Commercial Law

Business in Australia today is becoming increasingly competitive and regulated. Business owners and directors need cost-effective, practical solutions for a range of matters including; – advising on start-ups and corporate governance, negotiating commercial arrangements, planning for growth and restructure, and handling legal disputes.

Choosing a business structure

Choosing a legal structure through which to operate a business is an important consideration, and will take into account a number of factors including, but not limited to, the size of the enterprise, the industry within which the business operates, the owners’ circumstances, goals and future plans for the business.

Small businesses often operate as a sole proprietorship or partnership. For a partnership, a formal agreement should be prepared to govern the relationship between partners and set out agreed processes for matters such as termination, retirement, sale of partnership shares and business succession.

Alternatively, a registered company may be incorporated through which the business will operate. Incorporation provides a certain level of protection from liability for the company’s officers and shareholders. Companies do, however, have additional regulatory and reporting requirements, and directors must be aware of their duties and obligations under the relevant corporations law.

Various trust structures may also be used to conduct the activities of a business. If properly set up and managed, trusts can provide asset protection and favourable taxation treatment. They are however complex and must be administered to ensure the benefits outweigh the costs and ongoing fees.

Buying or selling a business

Buying or selling a business requires careful planning to ensure that agreed terms and conditions are properly documented in a written contract, and incidental arrangements such as lease and service agreements are considered.

Undertaking due diligence when purchasing a business involves activities such as reviewing the sales history, considering financial records like profit and loss statements, wages and running costs, completing an inventory of assets and liabilities and interviewing key personnel.

Sufficient funds will be required to cover not only the purchase price for the business but also any legal, regulatory, stamp duty and GST costs, as well as operational expenses to assist with cashflow, particularly during the initial phases.

If you are considering buying a business, there are a number of essential steps that we can assist with. Consulting with your lawyer and a financial professional can help to minimise risk and avoid some of the common pitfalls encountered in many new business ventures.

Similarly, when selling a business, retaining expert advice to structure the sale for optimum return by considering the calculation of goodwill, the breakup of the sales price, GST and CGT issues, and dealing with matters such as employees, confidentiality and restraint of trade provisions.

Commercial contracts

Commercial contracts are fundamental to any enterprise and govern the legal rights and responsibilities of the parties for a range of transactions. Business contracts include supply / service agreements, partnership / shareholder agreements, licence and loan agreements.

Business contracts should be in writing to capture the parties’ negotiated agreement, to set out their respective rights and responsibilities and detail essential terms such as the scope of services or products to be provided, warranties, indemnities, and dispute resolution processes.

Commercial and retail leasing

A commercial lease governs the relationship between a landlord (lessor) and tenant (lessee) regarding the lessee’s right to occupy premises owned by the lessor. Commercial leases are frequently the subject of legal disputes which often occur due to poorly drafted, ambiguous or non-existent lease agreements, and / or the failure of the parties to understand the terms of the lease.

Retail leases are commercial leases regulated by specific legislation which typically applies to premises within shopping centres or that are used wholly or predominantly for conducting a retail business. Retail leasing legislation aims to enhance consumer protection by stipulating minimum terms and conditions and limiting certain provisions that are deemed unreasonable for a lessee. The legislation also imposes certain disclosure obligations upon a lessor.

Lessors and lessees should obtain appropriate advice to ensure their negotiations are properly reflected in a lease agreement, and the provisions comply with any relevant legislation.

Employment law

Key to the success of an organisation is the competent management of the employer / employee relationship across each phase of the employment cycle, whether that be at the planning, strategic management or dispute resolution stage.

Strategies to effectively recruit and manage staff, foster an inclusive work environment and prevent breaches of fundamental workplace rights are essential to achieve optimum performance and minimise disruption and loss.

Whether hiring at a junior or executive level, a well-structured employment contract containing key essential terms provides clarity regarding the rights and responsibilities of the employee and the organisation.

Directors’ duties

A company is an incorporated legal entity with the capacity to enter legally binding transactions in its own right. Apart from some exceptions, directors are not personally liable for the company’s debts. Directors however hold a position of power and trust imposing on them several duties to act in the company’s best interests. Essentially, they must:

  • act honestly and use their powers to make decisions based on what is right for the company as a whole;
  • avoid conflicts of interest and not use their position for personal profit to the detriment of the company;
  • exercise care, skill and diligence in performing their duties;
  • prevent insolvent trading.

Directors face many situations and challenges that may place them in danger of breaching their duties and, in the case of uncertainty, should seek legal advice. Certain defences may be available to a director who has breached a duty to avoid insolvent trading and it is critical that directors of companies facing financial difficulties seek professional advice early.

With over 30 years expertise in commercial law, our team has assisted numerous small, medium, and large organisations operating across various industries, tailoring solutions for the many planned and unforeseen events that occur throughout the life of a business.

If you need any assistance contact one of our lawyers at [email protected] or call 02 8373 2555 for a no-obligation discussion and for expert legal advice.