Protecting your business interests with clear and concise contracts

Businesses need to issue clearly marked terms and conditions before entering into a contract for services. A recent decision by the Court of Appeal in Western Australia highlights the risks of not providing the terms of your contract to your client before the services have been delivered.

In the case of La Rosa v Nudrill Pty Ltd the Court deliberated over a situation where the parties had a ten (10) year business relationship and one party (Mr La Rosa) attempted to rely on terms and conditions being printed on the back of his invoice’s in order to enact an exclusion clause.

The dispute arose when Mr La Rosa damaged a drill rig he was transporting because he was speeding and driving negligently. Mr La Rosa tried to rely on an exclusion clause (which stated “all goods are handled, lifted or carried at the owner’s risk”) printed on the back of his invoice to avoid any liability for the damage to the drill rig.

The key issue the Court considered was whether Nudrill and Mr La Rosa, by their past conduct, had incorporated the exclusion clause into the contract for services. When determining whether a term is to be incorporated into a contract due to prior dealings in a commercial relationship the Court insisted the test should at the very least rely on the number of prior dealings, how recent those prior dealings were and the consistency between the prior conduct and the dealing in question.

The Court of Appeal unanimously held that the receipt of Mr La Rosa’s invoices by Nudrill was not sufficient enough to justify an inference that Nudrill had accepted, or was willing to be bound by, the terms and conditions printed on the back of the invoices.

The two (2) main points the Court relied on in justifying their position were that there was no evidence that Nudrill had actually read the terms on the back of Mr La Rosa’s invoices and that it was reasonable for a person to regard the invoice as simply a request for payment rather than a document containing contractual terms governing the transaction that had already occurred.

Without having explicitly agreed to terms and conditions businesses run the risk of leaving themselves unsure and uncertain as to the potential dangers and liability they may raise its head in the future. Just because your business has always contracted with another business many times does not mean that a term will always be incorporated into a contract because of the prior dealings. Businesses need to protect their own interests by learning from the La Rosa v Nudrill case and ensuring their contracts explicitly cover their own interests.

If your business needs help reviewing, renewing or drafting clear and concise terms and conditions contact a Best Practice Lawyer.

National business names register

ASIC Keys

In May 2012 business names which were previously held in state based registers were migrated over to the National Names Register which is administered by ASIC. ASIC does not have a shop front for dealing with the registration and transfer of business names and the register is administered on-line.

All business name holders are now required to have an ASIC Key for a business name registered on the National Names Register. The ASIC Key is different to the ASIC Key you may already have if you are the director of an ASIC Company. The ASIC Key is issued by ASIC to the holder of a business name when business names are registered or renewed. The ASIC Key is required if you want to deal with your business name in any way, for example when you want to sell your business.

However, as most business names in NSW are registered for a 3 year period if you have not had to renew your business name since the National Names Register commenced in May 2012 you will not have received your ASIC Key for the business name. This can cause issues if you wish to sell your business and transfer the business name to the purchaser as you need your ASIC Key to apply for the ‘consent to transfer number’ which you need to provide to the purchaser of your business to enable them to register themselves as the new holder of the business name. You can request the ASIC Key for your business name online. Click hereand then click on the link to find out more about ASIC Keys and how to apply for one.

Changes to the Transfer of Business Names

When you are selling your business and the purchaser is buying your business name you apply to ASIC for a consent to transfer number. Before 27 January 2013 once you applied for that number your business name was stored on a temporary register for 28 days until the transfer was completed. The process has now changed and since 27 January 2013 details of the previous and new business name holder are immediately displayed on the national business names register for a period of 28 days. After that the register updates to show the new business name holder.