New Release: A Builder’s Guide to Resolving Disputes in NCAT, read here.
The express terms of a contract make a huge difference when it comes to resolving disputes and dealing with bad debtors.
If you supply a trade or service on credit, having an effective solution for making everyday contracts is simply a must. It’s why banks and large companies always have comprehensive standard form contracts and why the form of contract is the first thing that any Commercial Litigation or Debt Collection Lawyer asks for.
Our experienced Business & Commercial Lawyers assist contractors, suppliers and professional services businesses to make effective everyday business contracts by:
A Business Contract will arise when one party accepts another parties’ offer to perform work and/or supply goods or services for an agreed price (or at an agreed rate) and there is an intention to be bound by the agreement. Contract Variations can arise in the same way.
In most cases, a Business Contract (or Contract Variation) will exist regardless of whether the contract is in writing or evidenced in writing.
For any term or condition to form part of a Business Contract it must have been agreed at the time the contract (or variation) was made.
When particular terms have not been considered or agreed, terms can be implied by the Courts or by statute. Additionally, some terms of contracts are void and unenforceable as result of various legislation governing terms in different contracts.
Standard from contracting documents are used by businesses to overcome uncertainty in relation to:
Standard form contracting documents are also used to effectively incorporate business’ Terms & Conditions of Trade, which in turn strengthen business’ legal position and help to:
Simply put, businesses who to want make better every day Business Contracts should adopt and properly utilise customised standard from contacting documents and seek advice from Business Lawyers promptly when in doubt.
For Terms & Conditions of Trade to be enforceable they must be effectively incorporated into the contract by disclosure and acceptance prior to or at the time the contract is made. The earlier and more obvious the disclosure the more likely it is that the Terms & Conditions of Trade are incorporated into the particular contract.
Despite common practice, standard form Terms & Conditions of Trade cannot be incorporated into a contract by their inclusion on a Tax Invoice issued after the contract was made and when typically the goods or services have been supplied or partly supplied.
Therefore, standard form Terms & Conditions of Trade are only incorporated into and form part of a contract if they are disclosed to and accepted by the other party at the time the contract is made.
Effective incorporation of Terms & Conditions of Trade can be achieved by:
Take note; as a general rule, the more onerous the clause, the greater the length the business must go to draw the clause to the attention of the other party.
1. Personal Guarantees
Businesses often extend credit to Customers without any security whatsoever. Your bank would not extend that sort of credit to your business without security in the form of a personal guarantee and/or Mortgage over real property, so why should your business offer credit to your Customers without security.
Personal guarantees should ideally be obtained whenever your business makes a Contract with a company or a sole trader. The Guarantees should be sought from the Directors of the company or the spouse of the sole trader, if any.
2. Real Property Security
Security over real property (land and buildings) owned by the Customer and/or any Guarantor. You will have the right to register a Caveat over the title to any real property owned solely or jointly by the Customer or any Guarantor in the event of a default by the Customer under an Agreement.
3. Retention of Title to Goods
If your business supplies goods, your Terms & Conditions of Trade can include a “Retention of Title” Clause entitling you to reposes goods that have not been paid for in the event of a Default. Following the introduction of the Personal Property Securities Act, a Security Interest must be registered on the Personal Property Securities Register for the retention of title clause to be effective in providing security (see below).
4. Personal Property Security
Security over personal property within the meaning of the Personal Property Securities Act 2009 (Cth), subject to registration of a Security Interest on the Personal Property Securities Register
Each State and Territory has specific legislation governing the rights of parties to recover prompt payment for the supply of construction work or related goods and services. In New South Wales these rights are contained in the Building and Construction industry Security of Payment Act 1999 (NSW).
If your business carries out construction work or supplies related goods or services, the Terms & Conditions of Trade contain provisions that will assist your business to more easily serve valid Payment Claims under the Security of Payment Laws. In turn, this will assist you to utilise the security of payment regime to recover payment promptly when necessary.
Our Business Contract Solutions are customised to suit every business. For most businesses they include:
For an overview of the documents commonly provided in our Business Contract Solutions, please see the User Guide corresponding to your business.
Personal guarantees are one of the most useful tools a business can implement to ensure that it is paid by its customers promptly.
By far the most common cause of commercial disputes is the failure of the parties to adequately record the terms of their agreement in writing.
The best way to deal with bad debtors is to implement standard form contracts and debtor management procedures within your business to actively reduce or eliminate them in future.
The prompt registration of security interests is crucial to ensure that your security will have priority after other creditors and is enforceable in the event of a debtors insolvency.
In Australia you will see companies referenced by the letters ACN and businesses by the letters ABN. In this article we look at what they stand for and what they mean.
Subcontractors often come to us at the eleventh hour for help when they haven’t been paid, but there are some common pitfalls that can put the benefit of the Security of Payments Act out of their reach. In this article I have summarised some of the most frequent problems encountered.
Residential builders in New South Wales risk significant fines if they do not comply with their newly-created obligations in relation to the Building and Construction Industry Security of Payment Act 1999 (NSW).
Many residential building disputes relate to substantial sums and involve multiple complex issues relating to defects and informal contract variations.
