition of employees in the Long Service Leave Act 1976 (ACT) includes casual employees. The law provides that employees are entitled to long service leave if they have completed seven years of service.
South Australia
The Long Service Leave Act 1987 (SA) creates a long service leave entitlement for employees who have ten or more years of service. Although the definition of service makes no specific reference to casuals, it is broad enough to include casual employment. 
Further, the exclusions do not specifically apply to casual employment. Therefore, casual employees are entitled to long service leave in South Australia.
Western Australia
An employee is entitled to long service leave if they have completed ten years of continuous employment. Unlike other states, the Long Service Leave Act 1958 (WA) does not make reference to casual employees in its definition of continuous service. 
However, continuous service is defined broadly and its exclusions do not expressly prevent casuals from accessing long service leave. The law also makes reference to casuals when detailing how you should calculate the long service leave entitlements. On that basis, casual employees in WA are entitled to long service leave.
True Casual Employees
If you have employed casual employees for a long period of time, you should also consider whether they are true casuals or actually permanent employees. This is especially relevant if you have employed them for a lengthy period which may entitle them to long service leave.
The distinction between casual and permanent employees is a complex one. Importantly, someone who is employed for a long period of time is more likely to have an: 

ongoing expectation of work; and 
advance commitment to the period of work.

Engaging an employee as a casual when they are in fact better classified as a permanent employee may create an underpayment liability for you. This is because you are not paying permanent entitlements to the casual employee.
Key Takeaways
Therefore, casual employees are entitled to long service leave in:

NSW;
Queensland;
Victoria;
ACT;
WA; and
SA.

However, each state and territory has specific exclusions, which may apply to a particular employee. This means that you should assess an employee’s entitlement to long service leave on a case-by-case basis. You should also review the nature of the relationship to ensure that you have correctly classified the employee as a casual rather than a permanent employee. This may create an underpayment liability. If you have any questions about whether a particular employee is entitled to long service leave or whether an employee is permanent or a casual, contact LegalVision’s employment lawyers on 1300 544 755 or fill out the form on this page.

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If someone owes your business a debt, it can be frustrating when they avoid contact and refuse to pay what they owe you. There are several enforcement options available to assist you in recovering your money. However, sometimes it is difficult to know which enforcement action is worthwhile or the best option to pursue. While technically not a debt recovery tool, bankrupting your debtor may still be an option worth considering. This article takes a look at some of the pros and cons of bankrupting your debtor.
When Is Bankruptcy an Option and What Is the Process?
Someone that owes your business money is known as a debtor. You must meet a number of pre-conditions before you can commence bankruptcy proceedings against your debtor. These conditions require that:

a court enters judgment against your debtor; 
the judgment is against an individual, not a business; and
the debt owed to you exceeds $5,000. 

You can only commence the multi-step bankruptcy process once you have met these pre-conditions. Then you need to follow a specific course of action, which includes:

lodging a bankruptcy notice with Australian Financial Security Authority and delivering the notice to your debtor; and
giving your debtor 21 days to make payment or to take steps to have the bankruptcy notice set aside.

If your debtor fails to make payment within the 21 day time period, they will be deemed to have committed an ‘act of bankruptcy’. You may then rely on the act of bankruptcy to commence bankruptcy proceedings in the Federal Circuit Court of Australia.
Temporary COVID-19 Arrangements
Temporary changes to insolvency laws are currently in place as a result of COVID-19. Whilst your business can still make use of bankruptcy notices, the time frame for making payment and the minimum monetary thresholds have changed considerably.

Pre COVID-19
Current temporary changes

Bankruptcy Notice 

Debt exceeds $5,000
21 days to comply

Debt exceeds $20,000
six months to comply 

Creditors Statutory Demand 

Debt exceeds $2,000
21 days to comply 

Debt exceeds $20,000
six months to comply

These changes will remain in force until 25 September 2020, unless extended further. 

What Are the Pros?
1. Motivate Your Debtor to Settle the Debt
Being declared bankrupt has serious consequences for your debtor. In many instances, these consequences will result in your debtor attempting to settle the debt owed to you if they have the means to do so.
Bankruptcy will affect your debtor in a number of ways, including that:

the bankruptcy will be on public record;
it will impact their credit rating, which in many instances will prevent your debtor from obtaining future finance or credit;
their name will appear on the National Personal Insolvency Index (NPII) register for life; 
it will prevent them from being a director of a company whilst they are bankrupt; and 
it may prevent them from travelling overseas.

