Commercial Law

What is a trade mark?

Trade marks are a form of intellectual property right. A  trade mark can be used to protect a business name, tag line/phrase or word  (a word mark) and/or logo (a figurative mark), but less commonly, it can also be used to protect a letter, colour, sound, scent, picture, movement, aspect of packaging or any combination of these.

Protecting a brand can add to its value as an asset so it is a very important business consideration, particularly if you ever intend to sell your business in the future.

Why have a trade mark?

A registered trade mark provides the holder the exclusive right to use that trade mark in Australia in respect of specified goods and/or services. This means that the holder of such an intellectual property can legally prevent others from using the trade mark for similar goods and services.

The holder of a trade mark can sell the mark to a third party or allow others to use that mark, for example for a fee, such as through a licensing arrangement. Often a franchise agreement also includes a license to use the trade mark of the franchised business.

Many business owners mistakenly believe that registering a business name or domain name gives them some sort of ownership of that name – this is not the case.

What requirements are there to register a trade mark?

The Trade Marks Act 1995 (Cth) and the Regulations under that Act govern trade marks in Australia.

In order to be registered, a trade mark must be able to distinguish the goods and services of the holder from other traders. It can’t be an everyday word or phrase, a geographical name or be descriptive of the goods or services (as other traders may need to use those words to describe their wares). Further, some signs and names are prohibited from registration.

When seeking registration, certain categories of goods and/or services must be chosen. The protection of the trademark is only in that category (or categories) chosen and only for the types of goods/services described in the application.

A trademark lasts for 10 years but can be renewed for successive periods.

How to help protect your trade mark

Having a registered trade mark gives the owner the right to place the ® symbol next to the trade mark so as to let others know it is registered and to help deter them from using it (without permission).

When a trade mark is not yet registered but an application is pending, the TM symbol can be applied to the mark. There is no requirement to use the ® or TM symbols however. use of the ® symbol in connection with a mark that is unregistered in Australia is an offence under the Act.

Trade marks must be used as registered. Failing to use a trade mark can render it liable to being removed from the register for non-use.

Registration of a logo that includes a trading name does not necessarily protect the trading name, just the logo. This is why the name often needs to be separately registered. Care needs to be taken to consider what is to be registered and how it will be used. Separate registrations are often advised for a name and for a logo.

If you have a trade mark and become aware of someone infringing it (such as by using a very similar name or logo without your consent or indicating they have some association with your business or products when they do not), you should get advice from a lawyer on sending an appropriately worded cease and desist letter asking them to stop using it.

What if your trade mark isn’t registered?

Registration of a trade mark is not essential. Unregistered trade marks can possibly be protected under the common law, such as through the tort of ‘passing off‘ and claiming misrepresentation such as under the Australian Consumer Law however, registration if recommended.

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@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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in Asset Protection / Business / Commercial Law / Dispute Resolution / Intellectual Property / Litigation  by 01 Jan 2024 0 comments

What is a Deed Poll?

In a previous article, we explained the difference between Deeds and Agreements however, there is a special type of Deed that does not require more than one party to sign it to make it legally binding (although it can also be made by more than one party, jointly).

That document is the Deed Poll. As soon as it is signed by the party that executes it, it becomes immediately operative and binding.

Deed Polls are solemn declarations, so they are commonly witnessed by lawyers, Justices of the Peace and notaries (but they requirements as to who can be witnesses and whether you need one can differ between States and Territories).

Deed Polls are used for various purposes such as:

  • part of the process of changing your name or gender
  • affirming your identity (such as where you may use more than one name)
  • declaring:
    • a promise to do not not to do something (including keeping information confidential)
    • the validity of a document or right
    • a fact or intention
  • releasing rights

The unilateral obligation/s created by a Deed Poll can be enforced by any person with whom the covenant in the document was made as against the party making it, so they ought not to be entered into lightly.

