General

The Australian Consumer Law (ACL)

Since 2011, businesses that provide goods (whether by selling or leasing them) or services to consumers in Australia must comply with certain consumer guarantees (as do manufactures and importers) imposed by the Australian Consumer Law (ACL).

Businesses must provide these ACL guarantees automatically, regardless of any other warranties they give to you or sell you.

Who is a consumer?

A person – including a business – will be considered a “consumer” if:

  1. they purchase goods or services that cost less than $40,000;
  2. the goods or services cost more than $40,000, but they are of a kind ordinarily acquired for domestic, household or personal use or consumption; or
  3. the goods are a commercial road vehicle or trailer used primarily to transport goods on public roads.

CONSUMER GUARANTEES – GOODS

Businesses that sell goods guarantee that those goods:

  • are of acceptable quality – safe, lasting, have no faults, look acceptable and do all the things someone would normally expect them to do;
  • are fit for any purpose that the consumer made known to the business before buying (either expressly or by implication), or the purpose for which the business said it would be fit for;
  • have been accurately described;
  • match any sample or demonstration model;
  • satisfy any express warranty (ie, anything promised by the business about the goods);
  • have a clear title, unless you otherwise advise the consumer before the sale;
  • come with undisturbed possession, so no one has the right to take the goods away from or to prevent the consumer from using them;
  • are free from any hidden securities or charges; and
  • have spare parts and repair facilities reasonably available for a reasonable period of time, unless the consumer is advised otherwise.

Manufacturers and importers guarantee that their goods:

  • are of acceptable quality;
  • have been accurately described;
  • satisfy any manufacturer’s express warranty; and
  • have spare parts and repair facilities reasonably available for a reasonable period of time, unless the consumer is advised otherwise.

What happens if these guarantees regarding goods aren’t met?

If a business sells a good to a customer that fails to meet one or more of the above consumer guarantees, they are entitled to a remedy – either a repair, replacement or refund and compensation for any consequential loss – depending on the circumstances.

Minor problems

Generally, if the problem is minor, the business can choose whether to remedy the problem with a replacement, repair or refund. If business chooses to repair and it takes too long, the consumer can get someone else to fix the problem and ask the business to pay reasonable costs, or reject the good and get a full refund or replacement.

Major problems

If the problem is major or can’t be fixed, the consumer can choose to:

  • reject the goods and obtain a full refund or replacement, or
  • keep the goods and seek compensation for the reduction in value of the goods.

What is “minor” and what is “major” when considering goods?

A purchased item has a major problem when it:

  • has a problem that would have stopped someone from buying the good if they had known about it;
  • is unsafe;
  • is significantly different from the sample or description;
  • doesn’t do what the business said it would, or what the consumer asked for and can’t easily be fixed.

Gift recipients are entitled to the same rights as consumers who bought the goods directly.

A business can’t refuse to provide a remedy if the good is not returned in its original packaging.

The buyer also must not refuse to deal with a customer about the returned good and tell them to deal with the manufacturer instead (however a manufacturer can be approached directly by the consumer).

CONSUMER GUARANTEES – SERVICES

Businesses that supply services to consumers guarantee that those services will be:

  • provided with due care and skill;
  • fit for any specified purpose (express or implied); and
  • provided within a reasonable time (when no time is set).

What happens if these guarantees regarding services aren’t met?

If a business sells a customer a service that fails to meet one or more of the consumer guarantees, the consumer is entitled to a remedy – for example, a refund, a further service to rectify the problem and in some circumstances compensation for consequential loss. The service provider must then provide the appropriate remedy.

Minor problems

If the problem is minor and can be fixed, the business can choose how to fix the problem.

The consumer cannot cancel and demand a refund immediately. The business must have an opportunity to fix the problem. If the repairs take too long, the consumer can get someone else to fix the problem and ask the business to pay reasonable costs, or cancel the service and get a refund.

Major problems

If the problem is major or can’t be fixed, the consumer can choose to:

  • terminate the contract for services and obtain a full refund; or
  • seek compensation for the difference between the value of the services provided compared to the price paid.

What is a “major” problem when looking at services?

A purchased service has a major problem when it:

  • has a problem that would have stopped someone from purchasing the service if they had known about it;
  • is substantially unfit for its common purpose, and can’t easily be fixed within a reasonable time;
  • does not meet the specific purpose the consumer asked for and can’t easily be fixed within a reasonable time; or
  • creates an unsafe situation.

