Terms and Conditions are an excellent ‘starter’ document which every business should invest in. If you’re starting a new business, it should be the first business document you have in place. If you’ve been in business for a while and have been getting by without a set of Terms and Conditions, you should absolutely still consider them as they become particularly important as your business grows.

A well-drafted set of Terms and Conditions will not only protect your business in the event a customer/client makes a claim for defective products or services, it will also clearly deal with important business policies such as refunds, payment timing and methods, insurance and cancellations.

Of course, because all businesses are run differently, it follows all Terms and Conditions should be different too. Your specific business methods and procedures should be taken into account in preparing a quality set of Terms and Conditions. For example, if a business requires a deposit to be paid, their Terms should sufficiently state in what circumstances (if any) the deposit would be refunded or otherwise.

Whether you’re starting a new business, have been operating for a while without any Terms, or would like a second opinion on your current Terms and Conditions, the expert Business Law Team at Enterprise Legal can help. At Enterprise Legal, we take the time to learn about your business before preparing your Terms and Conditions.

Contact EL's Business Law Team today or book in your Free Business Health Check!

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Whether you refer to them as Governing Rules or a Constitution, you should regularly be considering whether an update is needed. However, knowing when to actually ‘pull the trigger’ on conducting a full review and update (or whether you just need a small internal policy change) is the tricky part, and as is the classic legal response, it ‘will depend’ on a number of factors.

It is absolutely a case-by-case basis, but to help your organisation make that call, we have identified the following key factors to assist:

1. when the Constitution was last updated;
2. the structure of your organisation;
3. the industry in which your organisation operates; and
4. ‘who’ prepared the latest version of the Constitution.

When Was The Constitution Last Updated?

There is no hard and fast rule as to timing, and there is no time limit on how long a Constitution will be effective for. But, the law is constantly evolving and changing and any legal document (or any part of it) could quickly become ‘outdated’. A Constitution holds such significant bearing on how an organisation operates, so it is a document any organisation should at least consider updating every couple of years, to ensure it remains relevant in the context of changes in the law. There may also have been significant changes in the structure or policies of the organisation during that time, so there may be some practical changes to implement.

What Is The Structure Of Your Organisation?

A corporate entity with a Sole Director and Shareholder probably doesn’t need regular updates to their Constitution, but a non-profit who reports to members and stakeholders should frequently ensure the organisation keeps their Constitution up-to-date, as that ensures good governance measures are followed and any legislation changes are accounted for. For example, if there have been major changes to a Board of Directors then there are likely going to be significant changes to the way the organisation operates, so a great starting point would be updating the Constitution to ensure the new Board is on the same page with the direction the organisation is going to move to.

Specifically for any Incorporated Associations in Queensland, there have been significant changes to the governing legislation (the Incorporated Associations Act 1981 (Qld)) which have been implemented in stages over the last few years. This means that right now is a great time for any Incorporated Association to review their Constitution.

Industry Changes

Depending on the industry in which your organisation operates, there may be more frequent industry changes which ‘force’ an organisation to reconsider various governance measures. For example, an organisation that operates in the technology space is likely going to have more frequent reason to update their Constitution, than an organisation which operates in the retail or hospitality industry, which are much more ‘established’ industries.

Who Prepared the Current Constitution?

If your organisation is using a template-style document that has been ‘borrowed’ or is adopting any legislative model rules, they won’t be drafted in a way that accounts for things such as industry changes, specific organisational policies and procedures, nor recent or incoming legal changes. However if you engaged a lawyer to prepare your Constitution and your organisation took the time to carefully consider the impacts it would have on governance, it won’t need to be updated as regularly.

What’s Next?

Our expert Business & Property Team has extensive experience in corporate governance, structuring matters with a particular expertise in assisting non-profits, charities and sporting organisations.

If your organisation is considering updating their Constitution, get in touch with our team today and we can help you with updating your Constitution and structuring advice:

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Let’s be honest – legal entities and business structures can sound like a pretty dry and complicated topic. We can’t really sugar coat that, but we can tell you that if it’s not something that is addressed and set up to suit your business, you could be missing out on some very important advantages, and exposing your business and your assets to more risk than is necessary. Stick with us on this topic – it can be the difference between a business that thrives and a business that struggles.