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@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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in Business / Commercial Law / Dispute Resolution / Estate Planning / General / Litigation / Risk management / Uncategorized  by 01 Dec 2023 0 comments

Leasing business premises from a SMSF

Many business owners own the commercial or industrial premises that they use to operate their business from.  Often that property is owned by a Self-Managed Superannuation Fund (SMSF).

Leasing business premises from a SMSF is becoming commonplace. SMSFs can be a tax-effective way to create wealth and provide for your retirement, in addition to providing some asset protection benefits however, they come with a requirement to comply with the Superannuation Investments (Supervision) Act 1993 (Cth) (SIS Act) and its Regulations.

Additional obligations apply when the SMSF is using a limited recourse borrowing arrangement and bare trust when borrowing to acquire the premises and consideration ought to be given to who the members of the fund are and what happens if they were to pass away.

One of the leasing obligations on SMSF trustees in the SIS Act is that there be a written Lease in place. Not only does there need to be a Lease in place, but it must be at ‘arms length‘ and on commercial terms.  This effectively means that it must have all of the usual or typical terms that would be expected to be in place if the property was being rented to a third party, for example with market rent being required to be paid in full and on time, with no discounts.

Practically, there are other benefits of having a proper Lease in place and one of them is that on the sale of the business, the Lease can be assigned to the purchaser so that the SMSF continues to get the benefit of the Lease and its protections after you cease to run the business. It also can assist your SMSF to maintain the value of the premises as any purchaser of the land is bound by it, so having a good yield is important.

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@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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in Business / Commercial Law / Dispute Resolution / Estate Planning / General / Property / Risk management / Superannuation  by 01 Oct 2023 0 comments

What is independent legal advice?

If you are:

  • borrowing money from a bank or someone else, like a parent,
  • have some special vulnerability in relation to a borrowing arrangement (such as due to age, inability to speak English well etc),
  • borrowing in relation to a self managed superannuation fund’s limited recourse borrowing arrangement, or
  • perhaps going guarantor on a loan for a company or a family member for their loan,

then chances are you will be asked to get “independent legal advice” from a solicitor in relation to the loan and the security for the borrowing or guarantee.

The document evidencing the loan is usually a:

  • Loan Agreement,
  • Letter of Offer or similar

and may have accompanying terms and conditions etc.

Security for a loan arrangement usually takes the form of a:

  • Mortgage,
  • Caveat or
  • Security Interest registered on the PPSR.

Independent advice us usually required by the lender so that it cannot (easily) be argued later that the borrower or guarantor didn’t understand the gravity of the arrangements being put in place – so although you get the advice, it is really for the lender’s protection.

In order to give independent legal advice, the lawyer will read the loan and security documents provided, advise you as to the meaning and effect of them and discuss any risks.

You will then be required to sign a document called a Declaration under oath confirming that you obtained independent legal advice before you freely and voluntarily signed the loan/guarantee/security documents.

Often the lender will also require the borrower or guarantor to obtain “independent financial advice” from a financial advisor, accountant or other appropriately qualified person. Lawyers, simply by virtue of their profession, possess no special skill to give financial (as distinct from legal) advice.

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@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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in Asset Protection / Business / Commercial Law / Dispute Resolution / General / Litigation / Property / Risk management  by 01 Aug 2023 0 comments

Severing a joint tenancy

If you own real property with others, then it is either held as “joint tenants” or as “tenants in common“. For more information on the difference between both, please click here.

Assuming land is held jointly, on your death it will pass to the surviving joint tenant/s regardless of what you state in your Will. This is known as the “right of survivorship” and it operates because each joint owner of the property owns the whole of the land at the same time as the others, so the deceased owner simply drops off the title leaving the remaining joint tenants on title. This isn’t automatic as the land registry needs to have the details of the death to update the register, but it is a relatively simple process.

