Contract Reviews and Negotiations -


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A Buiness Lawyer's Practical Guide to Contract Reviews and Negotiations for Non-Lawyerss

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Contract Reviews and Negotiations -

  1. 1. CONTRACT REVIEWS AND NEGOTIATIONSA BUSINESS LAWYERS PRACTICAL GUIDE Presented by: Tom Meagher Director – Commercial Law © Murfett Legal 2013
  2. 2. Disclaimer• The information presented in this seminar is intended only as a guide, as to the topic and the matters discussed.• This seminar is not legal advice and must not be relied on as such.• If you have a matter which relates to this seminar or you require legal advice, careful review and analysis of your matter‟s particular facts, information and documents is required before proper legal advice can be given or applied to your matter. © Murfett Legal 2013
  3. 3. What is a Contract ? – Offer: intention to create legal relations – Acceptance of Offer – Certainty of Terms: between the parties • reasonable and objective interpretation; • variation of contract or counter offer – Consideration: the parties have bargained or paid for their mutual promises – Privity: only the parties to the contract may enforce their contractual promises © Murfett Legal 2013
  4. 4. Methods of Formation of Contract-When have you entered into a contract? – Verbal; – Written; • Note: must always be for land transactions; – By performance; or • Note: also estoppel – Any combination of the above. © Murfett Legal 2013
  5. 5. Who can Bind the Parties to a Contract? The accepting party, who may be: » the business owner » a customer » a director » a partner » an agent » a manager; or » an employee. Authority to bind: • contractual right (e.g. manager), • ostensible authority (e.g. agent); or • statutory (s.128 & 129 of Corporations Act – a party‟s assumptions in relation to their dealings with a company). © Murfett Legal 2013
  6. 6. Types of Contract Examples of various types of contracts: – For goods and/or services – A bus ride and car parking – Employment agreements – Leases and licences (note: offers to lease) – Shareholder and unit holder agreements. © Murfett Legal 2013
  7. 7. Types of Contract Some parties may present a “Heads of Agreement” also commonly referred to as an: – “Agreement to Agree”, – “Memorandum of Understanding” – or “Term Sheet”, before a formal contract. The Heads of Agreement typically sets out only the key terms of the contract but an still be legally binding! © Murfett Legal 2013
  8. 8. At or Before Contracting – Agree the terms or deal, then confirm it in “in writing” e.g. by signed agreement, fax or email. – Consider not proceeding if, despite an apparent contract, you don‟t reasonably believe you will get what you seek or what you should be paid. – Also consider if a Confidentiality Deed is required e.g. IP protection, competitor buyer. © Murfett Legal 2013
  9. 9. At or Before Contracting– Ensure proper advice and other material matters are in place e.g. • check tax consequences with accountant, • check with insurance advisor – duty of disclosure proper and adequate insurances • any necessary statutory licences or permits or authorisations required.– Statutory disclosure • Product Disclosure Statements (PDS) • Consumer Credit Code • „Disclosure Statements‟ for Retail leases • „Disclosure Documents‟ for Franchise agreements. © Murfett Legal 2013
  10. 10. Terms and Conditions of Agreement(aka Terms of Trade or the Contract!)You should be aware of and understand effects (and differences)the following clauses: • Retention of title and the• Insurances; Personal Property Security• Indemnities and Warranties; Act;• Defects and Liability; • Direct and consequential losses;• Limitations of liability – consequential losses; • Notices; and• Liquidated damages; • Incorporation of other documents into the contract• Default and Termination (tip: eg. watch for ‘termination for annexures, schedules, policie convenience’ clauses); s. © Murfett Legal 2013
  11. 11. Terms and Conditions of AgreementYou should also ensure the following clauses are acceptableand/or incorporated: • Satisfactory payment terms; • Protective Covenants (e.g. • Security for payment; ‘anti-poaching’ of staff • Ability (or first right) to rectify , clients etc.) and Restraints of any defects in the goods Trade; and/or services; • Confidentiality; • Ownership of Intellectual • Assignment, novation, sub- Property Rights; contracting; • Variations to the works; • Force Majeure/ ‘Act of God’ • Extension of time; • Jurisdiction/ Governing Laws • Dispute resolution; • Entire agreement clause; and • Further assurances. © Murfett Legal 2013
  12. 12. How to avoid unnecessary legal risk, cost and stress• Don‟t rely on friends, „mates‟, agents or other non-qualified third parties for “advice”. They: a) do not act for you, b) do not owe you a fiduciary duty; and c) are not qualified (or insured!) to give you proper legal advice.• Engage a lawyer at the right time – e.g. you do the deal but before you accept a contract, be sure to obtain appropriate legal advice.• Business lawyers can add value and can be better than warranty/insurance claims or litigation!• If a dispute arises, be sure to clarify the issues in writing, keep all material information/documents and seek advice early (also, if applicable, promptly notify your relevant insurer – rights of subrogation). © Murfett Legal 2013
  13. 13. THANK © Murfett Legal 2013