Commercial Contracts

Under the Business Names Act if a person conducts business in New South Wales under a name that is not that person’s own natural name, then that person must register that business name with the New South Wales Department of Fair Trading.

If you trade under the name “Tim Thomson” and that is your name then there is no need to register. If you trade under the name “Tim Thomson’s Surfboards” then it is necessary for you to register that name. We assist with this process and advise you on any issues or difficulties that may arise.

Day-to-day business often involves a lot of verbal transactions about important issues that can affect the success of your business. Needless to say, business does not always run as planned. When buying or selling a goods or services, it is important to formalise the terms and conditions you trade under so that any disputes that may arise with a customer or supplier may be mitigated by a well drafted document. Your terms of trade will essentially set out the terms and conditions on which you conduct business, governing many of the important aspects of your business relationships.

A well drafted set of terms and conditions is important for two main reasons. Firstly, it allows a business to protect its profits and cash flow by clearly setting out how non-payment will be dealt with. Secondly, it is needed in order to comply with the many provisions of the Competition and Consumer Act 2010 (Cth) (formerly known as the Trade Practices Act 1974) that cannot be legally contracted out of.

For businesses which sell goods or services to customers, the main purpose of the terms of trade will be to set out all relevant terms pertaining to things such as order procedures, pricing, payment, delivery terms and cancellation or returns policies. These terms and conditions will need to be drafted to suit the particular nature of your business and industry. For example, you may also need to take into account issues of ownership of intellectual property, licences, or insurance of goods.

To enforce a condition, it is necessary to ensure that the parties involved have reached an agreement on your terms of trade before the goods or services are provided. Although it is common practice to print terms and conditions in fine print on the back of an invoice, it will be harder to enforce a term which the customer has not been reasonably notified of. Since invoices are normally issued after the goods or services are provided, it is therefore harder to prove that an agreement was reached by both parties as to those terms. It is therefore vital that your terms and conditions of trade are brought to the attention of customers as soon as possible.

Many other aspects of your terms of trade will be governed by industry codes or legislation such as the Australian Consumer Law (ACL) which is contained in the Competition and Consumer Act 2010 (Cth). There are a number of provisions in the ACL which cannot be contracted out of in your terms of trade, such as your liability in relation to misleading or deceptive conduct and advertising. Having recently replaced the Trade Practices Act, many of the ACL’s provisions are taking force in 2011 and 2012, incorporating new laws and regulations on different areas of trade. It is vital that your terms and conditions of trade reflect these changes.

Two of the many examples include:

1. Consumer guarantees
   Since 1 January 2011, the consumer guarantees under the ACL provide consumers with the right to seek a repair, placement or refund if services are incomplete, untimely or unfitting to the purpose discussed. Goods which are unsafe, faulty or look unacceptable are also subject to these consumer guarantees. This comprehensive set of rights cannot be contracted out of and apply regardless of any extra warranties provided by the seller.
2. Warranties against defects or ‘voluntary warranties’
   Voluntary warranties you give to customers will not limit their rights under the consumer guarantees given by the legislation. However, if you choose to provide a warranty as an additional benefit to your customers, from January 1 2012 all warranties against defects must comply with the ACL Regulations. For example, the document must state various details and the length of the warranty, including the mandatory text:
   “Our goods come with guarantees that cannot be excluded under the Australian Consumer Law. You are entitled to a replacement or refund for a major failure and compensation for any other reasonably foreseeable loss or damage. You are also entitled to have the goods repaired or replaced if goods fail to be of acceptable quality and the failure does not amount to a major failure.”

Drafting a set of terms and conditions is therefore not simple. Each business and industry will require different types of terms and conditions. Furthermore, the ACL and its regulations have changed a number of areas of trade practices law and your terms and conditions of trade should work for you in insuring that you comply with them.

Fox & Staniland can help you take control of the terms and conditions that govern your business and assist you in limiting your liability under the Competition and Consumer Act whilst complying with its provisions.