Do You Even Know What Entity You Have?

As a threshold issue, if you don’t know exactly what your current entity structure is, then that’s ok (it’s not easy, and it’s not necessarily a ‘water cooler’ kind of topic), but this article is definitely for you and you should contact our expert Business Law Team so that we can help you identify it.

Common Entity Types 

This three most common entity structures we encounter at EL are:

1. Sole Trader/Individual: 

This is effectively the ‘starting point’ for many businesses. A sole trader is a single person who is carrying on a business under an ABN. An individual is of course capable of suing and being sued. In order to change the business structure, a sole trader must ‘transfer’ the business to another entity, which can be costly and will require payment of transfer duty based on the value of the transfer.

Income Distribution: all income of the business is distributed to the individual, which is to be declared in conjunction with any other income that individual earns. This is typically not an issue in the initial phase of a business while profit is building, but can be problematic if the individual is already paying a high rate of tax, as all profit earned by the business is also taxed at that rate.

Risk Profile: all assets owned by the individual can be at risk in any claim against the business. For example, if a customer/client or employee of the business sues the business and is successful, the individual may be required to sell other personal assets in order to pay out the claim, or risk declaring bankruptcy if the value of those assets are not enough to pay the claim.

2. Company:

A company is a separate legal entity to the people/persons that control it. The company is capable of suing and being sued. The controlling persons can be easily changed from time to time, which allows flexibility for business owners wanting to sell or bring other business partners on board.

Income Distribution: companies have additional flexibility when it comes to distribution of income, as it is ultimately distributed to the ‘shareholders’, which could be the individuals who control the company, another entity controlled by those individuals (for example another company or trust), or another entity controlled by a third party (for example an investor who has contributed funds to the business but does not assist in the day-to-day running of it). However this flexibility is somewhat limited, as the income must be distributed in accordance with the percentage of shares held by the shareholders.

Risk Profile: the company can be sued, and all assets held by the company are at risk in any claim against the business. If the company does not hold enough assets to pay the claim, the company may be required to wind up. Except in limited circumstances, typically the assets of the individuals who control the company are safe from any claim, so at worst the business will fold, but the individuals will maintain any other personally-held assets.

3. Trust:

A trust is again a separate legal entity to those persons/entities who control it. The trust is capable of suing and being sued, and the controlling persons can also be easily changed from time to time by amending the trustee.

Income Distribution: trusts also have greater flexibility to distribute income, as it is distributed to the ‘beneficiaries’ of the trust, which can be individuals, companies, other trusts etc. A trust can be set up as a ‘discretionary’ trust, which allows the trustee flexibility to distribute income to the beneficiaries in any proportion that they determine.

Risk Profile: the risk profile of trusts is similar to that of companies, in that a trust can sue and be sued, and all assets held by the trust are at risk in any claim against the business. If the trust does not hold enough assets to pay the claim, the trust may be required to wind up, but similar to companies the assets of the trustees and beneficiaries are safe from any claim. In this situation, the business would fold but the individuals will maintain any personally-held assets.

There are of course other entities that you might encounter (such as partnership, unit trusts, etc), but they are largely either ‘outdated’ or only used in very specific circumstances. That does change from time to time based on things such as legislation and market preferences, but for now the three structures we have mentioned above are the most common.

Accounting Benefits v Legal Risk 

In any decision around appropriate entity structures, often the accounting and legal advice are the same, which makes a decision easy. However, sometimes that advice can be conflicting, and you might find that trading in a certain entity will give you the greatest tax and accounting advantages, but will expose you to greater legal risk.

The classic example of this is a start-up business – in that example, while income is on the lower end because the business is starting out and growing, you’re often better starting off as a sole trader and minimising your accounting and set-up costs. The trade-off here is that you carry additional risk because your personal assets are exposed in the event of any claim. Depending on the type of business you operate and the personal assets you hold, you might be happy to accept that risk in favour of gaining some tax and accounting advantages.

At Enterprise Legal, we understand the competing accounting and legal benefits and risks, and we like to work with your accountant to discuss the best structure for you, both now and in the future. This way, you are armed with the knowledge from both sides and can make an informed decision.