EXCEPTIONS

A business may not be required to provide a remedy if a consumer:

  • simply changes their mind, decides they do not like the purchase or has no use for it;
  • discovers they can buy the goods or services more cheaply elsewhere; or
  • has misused the goods in a way that caused the issue or damaged the goods by using them in a way that was unreasonable.
  • knew of or was made aware of the fault before they bought the good;
  • asked for a service to be done in a certain way against the advice of the business.

HOW CAN BUSINESSES HELP THEMSELVES?

Although the consumer guarantees cannot be contracted out of, businesses can take steps to limit its effect, such as:

  • Putting in place appropriate Terms of Trade that confirm the understanding of the parties as to things that can often cause issues like time for delivery (as opposed to the unclear “reasonable” time), imposing obligations on the consumers as to how to properly use the goods/services and so on;
  • Putting in place appropriate workplace policies and employment contracts that limit the “promises” that sales staff may make about goods or services being sold;
  • Considering marketing and product/service detailed material so as to ensure the descriptions and promises about the goods and services are clear and correct and not misleading or likely to cause complaints.

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to consumer rights, business or commercial law matter, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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Double Demerits this Easter long weekend

A reminder to our clients that double demerits apply for speeding, seatbelt, helmet and mobile phone offences this Easter long weekend from midnight tonight, 28 March to 11:59pm 2 April 2018.

During Operation Merret and throughout the Easter period, you will see more police on the roads, not only targeting motorists for dangerous behaviours, but educating drivers on safe behaviour and encouraging those who are doing the right thing through positive reinforcement.

Please drive safely.

Claim a CTP Green Slip refund

The NSW Government has reformed the compulsory third party (CTP) insurance scheme to reduce the costs of CTP Green Slips for vehicle owners and better support people injured on NSW roads.

If you were the registered owner of a private vehicle as at midnight 30 November 2017, you may be able to claim a CTP Green Slip refund for CTP insurance policies bought or renewed before 1 December 2017.

Over 4 million NSW vehicle owners will be eligible for a refund as a result of these reforms.

To see if you are eligible and claim your refund, log in to Service NSW

Do you own land in NSW through a family trust structure?

Do you own land in NSW through a family trust structure? If so, then take note…

Revenue NSW (previously the NSW Office of State Revenue) automatically applies the Land Tax Surcharge  on land tax assessments for properties owned through a family trust. The surcharge, which was introduced as part of the 2016 NSW budget, is currently at 2%, and can be significant.  There is a similar application to stamp duty also.

This surcharge does not apply where Revenue NSW has been advised of the fact that the trust deed specifically excludes foreign persons or entities as potential beneficiaries.

Revenue NSW may allow trustees up to 6 months from the date of an assessment date to update their trust deed to remove foreign persons as beneficiaries. After the deed is updated and Revenue NSW is satisfied with the changes, the trustee can then apply for the surcharge to be refunded.

We have assisted several clients to update their trust deeds at the time of initial registration for land tax (to exclude foreign persons or entities as potential beneficiaries) however, where there is an existing trust with an existing landholding, this may be something that needs to be monitored and updated, so check your assessments.

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to land tax, trust deed amendments or any other commercial law matter, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au.

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your legal needs.

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Road Rules Awareness Week

26 February – 4 March 2018 is Road Rules Awareness Week in New South Wales and is part of Transport for NSW’s Towards Zero campaign.

Here is a guide to the Top 10 misunderstood Road Rules which provides simple answers to many road rule questions, including using roundabouts, when you can and can’t use high-beam and fog lights, and when it is permitted to make a u-turn.

Top 10 Misunderstood Road Rules

Below are some short videos on each topic in the top 10.

Road Rules Awareness Week provides an annual opportunity for drivers to refresh their knowledge of road rules. It also allows pedestrians, motorcyclists, passengers and bicycle riders to better understand the rules and improve their safety on or near the road.

 

 

Bringing on business partners?

For businesses that are growing and putting on other shareholders and directors, a Shareholders Agreement is a must have. If your business is not a company but it a partnership or a unit trust structure, the document would be a Partnership Deed or Unitholders Agreement.

