Business & Commercial Law

Owning and managing a business is hard work. Some would argue it has become even more challenging over recent years, with strict compliance requirements and countless laws to navigate. We can help whether you need start-up advice, are ready to grow, or facing a legal challenge in your business. We can help you choose the right structure, draft and review contracts to protect your interests and mitigate risk, and advise on a range of commercial law matters. Over the years, we have built long-term trusted relationships with many clients, providing tailored strategies and solutions for their business needs.

Buying and Selling a Business

Buying or selling a business is a high-stake transaction for both buyer and seller and each party should be individually advised. Working with an accountant and lawyer together, can help you to achieve an optimum outcome which considers the legal, taxation and financial aspects of the transaction.

If you are buying, you want to make sure that you are getting everything you need to successfully operate the business. Due diligence is essential before signing a contract, which should be carefully reviewed by your lawyer. You will need to check out the suitability of any incidental leasing agreements, investigate stock, plant and machinery, and arrangements for the transfer of existing intellectual property such as domains and trademarks.

You may also need to find out if you are able to obtain any necessary licences required to operate the business, and whether there are any other ongoing contracts for which you will be responsible after the sale is completed. Arrangements for existing employees can be fraught with confusion, so it is important to ensure you understand your obligations for those workers who will be offered continuing employment.

Business Structures 

We can explain and help you choose a legal structure that best supports your business goals and personal objectives. This usually takes into consideration the size and proposed growth of your business, the industry in which your business operates and an assessment of the associated personal risks. Typical business structures include:

• Sole trader – may be appropriate when starting a small-scale enterprise on your own using an Australian Business Number. A sole trader is legally and financially responsible for all aspects of the business.
• Partnership – may be ideal when another person or people are involved in, and contributing to, the business. In a partnership, however, all partners have joint and several liability for any debts incurred in the partnership and there can be potential for conflict. A partnership agreement can be used to outline the duties and responsibilities of each partner, how decisions are made and how disputes may be resolved. The agreement can also include provisions for the retirement, incapacity, or death of a partner and how interests will be sold or transferred after such events.
• Registered company – corporate structures can provide some level of protection for company officeholders. The company is a separate legal entity and may enter contracts in its own name. Companies are registered with the Australian Securities and Investments Commission and have ongoing costs and annual reporting obligations.  
• Trusts – can assist with asset protection and may be beneficial structures to deal with income tax and capital gains. Trusts are complex, however, and must be compliant and properly managed to ensure they deliver their anticipated outcomes. 

Commercial and Retail Leasing 

A commercial lease sets out the rights and responsibilities of a lessor (landlord) and lessee (tenant) regarding the lessee’s occupation of defined premises. If you own commercial premises, or need to rent office space, a retail shop, or a factory to run your business, you will need a carefully drafted lease agreement.

Some important provisions of a commercial lease include:

• A description of the premises, including the size, location, and permitted use.
• The rent payable by the lessee, including rent reviews and payment terms.
• The term of the lease, including any options for renewal or termination.
• Provisions dealing with a lessee’s right to sub-lease or transfer the lease, as relevant.
• The obligations of both the lessor and lessee regarding maintenance and repairs of the premises.
• Details of all outgoings payable by the lessee in addition to the rent, such as rates, taxes, and insurance.

Retail leasing legislation applies to certain premises defined as “retail” under the relevant legislation in each jurisdiction. These laws regulate the leasing arrangements between the lessor and lessee and require specific disclosure obligations of the lessor.

Commercial leasing disputes can arise when the agreement is unclear or does not adequately cover the many unforeseen events that can occur during the term of the lease, for example, major damage to premises or unprecedented disruption. Alternatively, a lessee may not understand the extent of their obligations under a lease which can lead to unexpected cashflow issues. Getting independent legal advice and having a proposed lease carefully reviewed and negotiated can help put the parties on the same page at the beginning of the leasing relationship and avoid disputes down the track. 

Acting as a Guarantor 

A guarantee is a contractual promise made by a third party to a lender that they will honour the obligations imposed under a loan agreement or mortgage if a borrower fails to keep their financial promises to the lender. If you agree to be a guarantor, you are required to take responsibility for the original borrower’s debt if they default on their loan. A guarantor is often a person guaranteeing the obligations of their own small business. With larger businesses, it may be a company acting as a guarantor for a loan extended to a subsidiary company. 

The terms of the guarantee must be set out in writing, and it is vital that you understand your obligations before you sign, as you may incur more onerous terms of loan repayment than the original debtor. We can provide advice if you have agreed to provide a personal guarantee in favour of another person or as a company director.

Commercial and Business Contracts

As your business grows, various negotiations and transactions will take place that should be documented in a legally binding agreement. These might include contracts for the provision of goods and services, terms of trade, shareholder agreements, employment contracts, and distribution agreements. 

Involving a lawyer to prepare or review your commercial contracts can help keep negotiations on track and ensure that important provisions are not overlooked. Lawyers generally think outside the box and contemplate what could, and sometimes does, go wrong. A well-drafted business contract puts the parties on the same page from the beginning of their relationship by providing clear terms that balance their rights and responsibilities, and provisions to cover a range of contingencies.

If you need assistance, contact one of our lawyers at [email protected] or call 03 5728 1866 for expert legal advice.