We are able to assist businesses with commercial matters as well as litigation.
General commercial matters can cover a range of areas which arise when someone is starting a business, running a business or even interacting with a business, such as:
Further, in transactions the key is to make sure the contract reflects the deal, and that the different issues/pitfalls are considered while the relationship is still good and before anyone puts pen to paper. This can make a vast difference later on, and can also reveal potential future problems early on before anyone gets too invested.
Litigation is an unfortunate outcome where a commercial relationship has reached a point where one party feels they will be better off getting an independent person in to resolve the matter. Sometimes it is used as a pressure tactic, and sometimes it is used as a last resort. Either way, the principles are the same, and it is important to understand and apply these if you are to see a successful outcome.
When we look at a successful outcome, we look at it more broadly than just winning the case. Sometimes winning the case can come at such a considerable cost that you would still be worse off. This happens all too often.
We gained most of our experience in litigation running cases against the ATO. The rule when running cases against the ATO is guilty unless proven innocent, which is a very high and difficult standard. As such, cases need to be run carefully and economically. The ATO also has considerable resources so there is a David and Goliath situation.
However, normal cases between people and businesses are not of this standard. The standard is instead a balance of probabilities, which is that the person making the claim has to make out their claim. The more even standard. Furthermore, it is not always such an extreme David and Goliath situation.
It’s a bit like if you are used to doing triathlons, the experience and practice really helps when it’s a middle-distance run.
These principles have been applied to good effect, and we have seen great results in dealing with commercial disputes and litigation.
Business law covers laws and contracts between businesses and other businesses, businesses and their customers and businesses and Government. Examples of these are: The best structure to use to set up a business, negotiating and drafting contracts, ensuring the contracts are enforceable and reflect the commercial deal
It tends to come down to three things: tax, asset protection and exit strategy. The tax strategy asks what the best structure is to allow you to operate. If your competitors have thought this through better, this might put you at a competitive disadvantage. The asset protection strategy asks what to do if something goes wrong. For example, if sued by a customer can you localise the effects so as not to take the whole business down? Or if you personally are affected by something (e.g. divorce) is there a way that your business won’t be affected? If the business needs finance, what is the best way to do this? The exit strategy asks what you will do if you ever decide to leave the business – say if you sell it, or if you pass it on to your children, or others. Businesses that are structured correctly are more saleable, and also are often easier to lend to if need be.
If you use a company structure, the idea is that the company is a separate person under the law so it, rather than you, are affected by adverse actions against the company. In Australia, there are a lot of ways for directors to be made personally liable which reduces the benefit of using a company structure. It can still be better than trading in your own name, but you would not be able to assume that just because you are using a company you will be fine.
In a partnership all partners are jointly and severally liable. This means that if one partner makes a mistake, all the partners can be sued and required to pay – actually it really means you can pick on any one or more partners and make them pay all or part of the bill. Usually the partner with the
deepest pockets is the one at greatest risk of being in the firing line. Some partnerships use indemnities between the partners so that the partner responsible has to pay, but the reality is if you’re in a situation where you are relying on such an indemnity, it is probably because the offending partner didn’t have enough money, so you’re not going to be better off. There are limited partnerships, where limited partners have limited liability but in such partnerships there needs to be a general partner who has unlimited liability. A joint venture is where two or more people work together on a specific project and are each responsible for their own separate part. In return they collect a certain portion of the output. For example, in a mining project you might have someone who supplies the trucks and a different person who supplies the drilling equipment in a joint venture. The two parties are not jointly and severally liable like in a partnership, but are responsible for their own parts in a project. There are two types of joint ventures – incorporated and unincorporated. The incorporated one leaves little doubt that it is a joint venture and not a joint and several partnership.
At the very least when there is a major transaction, dividend or changes to the capital structure. It is often beneficial to have good records
Yes. A shareholders’ agreement is a great way of making sure everyone participating in a business is on the same page. This is achieved by having full and frank discussions at the beginning covering key issues such as what the business will do (seems simple but a conflict of visions is common and also creates problems), when dividends will be paid, how much or if directors will be paid, whether a shareholder can be involved in other businesses, what happens if someone wants to sell their shares and when and how the company will spend money. This is not an exhaustive list, but the more detailed the better. We have had clients who, on negotiating a shareholder’s agreement, realized they weren’t on the same page so did not continue with the business.
Yes, and it is also best to have some form of security which is then recorded on the PPSR. This doesn’t mean you can’t enforce a verbal contract for lending money, it is just much harder to do because you need evidence of its terms and if you’re in a dispute, chances are the other person won’t be remembering things the same way as you. They might even remember the money being a gift.
Yes. For example, certain tax debts are payable by the director if not paid by the Company and on winding up a liquidator can recover money previously paid to a director, or for debts incurred while the Company was insolvent. We have written an article about some of the circumstances in which a director can be personally liable for Company debts.
Embark on your financial journey with us by scheduling a consultation today.