These consequences will generally last for a period of three years.
2. Have a Trustee Appointed to Settle the Debts
As the petitioning creditor, you get the opportunity to choose an independent trustee. A trustee is someone who is appointed to administer your debtor’s estate. This means that they will manage the bankrupt person’s remaining money and assets. 
They have significant powers to search for assets and funds that could be used to repay any debts. This power extends to investigating and reversing previous transactions, including clawing back payments which have been made prior to the bankruptcy.  

The trustee can also sell any real property owned by your debtor, which can be a good source of funds to pay debts.

3. Receive Contributions from their Salary
If your debtor is employed, they will be required to pay a contribution from any earnings they receive over a certain threshold. The trustee shall determine the amount of the contribution, but will be adjusted to take into account factors such as the number of dependents a debtor has.
What Are the Cons?
1. No Guaranteed Payment
Bankrupting a debtor does not guarantee payment. There is a possibility that you will only receive a small portion of the debt owed to you, or in some instances, nothing at all.  
2. Difficult to Assess Your Debtor’s Financial Position
Once you declare your debtor bankrupt, there is no clear way of knowing:

what funds or assets they owned before commencing bankruptcy proceedings;
the amount of equity held in any real property; or 
the number of other creditors that they owe money to, or the amounts owed to them.

3. Other Creditors Might Get Paid Before You
Your debtor might owe a number of businesses money. Even if you initiated the process of bankrupting your debtor, you may not get paid before other creditors. The trustee must pay out dividends in a clear order of priority, which is mandated by law as follows:  

the costs that you incur as a result of the bankruptcy proceedings;
the costs of the trustee appointed to manage the debtors finances;
secured creditors; 
any employee wages, salary or leave entitlements; and
unsecured creditors.

This means that there is no guarantee that your debt will be repaid.
Is Settlement Still an Option?
You can negotiate and accept a commercial settlement at any time before bankrupting your debtor.
However, if you reach a resolution with your debtor and you choose to discontinue the bankruptcy proceedings, another creditor can take steps to continue the proceedings. In this scenario, there is a risk that the trustee may later deem any settlement payment you have received to be a preference payment. This means that it can be clawed back by the trustee to repay creditors in the priority order set out above.  
Key Takeaways
It is clear that there are both pros and cons to consider before bankrupting your debtor. Indeed, it may: 

incentivise your debtor to settle their debts to avoid the serious ramifications of bankruptcy; or
allow you to recoup some of your debts through the actions of a trustee.

However, there can be no guarantee that you will receive payment in full, or at all. If you need advice about bankrupting your debtor, contact LegalVision’s bankruptcy lawyers on 1300 544 755 or fill out the form on this page.

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When you hire a permanent or casual employee, you are required to extend certain rights to them under the Fair Work Act 2009 (Cth). Specifically, the law creates leave entitlements for permanent employees, which allows them to take days off work for certain purposes. It also creates some entitlements for casual employees, although they are fewer and unpaid. As an employer, you must be familiar with these entitlements to avoid breaching the law and to reduce the risk of a dispute with your employees. This article: 

summarises employees’ leave entitlements; and 
outlines your responsibility to comply with employment law.

Employees’ Leave Entitlements
The table below outlines the leave entitlements that you must extend to you employees.

Permanent
Casual

Paid annual leave
✓
✕

Paid personal/carer’s leave
✓
✕

Unpaid carer’s leave
✓
✓

Compassionate leave

✓ 
Paid

✓ 
Unpaid

Unpaid family and domestic violence leave
✓
✓

Community service leave

✓ 
Unpaid except for jury service

✓ 
There is no entitlement to payment under the National Employment Standards, but state/territory laws may provide for it

Unpaid parental leave

✓ 
As long as the employee has completed 12 months of continuous service

✕ 
Unless the employee:

has completed 12 months of continuous service;
is a long term casual; and
but for the birth/adoption, they would have had a reasonable expectation of continuing employment on a regular and systematic basis.

Long service leave*
✓
✓

Unlike other forms of leave, which are governed by the Fair Work Act 2009 (Cth), long service leave is governed by state or territory legislation. As a starting point, all states and territories entitle casuals to long service leave in certain circumstances. However, you should consider this entitlement on a case-by-case basis because each various exclusions exist in each state and territory.