Don’t leave some of the most important and fundamental issues for your business to chance. Consider a company with 2 or 3 shareholders – a typical small to medium sized business scenario…

COMMON PROBLEMS FOR SHAREHOLDERS

Issues that commonly that can affect shareholders include:

  • A shareholder sells their shares, leaving you with an unintended business partner;
  • A shareholder dies and you inherit an unintended business partner or you have to buy the shares from their estate for more than you ought to;
  • As a shareholder, you want out but cannot find a suitable purchaser but the other shareholders won’t buy you out;
  • The shareholders don’t have available funds to pay out an exiting shareholder;
  • The majority shareholder wishes to run the business one way, but is restricted by a minority shareholder;
  • You, as a minority shareholder, are being treated poorly by other shareholders who are running the business with little regard to your interests;
  • You wish to sell the company’s business as there is an excellent offer on the table, but another shareholder will not and is jeopardizing the sale;
  • You wish to receive dividends from the business, but others want to reinvest the profits.

The aim of a Shareholder Agreement is to bring some certainty to the business relationship so there is confidence in how the business will operate

TAILORED SOLUTIONS

A Shareholder Agreement tailors the rights and obligations of the shareholders to fit the particular purposes of the company, the nature of its business and the aims and wishes of its shareholders – to help avoid some of the potential problems identified above.

Some factors that should be considered in a Shareholders Agreement include:

  • The company’s activities/type of business – its purpose;
  • The roles and obligations of the shareholders;
  • Who are the directors and how the shareholders can change them;
  • Director remuneration;
  • Who will manage and control the business day to day, such as a managing director;
  • Meetings – how they are called, how they are run, counting of votes;
  • How decisions are made by shareholders or the board of directors;
  • What types of decisions require a simple majority, special resolution or a unanimous vote;
  • Payment of dividends;
  • Funding/borrowing;
  • Restrictions on the issue/transfer of shares and calculating the share price;
  • How shareholders can exit from the company and on what terms;
  • Funding of exits (including death) – buy/sell obligations and personal insurances;
  • Restraints on existing shareholders as to company customers etc;
  • Insurances to be taken out; and
  • How any disputes are to be resolved.

The aim of a Shareholders Agreement is to bring some certainty to the business relationship so that shareholders can have some confidence as to how the company will be run and, if there is a falling out, to provide a mechanism for that falling out to be dealt with, as painlessly as possible.

Ideally, the Shareholders Agreement would be in place from the outset whilst all parties are in agreement in relation to all issues however, they can be documented at any time (provided all parties agree).

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to starting or buying a business, drafting business documents or any other commercial law matter, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au.

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your business needs.

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Creditor’s Statutory Demand

If you or your business are owed a debt by an Australian company that is not disputed, then there can be a relatively simple, yet effective way of obtaining payment in as little as 3 weeks.

The Corporations Act 2001 (Cth) provides for the issue of a document called a “creditor’s statutory demand” to any company that owes a debt greater than the prescribed amount (which is presently $2,000).

The process is basically that the demand is served and then you wait.

Statutory demands must be in the prescribed form, detail the debt due, be signed by or on behalf of the creditor and be properly served on the company. Where the debt is not a judgment debt, an affidavit is also required to be signed, certifying that the debt is due and payable.

The Act provides where the demand is served and not complied with within 21 days, the company is presumed to be insolvent and is liable to be wound up. Compliance with the demand is achieved by either paying the debt due or coming to an arrangement satisfactory to the creditor in relation to payment of the debt within that 21 day period.

The presumption of insolvency lasts for 3 months after the 21 day period expires. Any proceedings to wind up the company on the basis that it is insolvent must be commenced within that period.

Creditor’s statutory demands may only be set aside by the Court on certain grounds and applications to do so must be both filed with the Court and served on the creditor that issued the demand within that 21 day period. Grounds for setting aside the demands are limited and include where there is a defect in the demand, where the amount owed is less than the prescribed amount or where there is a dispute as to the existence and/or amount of the debt claimed. None of these grounds may be relied on to oppose a demand after the 21 day period.

Where the debt is disputed, the service of a creditor’s statutory demand is not the appropriate way to obtain payment however, there are other methods available.

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to debt recovery, company issues or any commercial law matter, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au.

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your legal concerns or objectives.

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Merry Christmas from McKillop Legal

Our office will be closed from 4pm on Friday, 22 December 2017 and will re-open on Monday, 15 January 2018.

We wish you a very merry Christmas and a happy and prosperous new year ahead in 2018.

What is AUSTRAC and what does it do?