How Enterprise Legal Can Help

At Enterprise Legal, we offer a free Business Health Check, in which we arrange a time to meet with you in-person or by phone/Zoom to assess your business needs. In addition to assessing other legal needs, this includes an in-depth analysis of your existing entity structure, and a discussion with you around other options, and the steps involved to change your structure.

We work with your accountant and other financial advisors to give you all the information, and discuss the best way to move forward. We can even create your new entity, amend your existing structure, or draft supporting entity documents to support your entity structure (such as company constitutions, association rules, shareholder’s agreements etc). 

If you have any concerns or questions about your existing entity structure for your business, contact our expert Business Law team today: 

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Disclaimer: because we are #lawyers, we have to say that the advice in this article is generic in nature and not intended to apply to everyone’s personal circumstances. Please contact our EL Business Team, as well as your accountant, for customised advice regarding your business structuring.

What It Is

On 1 November 2021, the Australian Business Registry Services (ABRS) introduced a requirement for directors of relevant companies to obtain a Director Identification Number (Director ID).

A Director ID is a unique, fifteen-digit identifier given to a director of a company who has completed an application and verified their identify with the ABRS.

A director must personally apply for their own Director ID (and it is is free to apply) and will only ever have one Director ID, regardless of how many companies or similar entities they are a director of.

Who It Applies To

Any person who is currently appointed as a director or alternate director of a company, registered Australian body, registered foreign company or Aboriginal and Torres Strait Islander corporation must apply for a Director ID.

You can apply for a Director ID even if you are not currently a director, and it will stay with you for life and can be used if you do ever become a director.

When You Need It

The below table provided by the ABRS succinctly sets out the timeframes for application for a Director ID:

How To Apply 

All Directors must make their own applications – unlike other arrangements for company documents your accountant or registered tax agent is not permitted to do this for you.

In order to apply for your Director ID, you will need to go to the ABRS Website and follow the process to download the myGovID app (this is different to myGov). The direct link is Apply for your director ID | Australian Business Registry Services (ABRS).

As part of the application process, you will need to complete a verification of identity, so before you apply you should gather the following information/documents:

1. your tax file number (TFN);
2. your residential address as held by the ATO; and
3. information from two (2) documents to verify your identity – the relevant documents that ABRS suggest are:
   1. bank account details;
   2. an ATO notice of assessment;
   3. superannuation account details;
   4. a dividend statement;
   5. a Centrelink payment summary; or
   6. a PAYG payment summary.

If you are unable to apply online, you can apply by phone or by paper form, but you will still need the above information / documentation.

How Enterprise Legal Can Help

Although we are unable to complete the application for you, we are available to assist you with any questions or concerns you have regarding the Director ID, including whether it applies to you, when you need to make an application by, and any questions about how the application works or the best application method for you.

Contact Enterprise Legal's expert Business Law team today:

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If your business provides services, then the answer is YES!

A Services Agreement is an essential document for every service-based business! If you’re just starting out, you should put a Services Agreement at the top of your ‘legal document priority list’ (which is definitely a list everyone has). For existing business owners, whether you’ve been going ok without one or rolling out some stock-standard agreement you found from a Google search, you should put it back on your legal document priority list, as it only becomes more important as your business grows.

A tailored, well-drafted Services Agreement both protects your business (for example, in the event that a customer or client makes a claim for defective services) and clearly deals with important business policies such as cancellations, payment timing and methods, insurance etc.

A Services Agreement should also be customised for your specific business and the services you provide, because one size does not fit all when it comes to these kinds of agreements. From matters such as specific legislation that might apply to the industry (eg. NDIS, medical services, specific privacy law requirements), how much notice must be given for a cancellation, to the basic style and tone of the document, different businesses will have different requirements, so it is important that your Services Agreement reflects what your business needs. This is where you can get unstuck if you ‘take inspiration from’ (eg. copy) another business’ Services Agreement (you might be copying something that isn’t actually very good) or buy a generic online document! For example, if you provide support services for NDIS participants, then grabbing a Services Agreement from the website of your local gym is probably not going to be suitable for your business.

