Business and Franchise
The easy to follow, comprehensive procedures and checklists in this guide eliminate common issues which cause delay or dispute in relation to contracts for sale of business, such as purchaser entity, finance, premises and franchise requirements.
Precedents include our new Uniform Contract for Sale of Business which covers all aspects of the transaction from pre-exchange vendor warranties and purchaser guarantees (by shareholders where applicable) to completion, including effective releases of PPSR security interests, transfer all of business assets including copyright works, trade marks, supplier contracts, et cetera and the ASIC/Fair Trading requirements for the transfer of business name. Our contract also customises the competition restraints so they are enforceable, bind the key people and deal with e-commerce, non-solicitation of staff and customers and confidential information.
The commentary compares business structures, sets out the tax consequences of sale price apportionment, explains the tax treatment of stock, long service leave and other employee entitlements, considers the status of the premises and any franchise agreement and discusses many other important issues affecting business conveyancing.
Recent updates can be viewed on Obiter - our blog.
Some of the most popular precedents in this publication include:
- Uniform contract for sale of business
- Letter to purchaser's solicitor submitting contract
- Letter to vendor's solicitor with executed contract for exchange
- Direction to pay to purchaser's solicitor
- Order on agent
- Notice to complete
- Direction to pay to incoming mortgagee
- Summary of relevant considerations
- Letter to vendor's solicitor raising requisitions
Guides in this publication
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“ Contents Overview2 ”
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“ In the legal profession the term ‘costs’ refers to the fees and other expenses a solicitor charges a client for their professional services and other payments that arise out of the provision of legal services, including disbursements such as court fees. Costs are one of the most heavily regulated ... ”
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“ Nature of disclosure1 Timing of disclosure2 ”
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“ Costs disclosure is not required in relation to certain clients, described in the legislation as ‘sophisticated clients’ or ‘government or commercial clients’ as defined by the relevant legislation to include clients such as lawyers, law firms, public companies, liquidators and government entities. ... ”
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“ Cost agreements are not always required although clearly as between the practitioner and their client there will be disclosure but without the need for formal compliance with the regulation. The limits are: ”
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“ In NSW & VIC there is a standard costs disclosure for fees under $3,000 which is included in the precedents. If the total legal costs in a matter (excluding GST and disbursements) are not likely to exceed $3,000 (the higher threshold), a law practice may, instead of making a disclosure under ... ”
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“ Knowing that clients are disinclined to read, sign and return cost agreements, the letter sending them usually provides that unless heard to the contrary the practice will assume agreement. There will almost always be a later opportunity to have the agreement signed. Of course, many practitioners ... ”
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“ Costs are remuneration for professional work when acting in the capacity of a barrister or solicitor. Payments to a practitioner for work which is not professional work, are not costs. Disbursements are payments made, or liabilities incurred in the course of practice and which the practitioner is ... ”
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“ Firms are required to provide an estimate of the total of costs, excluding GST and disbursements, and information on the impact of any significant change to these costs. A law practice must take all reasonable steps to satisfy itself that the client has understood and consented to the proposed ... ”
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“ What is a disbursement Disbursements are payments made, or liabilities incurred in the course of practice, and which the practitioner is bound to pay whether put in funds by the client or not; or payments which, by established custom and practice of the profession, the practitioner is bound to pay. ... ”
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“ A lawyer may request money on account of fees be paid into a trust account before the commencement of work. This is particularly so in criminal and other court matters where the inclination to pay may wane with an unwanted outcome. The funds may cover legal fees as well as disbursements and the ... ”
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“ The costs agreement will set out the billing cycle. Commonly a regular monthly billing cycle is adopted covering work undertaken during the previous month. ”
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“ A lump sum invoice is one which sets out a recital describing the legal service provided and a total amount. An itemised invoice is one which sets out in detail each of the legal services provided, the date they were provided, and the cost for each service. An itemised invoice allows for an invoice ... ”
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“ A law practice cannot charge for the time spent in preparing an invoice. A law practice cannot charge for the time spent in preparing an itemised invoice for a client who has already received a lump sum invoice. ”
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“ All bills should be accompanied by a written statement setting out the avenues that are open to the client in the event of a dispute and any time limits that apply to the taking of such action. Under the uniform law in NSW and VIC each bill or covering letter must be signed by a principal of the ... ”
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“ In 1991 the Australian Competition and Consumer Commission released guidelines to assist businesses in the withdrawal on one and two cent pieces. In the purchase of goods or services for cash, businesses were advised to round the final payment: ”
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“ – When to charge and how to charge Goods and Services Tax (GST) is a broad-based tax of 10% applied to most goods and services, including legal services. Businesses are required to register for GST if their turnover exceeds the $75,000 threshold. If turnover is less than $75,000 than registration ... ”
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“ Reducing fees can create good will but needs to be handled with care as some take offence to the implication that they cannot afford to pay for the work they have retained. It is also a hard won reality that comes from experience that people are inclined not to value any advice given for free. ”
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“ Credit terms are quite common and need to be clearly documented and administered. ”
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“ Notification of rights is a requirement in all states and is found in all example invoice precedents. If the client has not been advised of their rights in a costs agreement, then practitioners must advise the client of their rights at the time of issuing the invoice. ”
