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Unfair Contract Terms in a Business to Business Contract

Posted by on Dec 8, 2017 in Business Sale & Purchase News, Commercial Agreements & Disputes News, Conveyancing News, Leases News, Litigation News, News |

In a recent Federal Court case, Australian Competition and Consumer Commission v J J Richards & Sons Pty Ltd [2017] FCA 1224, the Federal Court found that a number of terms in a standard form contract between a large waste management company and a small business were unfair and therefore void. Under the Australian Consumer Law consumers and small businesses are protected from unfair contract terms imposed on them by standard form contracts. In this case the standard from contract included terms (later found to be void): * binding customers to a further term of the contract unless notice was given 30 days before the end of the term (automatic rollover); * allowing a unilateral increase in prices during the term; * requiring the waste management company to be the exclusive provider of services; * allowing a suspension of service if payment was outstanding for 7 days; and * preventing the customer from terminating the contract if payments were outstanding. The lesson both for businesses wanting customers to sign standard form contracts and for customers presented with a standard form contract by a supplier is to to carefully review the document to ensure that there are no unfair terms which will impact on the...

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Changes to Retail Leases Act

Posted by on Jul 3, 2017 in Business Sale & Purchase News, Commercial Agreements & Disputes News, Conveyancing News, Leases News, Litigation News, News |

The Retail Leases Act 1994 applies to most retail shop leases in NSW. Amending legislation, which commenced on 1 July 2017, introduces significant reforms including the following changes: * The requirement that a retail lease must be for a minimum of 5 years has been removed so that there is now no minimum term. * A lessee will now have a right to compensation where the the lessee terminates the lease inside the first 6 months for a failure by the lessor to give the lessee a Lessor’s Disclosure Statement or if the lessor gives one that is incomplete, false or misleading. * A lessor must return a bank guarantee to a lessee within 2 months of the lessee complying with its obligations under the lease. * A retail lease must be registered within 3 months of the executed lease being returned to lessor by the lessee. * A lessee will not be liable to pay a particular outgoing under the lease unless that outgoing was disclosed in the Lessor’s Disclosure Statement. Also, if the lessor had no reasonable basis for a particular outgoing estimate the lessee is only obliged to pay the amount of the estimate and nothing more. * A Lessor’s Disclosure Statement, which has to be provided by the lessor to the lessee 7 days before the lease is entered into, can now be amended if the parties agree in writing rather than the lessor having to issue a new document and the parties having to wait another 7 days. * The monetary jurisdiction of the NSW Civil and Administrative Tribunal with regard to retail lease disputes is increased from $400,000.00 to $750,000.00. * Penalty notices for failure to comply with the Act can now be issued. The main message is that greater care must now be taken to ensure that a Lessor’s Disclosure Statement is accurate otherwise: (a) a lessee may not only be entitled to terminate the lease in the first 6 months but also substantial compensation including the cost of a fit-out and legal fees; and (b) a lessor may not be able to recover all outgoings in full if those referred to in the lease are not disclosed or the estimates are not reasonably based. Compliance with the Retail Leases Act will also be important to avoid receiving a penalty...

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Change to Foreign Resident Capital Gains Tax Withholding

Posted by on Jun 7, 2017 in Conveyancing News, News |

For those of you considering buying or selling real estate in the near future you may be aware that there is a Foreign Resident Capital Gains Withholding (“FRCGW”) which, in the case of real property being sold for a price of $2m or more, requires the purchaser to withhold 10% of the purchase price from the vendor (whether he or she is a foreign resident or not) and to submit this sum to the Australian Tax Office on account of possible capital gains tax liability UNLESS a clearance certificate  from the ATO is provided to the purchaser by the vendor before settlement. The big news is that as from 1 July 2017 (subject to Commonwealth legislation passing beforehand) the FRCGW will apply to the sale of real estate where the price is $750,000 or more (basically everything in Sydney!) and the withholding amount will be at the rate of...

