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

1. CONTRACT REVIEWS AND
NEGOTIATIONS
A BUSINESS LAWYER'S PRACTICAL GUIDE
Presented by:
Tom Meagher
Director – Commercial Law
© Murfett Legal 2013

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. 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. 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. 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. 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. 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. 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. 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. 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. Terms and Conditions of Agreement
You should also ensure the following clauses are acceptable
and/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. 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. THANK YOU
Tom@murfett.com.au
www.murfett.com.au
© Murfett Legal 2013