Joint tenancy may be a suitable scenario for a husband and wife where the survivor expects to retain the house however, generally joint tenancy is not suitable for investments as the investors would want their family or beneficiaries to inherit their interest in the property on their death, rather then their co-owners on title. From an estate planning perspective, tenants in common would generally be more sensible in this situation.

Property is sometimes incorrectly held as joint tenants because, for example:

  • people inherit property from their parents jointly with siblings, but they intend for their own children to inherit it on their deaths, rather than it staying with their surviving siblings;
  • sometimes purchasers just don’t understand the difference or don’t take advice at the time of acquiring a property (or the advice they got was wrong); or
  • they have divorced or separated and not taken any steps to separate their assets, update their property interests or estate planning arrangements

however, this is not a massive problem provided that they identify the issue and seek to rectify it without delay;

You can sever a joint tenancy. Severing a joint tenancy changes the nature of ownership so you and your co-owners own the land as tenants in common, which allows you to leave your share of the property to anyone in your Will (or if you don’t have a Will, under the laws of intestacy).

NSW Land Registry Services allows joint tenancies to be severed (converted to tenants in common) either unilaterally or with the consent of the other joint owners.

No stamp duty is payable in such a severance.

FURTHER INFORMATION

For further information in relation, please contact McKillop Legal on (02) 9521 2455 or email help@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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in Business / Commercial Law / Dispute Resolution / Estate Planning / General / Property / Risk management  by 01 Jul 2023 0 comments

What is bankruptcy?

Bankruptcy is a legal process where you’re declared unable to pay your debts and released from most debts (but not child support, court imposed fines, HECS and HELP debts etc) so you can make a fresh start financially.

You can either enter into bankruptcy:

  1. voluntarily; or
  2. on petition to Court by a creditor after not complying with a Bankruptcy Notice.

An order declaring someone as a “bankrupt” is known as a sequestration order.

Bankruptcy normally lasts for 3 years (and one day) provided you comply with your obligations. If you don’t, it can be extended several years.

Once a bankrupt, your Trustee has ownership and control over your assets (with exceptions such as some household items, a car up to a certain value, tools to earn an income, superannuation etc).

The trustee can be the Official Trustee (from the Australian Financial Security Agency, AFSA) or a registered (private) trustee. The trustee is either appointed by the Court or in the case of voluntary bankruptcy, by AFSA or you can nominate one of your choice.

When you are bankrupt:

  • you must provide details of your debts, income and assets to your trustee
  • your trustee notifies your creditors that you’re bankrupt – this prevents most creditors from contacting you about your debt
  • your trustee can sell certain assets to help pay your debts
  • it can affect your ability to be a company director
  • you may need to make compulsory payments if your income exceeds a set amount (currently around $64,000)

Bankruptcy may have a serious impact on you. It may affect your ability to get credit, travel overseas or gain some types of employment so you should get some advice before voluntarily bankrupting yourself. The National Debt Helpline provides free support on 1800 007 007.

Bankruptcy is just one formal option available under the Bankruptcy Act to manage your debt. Other formal options include temporary debt protection for 21 days reprieve from creditors enforcing a judgment against you, a debt agreement  or a personal insolvency agreement (both being arrangements to settle debts without becoming bankrupt).

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@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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in Business / Commercial Law / Debt Recovery / Insolvency & Bankruptcy  by 01 May 2023 0 comments

What is redundancy?

If an employer no longer needs a role to be performed or doesn’t need the same number of employees to perform certain tasks, then an employee’s position can be made “redundant”.

Reasons for redundancy can include:

  • the job the employee is doing is being replaced by new technology/machinery
  • outsourcing tasks to contractors
  • an slow down affecting the business
  • a restructure or reorganization of the business or a merger or takeover taking place
  • the business stopping trading

Redundancy may or may not however, result in an obligation on the employer to pay the affected employee ‘redundancy pay’ (sometimes called ‘severance pay’). This, and the amount, depends on:

  • the length of employment
  • the employer’s size
  • whether the employee can be redeployed
  • the terms of the:
    • employee’s employment contract
    • any applicable Award or Enterprise Agreement; and
    • the Fair Work Act / National Employment Standards (NES).

