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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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New Laws for Off-The-Plan Purchases

Posted by on Nov 23, 2015 in Conveyancing News, Litigation News, News, Strata Matters & Disputes News |

A new amendment to the Conveyancing Act 1919 was passed by the NSW Parliament and applies from 2 November 2015 to the purchase of off-the-plan residential strata units or residential lots i.e. strata units or land lots awaiting creation following the finalisation of building works or sub-division. There have been concerns about developers using a “sunset clause” (a provision in a contract allowing the contract to be terminated if the strata or land lot is not created by the sunset date) to obtain a financial gain by deliberately delaying projects thereby entitling them to activate the clause and re-sell the property for a higher price. The purchaser would be left with nothing after incurring conveyancing costs. The new amendment provides that a vendor must give the purchaser at least 28 days written notice before rescinding a contract under a sunset clause. The notice must state the reasons for the proposed rescission and the delay. Even then the vendor can only rescind with the purchaser’s written consent or after obtaining an order from the Supreme Court of New South Wales. If the vendor is forced to apply to the Supreme Court it will take into account various factors such as: * the terms of the contract * whether the vendor has acted unreasonably or in bad faith * the reason for the delay * whether the subject lot has increased in value * the effect of the rescission on each purchaser * any other matter the Court considers relevant The vendor is also required to pay the purchaser’s costs of the proceedings unless the refusal to consent is considered unreasonable. If a developer determines that there is a substantial profit to be made by delaying a project and invoking a sunset clause to rescind a contract it can still make life difficult for a purchaser. One obvious tactic would be to offer a purchaser a financial incentive to consent to the rescission while at the same time warning the purchaser that it will claim in any application to the Supreme Court that the purchaser’s refusal to consent is unreasonable so that no legal costs will be recoverable. So, despite this commendable attempt at consumer protection the developer will still find a way to apply maximum pressure to purchasers. And many may well give in rather than face a long and costly legal battle. November...

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Changes to Home Building Act

Posted by on Jan 19, 2015 in Building Disputes News, Conveyancing News, Litigation News, News, Strata Matters & Disputes News |

The Home Building Act 1989 deals mainly with the the licensing and regulation of builders performing residential building work. However, it also gives the benefit of warranties and insurance in respect of such work. On 15 January 2015 certain retrospective amendments to the Act commenced. Also, on that date the Home Building Regulation 2014 commenced. The position is now as follows: 1.  The term “residential building work” means any work involved in: (a)    the construction of a dwelling; or (b)    the making of alterations or additions to a dwelling: or (c)    the repairing, renovation, decoration or protective treatment of a dwelling. The term also includes “specialist work” defined to include plumbing and electrical wiring work. However, excluded from “residential building work”  are any work (other than specialist work) the cost of which does not exceed $5000.00 and internal painting work. 2.    The term “dwelling” includes a swimming pool or spa, cupboards and vanity units affixed to the dwelling, driveways, retaining walls and fences. 3.    Warranties by a licensed contractor are implied into a contract to do residential building work including one that the work be done with due care and skill. 4.    The benefit of the warranties is extended to a successor-in-title to the person entitled to the benefit of the statutory warranties. 5.    The warranty period is 6 years after completion of the work for major defects and 2 years for all other defects. 6.    A “major defect” is defined as a defect in a major element of a building (i.e. a load-bearing component of a building that is essential to its stability or any part of it or a fire safety system or waterproofing) that is attributable to defective design, defective or faulty workmanship, defective materials etc. that causes or is likely to cause: (i)  the inability to inhabit or use the building or part of it; (ii)  the destruction of the building or part of it; or (iii) the threat of collapse of the building or part of it. 7.    With regard to the commencement of statutory warranties, for new buildings in a strata scheme the completion of residential building work will occur when an occupation certificate is issued authorising the occupation and use of the whole building. 8.    A licensed contractor is required to take out insurance under the Act in respect of the residential building work to be done under a contract if the contract price exceeds $20,000.00. It covers the person on whose behalf the work is being done or successor-in-title against the risk of loss resulting from non-completion of the work because of the insolvency, death or disappearance of the contractor. January...