Whether you’re starting a new business or have been operating for a while and either don’t have a Services Agreement or you would like a second opinion on your current Services Agreement, the expert Business Law Team at Enterprise Legal can help. At Enterprise Legal, we take the time to learn about your business before preparing your Services Agreement.

Contact the Business Law Team today or book in for your Free Business Health Check:

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In January this year we posted an article titled ‘Business Structures 101’. This is the follow-on to that article, and is aimed at existing business owners who are thinking about starting a second (and separate) business (Second Business). Although we will cover some different content here to Business Structures 101, we recommend reading these articles in sequential order), so if you haven’t already checked it out we encourage you to have a quick read: Business Structures 101 and then come right back for the follow-on.

The quickest and easiest option when setting up a Second Business is to use the entity you already have, and simply register a new business name and start operating the Second Business. In some circumstances that can work, but making this decision still requires taking some time to consider whether it is really the best option in your specific circumstances.

The following are some key issues you should consider:

Crossover

You should consider how your current business (First Business) will be impacted if anything goes wrong with the Second Business.

This is quite a big risk to consider, because you want to ensure that appropriate steps are taken to protect the First Business if something happens with the Second Business (and vice versa). For example, if a disenfranchised former employee of the Second Business decides to bring a claim, then the claim is brought against the controlling entity. If the Second Business was trading under a separate entity, then only the assets and money held by that entity would be at risk, and (all going to plan) the First Business could continue to operate totally unaffected by that claim.

In short, you might lose the Second Business, but you would still have the First Business to fall back on. Alternatively, if both business are operating under the same entity, then both businesses are impacted and you may be required to sell the First Business (or at least some assets in it) to meet the claim. 

Saleability

One business is a lot of hard work, let alone two. It’s highly likely that at some point you may want to sell one of the two businesses, or bring someone in at an ownership level to help run it. If both businesses are operating under the same entity, it is very difficult to ‘uncouple’ them for a sale. It can be done, but will cost significantly more than it would to set up a new entity at the outset. Whereas if the businesses are operating under separate entities, then it is a much easier task to sell the relevant business or bring someone in by way of a share sale.

Tax Planning

You should also seek accounting/tax advice, again based on your specific circumstances. There may be some added tax benefits that you can obtain by separating the Businesses into different entities.

Ultimately, it’s important to consider your own risk profile and how opening a Second Business will affect your First Business, and more importantly you as an individual.Knowing your business entity and structure is one of the most crucial parts of setting up your business and is very important to consider when adding to your business portfolio.

Enterprise Legal offers a free Business Health Check, in which we arrange a time to meet with you in-person or by phone/Zoom to assess your business needs.

We will work closely with you, your accountant and other financial advisors to give you all the relevant information and discuss the best way to move forward. We can even create your new entity, amend your existing structure, or draft supporting entity documents to support your structure (such as company constitutions, association rules, shareholder’s agreements etc).

Contact the Business Law Team today or book in for your Free Business Health Check:

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✉️ | Submit an Online Request

If you have recently been dismissed from your employment and you believe your dismissal was unfair, unjust, or there was a lack of consultation from your Employer, you might have a claim. However, there are a number of eligibility criteria which can prevent you from legally bringing an unfair dismissal claim. It can feel a bit like a marathon that starts with a 100m hurdle event – if you jump over all the hurdles and make it to the end, then you can start the marathon. This article briefly sets out the hurdles that you need to jump over in order to be eligible to bring an unfair dismissal claim.

Hurdle 1 - Timeframe

Much like not making it to the starting line on time for the race, if you don’t file an unfair dismissal claim on time then you have very little chance of even getting out of the blocks. Employees have 21 days from the date they are dismissed (or the event leading to them resigning, in the case of a constructive dismissal) to bring an Unfair Dismissal claim. If your claim isn’t filed with the Fair Work Commission by that date, then no matter how good your claim is it will be ruled ineligible and you’ll lose any rights you might have had. In exceptional circumstances, the Fair Work Commission can grant an exception to that rule, but that would be the equivalent of starting the race late and hoping everyone else fell over before the finish line, so unless you’re the modern-day Steven Bradbury, you wouldn’t rely on it.