An employee must have been employed for 12 months or more for redundancy pay to even be considered.

If the employer employs less than 15 (full time or full time equivalent, not casual) employees at the time of dismissal, then there is no entitlement for redundancy pay, unless your Award, Contract or Enterprise Agreement provides for it.

If there is no other position the employee could be redeployed into or if an offer to do so is not accepted, the amount of redundancy pay can be reduced, or even removed.

Redundancy pay is based on ordinary rates of pay (so it doesn’t include bonuses, commission, overtime, loadings, allowances etc).

If redundancy pay is payable, then the table in the NES applies.

Often there is a requirement for employee consultation regarding major workplace changes that could result in dismissal.

If a redundancy is not “genuine”, then issues of potential unfair dismissal can arise. If an employee is made redundant but, for example, someone else is hired at the time or soon thereafter to perform their duties, then the redundancy is not genuine.

Even if no redundancy pay is payable, notice (or payment in lieu thereof) is still required as the employment is being terminated (in addition to payment for all accrued employee entitlements).

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@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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in Asset Protection / Business / Commercial Law / Dispute Resolution / Employment  by 01 Apr 2023 0 comments

Getting out of a Lease

Leases (whether commercial or retail*) come to an end at the End Date or Terminating Date stated on the Lease.

Sometimes there is an early termination provision. Often there is not.

Getting out of a Lease in that scenario is not simple. There are however, ways for a Lease to end earlier than the Termination Date:

  • Surrender; and
  • Assignment or Transfer

Surrendering a Lease

Surrendering a Lease is where both parties (the Owner/Lessor/Landlord and the Lessee/Tenant) both agree for the Lease to end before the Term of the Lease has expired.

A form of Surrender of Lease~ is used for registered Leases as it needs to be registered with NSW Land Registry Services (NSWLRS).

Often, a Surrender of Lease is used as a precondition to a new Lease being granted (either to the same Lessee or a new one, such as on a business sale) as 2 Leases of the whole of the same premises cannot concurrently exist.

Transfer / Assignment of Lease

A Transfer of Lease or an Assignment of Lease is a relatively commonplace transaction in leasing, and is particularly common in relation to a sale of business.

The current Lessee seeking the assignment as part of its business sale (Assignee) effectively asks the Lessor to approve of to the assignment of the Lease in favour of the proposed new Lessee that is buying the business (Assignee).

An assignment is usually done by executing a tripartite Deed of Consent to Assignment of Lease by the Lessor, Assignor and the Assignee. The Lessor usually drafts the Deed of Consent to Assignment of Lease and the Assignor and/or the Assignee pay the costs of it (as they commercially agree).

The form used at  NSWLRS for this purpose is a Transfer of Lease~ and from the transfer date, the Assignee is responsible for complying with the Lease, paying rent and the like.

For Commercial Leases, the Lessor usually seeks information about the proposed Assignee and their financial standing before consenting and, depending on the terms of the Lease, consent can be withheld.

The Assignor may be released from those obligations or may (together with any personal guarantors) remain liable for the compliance with the Lease for the balance of the Term (effectively guaranteeing the new Lessee’s performance) depending on the Lease and the parties’ agreement. The Lease terms can specify the requirements to assignment.

Retail Leases on the other hand are slightly different and involve the issue of new Disclosure Statements etc as required by the Retail Leases Act 1994 (NSW). With Retail Leases, the Assignor can force the Lessee to give permission within a certain time after providing proof that the proposed Assignee has the same or better retailing skills and financial resources than the Assignee.

~In both cases, stamp duty (usually nominal in amount, unless a Lease is being transferred for a monetary payment) is payable and the transactions are performed online via the PEXA system.

Other options

Other options if surrender/assignment are not viable options, can include seeking to sublease part or all of the premises (consent may be required for this) so as to offset the rental expense on the main Lease.