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New Swimming Pool Requirements

Posted by on Mar 15, 2014 in Conveyancing News, News |

Under changes to the Swimming Pools Act 1992 pool owners must place their pool or spa on an online register. Owners may be fined if the pool is not registered. Pool fencing must also comply with with the Act. A swimming pool is defined to include a spa pool. From 29 April 2016 a Contract for the sale of a property that contains a pool must attach either: (a) a valid certificate of compliance issued by either the local Council or an accredited certifier under the Act; (b) a relevant occupation certificate and evidence that the swimming pool or spa is registered under the Act; or (c) a valid certificate of non-compliance issued under the Act. For newly constructed swimming pools,  a valid occupation certificate and evidence of swimming pool registration may be attached to the Contract in lieu of the certificate of compliance. Failure to attach one of these documents to the Contract may entitle the purchaser to rescind the Contract within 14 days of exchange of Contracts. Where a vendor attaches a certificate of non-compliance to the Contract the purchaser will have 90 days from the date of settlement to rectify the defects listed in the certificate of non-compliance and obtain a certificate of compliance. These provisions will not apply if the Contract relates to a lot in a strata or community scheme and the scheme comprises two or more lots or the Contract involves an off-the-plan purchase. If a landlord wishes to lease a property, which contains a pool, then from 29 April 2016 at the time the Residential Tenancy Agreement is entered into the landlord must ensure: (a) the pool is registered; (b) the pool has a valid certificate of compliance or a relevant occupation certificate; and (c) a copy of the certificate of compliance or occupation certificate is provided to the tenant. These requirements will not apply if the pool is within a strata or community scheme and that scheme comprises more than two lots. April...

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New Power of Attorney Forms

Posted by on Feb 10, 2014 in Conveyancing News, News |

As from 1 March 2013 there will be two forms for a Power of Attorney whereas previously there was only one. The first form will be for a General Power of Attorney and the second for an Enduring Power of Attorney. The differences between the two types are as follows: General Power of Attorney This can be useful for a short term appointment where you are going overseas for a while and wish to appoint an attorney to look after your legal and financial affairs or you want the attorney to act in relation to a one-off transaction such as the sale or purchase of a property. It is not necessary for the attorney to sign the document but it automatically terminates if you lose mental capacity. Enduring Power of Attorney This continues to operate after you as principal have lost your mental capacity. It enables someone to look after your legal and financial affairs even if you become unable to do so. However, the attorney must sign the form to show that they consent to act and it will not operate until the attorney has signed. Also, your signature as principal has to be witnessed by a prescribed witness, such as a lawyer, who then must sign a certificate stating that they explained the enduring Power of Attorney to you and that you appeared to understand it. Either Power of Attorney must be registered at Land & Property Information if your attorney is going to deal with real estate. February...

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Apple Acknowledges Consumer Guarantees

Posted by on Dec 4, 2013 in Litigation News, News |

Apple Australia has given the Australian Competition and Consumer Commission (“ACCC”) a Court enforceable undertaking after Apple staff informed customers that it was not necessarily required to provide a refund, replacement or repair for defective products and that there was a 14 day return policy as well as a 12 month limited manufacturer’s warranty. Apple has acknowledged that these representations “may” have contravened consumer guarantees in the Australian Consumer Law. The ACCC said that any warranties provided by the retailer or manufacturer are in addition to the consumer guarantee rights in the Australian Consumer Law which cannot be removed. The ACCC stressed that consumer guarantees have no set expiry date and apply for the amount of time that is reasonable to expect given the cost and quality of the item and any representations made about it. Apple will now supply its own remedies for a period of 24 months from the date of purchase of one of its products. December...

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