So, what is AUSTRAC and what does it do?

The Australian Transaction Reports and Analysis Centre (AUSTRAC) is tasked with enforcing compliance with the Financial Transaction Reports Act 1998 (FTR Act) and the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act).

One of the purposes of the FTR Act and AML/CTF Act is to seek to ensure that instances of tax evasion, money laundering and the potential financing of terrorists are reported to the appropriate authorities.

The AML/CTF Act

The AML/CTF Act imposes obligations on entities that provide ‘designated services’ (such as account/deposit-taking services, cash carrying/payroll services, currency exchange services, life insurance services and lending).

Entities that provide one or more designated services under the AML/CTF Act are ‘reporting entities’.

Threshold transactions

Reporting entities must submit a Threshold Transaction Report (TTR) to AUSTRAC within 10 business days after the entity provides a customer with a designated service involving a ‘threshold transaction’.

Threshold transactions involve the transfer of physical currency or e-currency of AUD$10,000 or more (or foreign currency equivalent).

International funds transfers

The ‘sender’ of an International Funds Transfer Instruction (IFTI) transmitted out of Australia, or the ‘recipient’ of an IFTI transmitted into Australia, must report the instruction to AUSTRAC within 10 business days after the day the instruction was sent or received.

Suspicious matter reports

A reporting entity must submit an Suspicious Matter Report (SMR) to AUSTRAC within 24 hours after forming the relevant suspicion if the suspicion relates to terrorism financing (or otherwise within 3 business days) if it is suspected on reasonable grounds that:

  • a person (or their agent) is not the person they claim to be, or
  • information the reporting entity has may be: relevant to investigate or prosecute a person for; an evasion (or attempted evasion) of a tax law, or § an offence against a Commonwealth, state or territory law; or of assistance in enforcing: the Proceeds of Crime Act 2002 (or regulations under that Act); or a State or Territory law that corresponds to that Act or its regulations
  • providing a designated service may be: preparatory to committing an offence related to money laundering or terrorism financing; or relevant to the investigation or prosecution of a person for an offence related to money laundering or terrorism financing.

The FTR Act

Where an entity is covered by the AML/CTF Act (which was enacted years after the FTR Act), they are generally not covered by the FTR Act.

The FTR Act covers cash dealers include financial institutions, corporations that provide financial or insurance services, trustees and managers of unit trusts and a person who carries on a business of operating a gambling house or casino. The obligations of solicitors are also prescribed by the Act.

Where a significant cash transaction takes place (a cash transaction involving AUD$10,000 or more (or foreign currency equivalent including transactions which, when aggregated, exceed that amount), a Significant Cash Transaction Report (SCTR) is to be lodged with AUSTRAC.

Cash dealers who are a party to a ‘suspect’ transaction must report that transaction to AUSTRAC. The cash dealer must submit a suspect transaction report (SUSTR) to AUSTRAC as soon as practicable after forming the suspicion.

The objective of the FTR Act is that by preparing the reports to AUSTRAC, businesses can more easily identify their customers and are therefore more likely to reduce the incidence of fraud.

The importance of workplace policies

All employers need to maintain, develop and implement appropriate workplace policies in their business.

The need for these policies is not only compliance with relevant legislation, but also to protect the businesses against claims which might arise from inappropriate conduct of employees. Creating and enforcing workplace policies is one way in which employers may be able to effectively prevent or manage such claims.

Putting in place suitable policies can be a time-consuming task and one that is potentially dangerous for those who are not familiar with the legislative and contractual requirements involved.

The purpose of workplace policies is to place both the employer and employees (or prospective employees) on notice of certain things such as prohibited conduct. They often prevent any serious problems arising but if problems do arise, the employer is usually able to prove they upheld their legal duty by showing compliance with an established written policy.

We can tailor policies to meet the requirements of your particular business.

The following is a non-exhaustive list of topics that employers may wish to cover with appropriate policies:

  • Equal employment opportunity
  • Discrimination, harassment, bullying and violence
  • Work health and safety
  • Appropriate email and internet use
  • Workplace surveillance
  • Drug and alcohol use
  • Mobile telephone use
  • Dress codes
  • Annual leave and sick leave
  • Dispute resolution
  • Counselling and disciplinary procedures
  • Privacy
  • Redundancy

The workplace policies should be drafted so that they compliment the employment contracts in place.

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to workplace policies, business law or employment related matter, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au

 

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