*This article does not apply to residential leases.

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@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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in Business / Commercial Law / General / Property  by 01 Mar 2023 0 comments

What is a Confidentiality Agreement?

A Confidentiality Agreement (also known as a Non-Disclosure Agreement or NDA) is a legal contract, which should be used when sensitive information needs to be shared between two parties. It helps to ensure that the person or organisation that gains access to sensitive information doesn’t disclose it to a third party. Often the agreement is in form of a Deed.

NDAs are often used:

  • to protect confidential information or trade secrets;
  • as a precursor document to intellectual property use (such as patents) or where contractors are to assist developing new products or ideas (such as a new App);
  • for parties to be able to disclose sensitive information such as in the due diligence stages of a possible business sale or asset sale; or
  • even as part of employment contracts where employees may used the protected information during their employment and only for the purposes of furthering the employer’s business.

The obligations in a Confidentiality Agreement can last for a specified period of time or can be indefinite in their operation. The Coca-Cola recipe, for example, has been kept secret for well over 100 years.

The document would generally state why the information is being shared (without actually disclosing the confidential information being protected!) and the measures to be taken to ensure it remains confidential and is not used for any reason other than the stated purpose.

Where both parties are disclosing information to each other, a two-way or mutual NDA can be used to protect both the disclosing parties.

Without a proper and enforceable agreement, the party receiving the information may be able to do whatever they like with it. That said, just because you have an agreement, doesn’t mean it will be followed. Confidentiality Agreements also often deal with the consequences of misuse or unauthorized disclosure.

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@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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in Asset Protection / Business / Commercial Law / Dispute Resolution / Employment / Intellectual Property / Risk management  by 01 Oct 2022 0 comments

Personal Guarantees

A personal guarantee is a written promise by a person (guarantor) that if a third party doesn’t pay its debts to the party entitled to the benefit of the guarantee, then the guarantor will make those payments.

Personal guarantees are regularly given by directors and sometimes shareholders of companies to personally guarantee the payment of money or obligations on behalf of the company, but they are also given on behalf of other individuals such as children.

They can be essential security for small to medium businesses in their contractual dealings with customers as the guarantor is then personally liable to pay the debt, whereas without the guarantee, the company could enter into liquidation and the contracting entity would have to prove the debt in the liquidation and risk not getting any return at all.

Common examples of where personal guarantees are used are in relation to:

  • leases of real property by companies;
  • loans by banks to adult children when purchasing property;
  • company loans from banks; and
  • company applications for credit at other businesses.

Managing risk

Entering info a personal guarantee is risky. You are placing your own assets at risk for the benefit of another person or entity so you should get legal advice before entering into one as well as assessing the commercial or other merits of providing the guarantee at all.

Considerations to help limit the risk include:

  • capping the maximum amount of the guarantee or the term in respect of which the guarantee is valid for;
  • requiring the guarantee to be secondary only (and not create a primarily liability of the guarantor);
  • removing security provisions such as caveats;
  • not allowing any variation to the agreement between the beneficiary and the person/entity whose liabilities are being guaranteed without your notice or consent;
  • seeking to have the guarantee removed  at some point once the borrower can demonstrate their own capacity to repay the debt.

however, often the beneficiary of the guarantee will not agree to these changes.

Aiding enforceability

If you are seeking to rely on a personal guarantee in your business, then you ought to get it drafted by a lawyer however, some basic tips to aid in enforceability include:

  • obtain a copy of the guarantor’s identification documents to properly identify them;
  • conduct some due diligence on the guarantor’s financial standing/capacity to pay;
  • obtain actual security for the guarantee obligation;
  • ensure it is signed and witnessed by an independent adult

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@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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in Asset Protection / Business / Commercial Law / Debt Recovery / Dispute Resolution / General / Insolvency & Bankruptcy / Risk management  by 01 Sep 2022 0 comments
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