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“ Monthly accounting for work in progress is recommended in order to achieve target lockup days. If debtors are not followed up promptly cash flow reduces making it imperative to adopt a debtor’s policy for effective debtor control. All overdue accounts must be followed up promptly and repeatedly. ”
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“ When a retainer is terminated before completion, a practitioner may claim costs for the work done to the date of termination on a quantum meruit basis if: The client terminates the entire retainer; ”
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“ When there are costs owing to the practitioner from the client, the lawyer may retain possession of the client’s documents which are legitimately in the practitioner’s possession. However, the Australian Solicitors’ Rules specify that when a practitioner claims to exercise a lien for unpaid legal ... ”
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“ If a practitioner has an equitable charge over the client’s property incorporated into the costs agreement, ordinarily the practitioner could exercise that power in seeking payment of costs. However, general charges such as a charge over ‘all my estate, rights, title and interest in and to any real ... ”
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“ Sound financial management is absolutely critical to the success of the law practice. There is a high correlation between practices with poor financial management and increased probability of experiencing professional negligence claims. The link is clear. Principals, who do not manage their ... ”
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“ Methods of payment include: Credit card; ”
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“ All By Lawyers cost agreements include the following authority to transfer money to pay their invoices: Trust money ”
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“ Lawcover recommends that practitioners use the costs assessment scheme to recover costs. Instituting proceedings against a disgruntled client who refuses to pay an outstanding bill exposes practitioners to the risk of a cross-claim in negligence being filed. The advantage of the cost assessment ... ”
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“ The following outline of costs assessment was written for NSW but the procedure is similar in the other states. This publication will be expanded to cover cost assessment in the other states in due course. In the interim refer to the relevant State Supreme Court. NSW Procedure ”
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“ A client may be entitled to complain to the Legal Services Commissioner about a costs dispute. If the complaint is made after the law practice or client has already applied for assessment of such costs, the assessment will ordinarily be stayed until the complaint has been determined. Similarly, if ... ”
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“ Australian Competition and Consumer Commission (ACCC) Australian Securities and Investment Commission ”
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“ Companies, Trusts, Partnerships and Superannuation Personal Property Securities ”
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“ There is a vast variety of businesses in existence, any of which may form the instructions of a sale. The incidents of each sale vary enormously. To some the lease of the premises is vital to secure the retailing location, whereas to others it is irrelevant. To some the agreements with suppliers ... ”
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“ Structuring the sale and purchase of the business in the most tax advantageous manner offers the opportunity to save your clients money. This opportunity arises because of the possibility of different rates of tax. ”
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“ Consideration of the tax payable by a vendor is an essential task that must be undertaken prior to the sale of any business assets. The planning may well result in the decision that the business should not be sold at all but rather the purchaser should be required to acquire the entity that owns ... ”
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“ GST property tool The obligation to remit (pay) GST belongs to the vendor. ”
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“ Prescribed form disclosures must be given by the vendor in South Australia for: Sale of a 'small business', where the purchase price is less than $300,000; ”
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“ VOI ”
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“ Features Uses uniform terms and conditions, with all additions and variations are made in the transaction summary. ”
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“ Apportionment of the sale price It is important to structure the sale of business agreement with an apportionment of the sale price to the actual assets transferred. Namely, it is not only desirable to have an identification of the actual assets being conveyed but also it is important to have an ... ”
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“ Any motor vehicles including any registered plant such as graders, bobcats or trucks must be itemised for stamping purposes and may best be dealt with in a separate special condition with values attached. A special condition is in the library. The contract should then be stamped by the purchaser ... ”
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“ Consumer and Business Services regulates the supply of alcohol in SA under the Liquor Licensing Act 1997. See Liquor and Gaming Online for more information. ”
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“ When purchasing or selling a business which has a web-site, domain name or email, it is important that you contact the internet service provider, to advise them of the sale and the new owners’ details. They will assist in arranging for the transfer of the domain name registration. Social media ... ”
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“ The objective as always is to incur the minimum tax liability arising from the sale. The tax rates applicable to the proceeds of sale depend on whether the asset sold is a revenue asset or a capital asset. Revenue assets are generally stock, and plant and equipment. Any taxable gain is taxed at the ... ”
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“ When an employer buys or sells a business, the sale may affect the employment and entitlements of employees that are already working for the business. The transfer of business provisions of Part 2-8 of the Fair Work Act 2009 deal with situations where a business is transferred from one employer to ... ”
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“ Although business names are not strictly ‘intellectual property’ in the sense that trademarks are, it is clear that they can have substantial value, as in ‘Myer’, ‘McDonald’s’ and so on. Every business name must be registered with ASIC unless the proprietor is trading under their own name. For ... ”
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“ Consumer and Business Services regulates the supply of alcohol in SA under the Liquor Licensing Act 1997. See Liquor and Gaming Online for more information. ”
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“ and finalisation Time for completion ”
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“ Transfer registration of motor vehicles Transfer software licences and domain names ”
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