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New Strata Laws

Posted by on Nov 1, 2016 in Conveyancing News, News |

On 30 November 2016 new laws (the Strata Schemes Development Act 2015 and the Strata Schemes Management Act 2015) affecting strata schemes in NSW will commence. Some of the changes include: 1. The executive committee will be known as the strata committee; 2. The sinking fund will be known as the capital works fund; 3. The owners corporation can defer its obligation to maintain and repair common property if it is has taken action against another party who caused the damage until the completion of that action provided safety is not affected; 4. The owners corporation can arrange for local Council parking officers to come onto common property and fine people for parking contrary to signs and notices; 5. Owners will be allowed to make cosmetic changes to their lots without approval such as installing picture hooks, painting, laying carpet, installing built-in wardrobes or blinds and curtains; 6. Owners will be allowed to carry out minor renovations to their lots with the approval of the owners corporation at a general meeting but without the need for a special resolution. Minor renovations will include renovating a kitchen, installing wood or other hard floors, installing wiring or cabling and reconfiguring walls; and 7. A strata renewal process has been introduced by which 75% of lot owners can approve a strata renewal plan for redevelopment of the strata parcel. The plan has to be approved by the Land and Environment...

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New Laws to Stop Agents Underquoting

Posted by on Feb 4, 2016 in Conveyancing News, News |

From 1 January 2016 changes to the Property , Stock and Business Agents Act 2002 commenced so as to prohibit real estate agents from engaging in underquoting i.e. when an agent intentionally understates the estimated selling price of a property which can result in potential buyers wasting time on inspections and money on property reports and legal fees. The new changes, which apply to residential property only, include the following: With respect to vendors 1. In an agency agreement with the vendor the agent must include an estimate of the likely selling price which may be a single figure or a price range provided there is only a 10% difference between the highest and lowest prices; 2. An agent is also required to ensure the estimated selling price remains reasonable and must revise it if it ceases to be reasonable; and 3. At the time of providing an estimated selling price or a revised one an agent must provide the vendor with evidence to support the price estimate; With respect to purchasers 1. An agent is prohibited from publishing an advertisement regarding the sale of a property indicating or suggesting a price less than the estimated selling price given to the vendor; 2. Also, an agent must not use phrases such as “offers above” or “offers over” a certain price or similar symbols or words like “ +”; 3. The definition of publishing an advertisement includes inserting an advertisement in any newspaper, publicly exhibiting an advertisement in view of persons passing by, delivering the advertisement by way of document sent to any person, showing the advertisement on a website or sending the advertisement by e-mail; and 4. A real estate agent is prohibited from making a statement, while marketing a property, representing to potential buyers that a property is likely to be sold for a price less than the estimated selling price given to the vendor. In such a case, the agent can be ordered to forfeit part or the whole of the commission earned. Any breach of the above requirements is an offence carrying a penalty up to $22,000.00. February...

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New Unfair Contract Protections for Small Business

Posted by on Nov 23, 2015 in Business Sale & Purchase News, Commercial Agreements & Disputes News, Conveyancing News, Leases News, Litigation News, News |

The Federal Government recently passed legislation amending the Australian Consumer Law and the Australian Securities and Investment Commission Act so that it will extend protections to small businesses from unfair terms in standard form contracts with other parties as from 12 November 2016. A standard form contract is one pre-prepared by one party to the contract and where the other party is given no real opportunity to negotiate its terms. The protections will apply in favour of small businesses (i.e. one employing less than 20 people) where it is offered a standard form contract by another party for: * the supply of goods and services * the sale or granting of an interest in land (including a lease) * the supply of financial products and services In order to obtain the protections the upfront price payable under the contract must be no more than $300,000.00 or $1 million if the contract is for more than 12 months. Under the protections any unfair term in a standard form contract will be void and therefore not be binding on the small business. Examples of terms that may be unfair include: * terms that enable only one party to avoid or limit their obligations under the contract * terms that enable only one party to terminate the contract * terms that penalise only one party for breaching or terminating the contract * terms that enable only one party to vary the terms of the contract In order to determine whether a term is unfair an application would have to be made to an appropriate tribunal or court. However, just the threat of making such an application may resolve the dispute with the other party. It is important to note that the unfair contract protections apply to small businesses whether they are the acquirer of goods and services etc. or the supplier. This means that if a small business offers a standard form contract to another small business that other business can claim the unfair contract terms protections. All small businesses must now consider reviewing all standard form contracts with other parties due to commence, renew or be varied from 12 November 2016 to determine whether any of the terms are possibly unfair and need amendment so as to not to offend the new regime. November...

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