Hurdle 2 – Have you been ‘dismissed’?

This might seem simple, but some things that may not be a dismissal are a resignation (unless it is ‘forced’), a redundancy (provided it is genuine), you’ve been demoted or your fixed term has expired. You’re in the wrong race altogether, and an unfair dismissal claim will not be applicable.

Hurdle 3 – Has the dismissal been effected?

In this case, you’ve timed your jump too early, hit your front leg on the bar and come crashing to the ground. Unless you have actually been dismissed from your employment, you cannot bring a claim for Unfair Dismissal. This will usually be specified in your termination letter, and in some cases a resignation can still be a dismissal if it is considered to be a ‘forced’ resignation. There are some technicalities around what constitutes a ‘dismissal’ and whether it has been effective, so if it is unclear then you should seek legal advice before bringing a claim.

Hurdle 4 – High Income Threshold

If you earn more than the high income threshold (which at the time of writing, is $162,000 per annum, and subject to review on 1 July each year) then you will be ineligible to bring an Unfair Dismissal claim. Bonuses and other payments can be included in this part of the criteria. You may still be eligible for other claims though (breach of contract, general protections) so you should still seek legal advice, but if you earn more than the threshold you will simply be ineligible for an unfair dismissal claim.

Summary

Sometimes, no matter how unfair or unjust the circumstances might be, an unfair dismissal claim simply won’t be available to you. This doesn’t mean you won’t still have an action against an Employer, as there are other claims you could potentially bring, including a claim for general protections, breach of contract and misrepresentation.

If you have been dismissed but you think one or more of the above hurdles will prevent you from bringing a claim, you should still seek legal advice as there may be other options available. Contact our Employment Law team today for a free consultation.

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Case Note: BWD Trading Acct Pty Ltd v Bellamon Pty Ltd (No 2) [2024] QCS

A recent Supreme Court decision highlights the weight upon which contractual obligations will factor into a Court’s discretion to award indemnity costs.

Summary:

The original application BWD Trading Acct Pty Ltd v Bellamon Pty Ltd [2024] QSC 151 involved the seeking of relief to vest property in the name of the Bellamon Family Trust, with the effect of removing Bellamon Pty Ltd (who had entered into liquidation) and subsequently disentangling and protecting the interests of the various parties affected by that relief.

Issues:

The parties reached ‘substantial agreement’ on appropriate orders to be made, with the only remaining dispute being as to costs. The liquidator sought costs on the standard basis, however the relevant property was the subject of a mortgage and the mortgagee sought costs on the indemnity basis.

Reasons:

Citing Lee v Australia and New Zealand Banking Group Ltd[2013] QCA 284 at [9] and HBU Properties Pty Ltd & Ors v Australia and New Zealand Banking Group Ltd [2015] QCA 95 at [26], Henry J stated

‘The contract clearly contemplated the payment of costs on an indemnity basis’

‘It cannot be doubted that the mortgagee’s inclusion and participation in the present application arose in relation to the mortgage and the mortgagee’s protection of its’ rights under the mortgage. I have accepted that it was no fault of the mortgagee that the applicant had to make the application. No other reason exists to suggest the discretion should be exercised other than according to the mortgagee’s contractual rights.’

Decision:

Henry J awarded the respondent mortgagee its’ costs on the indemnity basis.

The Court’s decision to award costs on either the standard or indemnity basis will depend on the specifics of each individual circumstance and the Court has discretion on this issue with reference to the Uniform Civil Procedure Rules. However, this case highlights that the Court can consider the existence of any contractual entitlement for the payment of costs on an indemnity basis.

This confirms the importance of contract drafting, to ensure that contractual provisions properly consider whether payment of costs in the event of a dispute or default clearly provide for costs to be recovered on an indemnity basis.

How Enterprise Legal Queensland Can Help

Our Business Team is experienced in reviewing and preparing agreements, contracts, deeds, and similar documents. We ensure that the appropriate contractual clauses and provisions are included (or excluded where necessary) to achieve the best outcomes for our clients.

If you need assistance with a contract or agreement, contact our Business Team for reliable advice at (07) 4646 2621or  to schedule a consultation.