Annual Leave
A full-time employee is entitled to four weeks of annual leave per year. Their annual leave accrues progressively throughout the year. This means that they are only entitled to: 

four weeks of leave when they have completed 12 months of continuous service; or
two weeks when they have completed six months of continuous service. 

Annual leave also accumulates from year-to-year, meaning it does not reset to zero if an employee does not use their leave in a given year.
As an employer, you may allow your employees to take negative annual leave, by enabling them to take leave before they have accrued it. You can also allow them to take unpaid annual leave. However, employees are not legally entitled to these two forms of leave, so you may choose to allow or refuse it at your own discretion. 
You may only direct employees to take annual leave in certain circumstances. If your worker is not employed under a modern award, you may ask them to take leave if your direction is reasonable. 

For example, it may be reasonable for you to direct employees to take annual leave during a Christmas shutdown period. However, this is subject to each particular set of facts. 

If employees are covered by an award, you may only direct them to take annual leave in certain circumstances. 

For example, you can ask them to take their leave if they have accrued excessive leave as defined in the award.

You should carefully consider each award before making any such direction.
Personal/Carer’s Leave
A full-time employee is entitled to 10 days of personal/carer’s leave per year. As is the case for annual leave, personal/carer’s leave accrues progressively throughout the year and accumulates from year-to-year. 
An employee can only take annual leave:

because they are not fit for work, due to personal illness or injury;
to provide care to an immediate family member or a household member, who requires care because they are sick or injured; or 
because of an unexpected emergency.

An immediate family member is defined very broadly, including an employee’s:

spouse, former spouse, de facto partner or former de facto partner; 
child;
parent;
grandparent;
grandchild; or
sibling.

This also includes any child, parent, grandparent, grandchild or sibling of the employee’s spouse, former spouse, de facto partner or former de facto partner of the employee.

If an employee is not fit for work or has carer’s responsibilities, but they have run out of paid personal/carer’s leave, they may request to take unpaid leave. You can grant or refuse this request at your discretion. However, you may be at risk of discriminating against employees if you do not allow them to take unpaid leave on the basis of their:

physical or mental disability; or
carer’s responsibility.

You are entitled to ask employees for evidence when they take personal/carer’s leave, such as a medical certificate.
What About Part-Time Employees?
In August 2019, the Federal Court handed down a decision which enabled employees to accrue one day of personal/carer’s leave every 5.2 weeks, regardless of how much they have worked. The implication was that part-time employees were entitled to 10 days of leave every year, rather than a pro-rated amount.
However, the High Court overturned this decision in August 2020. This clarified that you must calculate personal/carer’s leave for part-time employees on a pro-rata basis. Therefore, they will receive leave in proportion to the ordinary hours that they work.
Compassionate Leave
In addition to personal/carer’s leave, all employees can take two days of compassionate leave. This allows employees to take time off work when an immediate family member or a household member:

contracts an illness or sustains an injury that poses a serious threat to their life; or 
dies.

It is important to highlight that employees are entitled to two days of compassionate leave for each incident that arises. 

For example, an employee would be entitled to take two days of compassionate leave if their father died. Then, if their child was diagnosed with a terminal illness a few weeks later, they would receive an additional two days of compassionate leave.

This differs from personal/carer’s leave and annual leave, which extend a certain number of days each year.
Parental Leave
If an employee has worked for you for 12 months, they are entitled to 12 months of unpaid parental leave. The law outlines detailed conditions as to when and how an employee can take parental leave, such as:

how long before the birth/adoption of a child an employee can take leave;
when an employee is entitled to take leave for the adoption of a child;
when an employee can extend the period of leave; and
what happens if the pregnancy ends.

Parental leave is unpaid. This means that you have no obligation to pay the employee their wage during the period of leave. However, as an employer, you may choose to create a scheme where employees are paid part or all of their wage during the period of leave.
Regardless of your internal policies, your employee may be eligible to receive payments from the government under the federal government’s Paid Parental Leave Scheme. The employee should enquire directly with Services Australia to receive this benefit.
Key Takeaways
Permanent employees are entitled to take: 

annual leave;
personal/carer’s leave;
compassionate leave;
parental leave; and
community service leave. 

Casual employees may also be eligible to receive these benefits under some circumstances. The law sets out the amount and accrual of leave, as well as when you must pay it. The provisions about parental leave in particular are quite prescriptive. If you have any questions about leave entitlements and related disputes, contact LegalVision’s employment lawyers on 1300 544 755 or fill out the form on this page.

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