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AIBB Guide – REIQ Business Sale Contract Queensland

This Guide by Kafrouni Lawyers and the Australian Institute of Business Brokers (AIBB) is designed for use by buyers and sellers of businesses, business brokers and professional advisers when using the REIQ Business Sale Contract (“Contract”). The purpose of the Guide...

AIBB Guide – Vendor Finance and Business Sales

The popularity of vendor finance is often cyclical. In tougher economic times, like the current state of the economy, when banks are limiting lending to business buyers, vendor financing becomes a viable if not a key selling point for a business sale. This Guide by...

Misleading Conduct and Marketing: The Rules of Proper Promotion

Marketing: it’s effectively the basis of all successful businesses.  Whether you’re selling goods or services, your success depends on your customer or client base.  And building that client base is impossible without some form of publicity.  Often, the best marketing and advertising campaigns are creative.  They give products some distinction – an edge that stands out from competitors.  A lot of the time, successful marketing campaigns encourage some imagination.  But when does that creative licence cross the line into misleading conduct?

 

When it comes to marketing and promotion, the law has drawn a line.  On one side, there is creativity.  The law has no issue with promotion that encourages consumers to use their imagination a little.  On the other side, though, there is deception.  Promotional activities that have any element of misleading or deceptive conduct are unlawful.  But, as with so many legal lines, there can be a little ambiguity.  And for small business owners, such ambiguity can present certain challenges.  If you’re planning a promotional campaign with a little flair, how can you tell if your creativity has gone too far?  The best way is to get a professional opinion.  But before you do, there are some signs that can guide you.  So let’s have a closer look at the law surrounding misleading and deceptive conduct.

 

Misleading or Deceptive Conduct: Where Does the Law Draw the Line?

 

Australian Consumer Law is the source of laws regulating misleading and deceptive conduct.  It’s designed to protect consumers against dishonesty.  It aims to do so by ensuring that consumers are presented with accurate and reliable information regarding goods and services.  The law prohibits a person, in trade or commerce, from engaging in conduct that is misleading or deceptive.

 

If we break that down, we can get a feel for what the law is attempting to achieve.  Firstly, it is limited to trade or commerce.  That means those fishermen’s tales your uncle tells are safe for now! Secondly, it applies to ‘a person.’  But in this context, that includes corporations and individuals.  And thirdly, it prohibits conduct that is misleading or deceptive.  It doesn’t stop there, though.  Australian Consumer Law also prohibits conduct that is likely to mislead or deceive.  So that narrows the scope of permissible conduct a little.  To understand more, let’s consider the definitions.

 

Misleading Conduct – Here’s How to Pick it

 

Australian Consumer Law has maintained a deliberately broad view of what is misleading or deceptive, under sections 18 and 29.  That means most cases of misleading or deceptive conduct are determined by the court, which considers all the surrounding circumstances of a transaction.  The definition of misleading is to be an objective one, too.  That means it is a question of fact.  So, what is to be considered in assessing whether conduct is misleading?  Generally, a court will consider whether the relevant conduct induced, or was capable of inducing error.  Did the purchaser think he or she was getting a different product at the time of transaction?  If so, was that a result of the vendor’s conduct?  In each case, the law will look a little deeper than those questions alone permit.  However, they’re useful questions to ask when you’re developing your own marketing campaign.

 

False Representations – When do they Become Misleading?

 

We see false representations all the time; they’re on TV, in newspaper ads, and on billboards.  Some might show cars driving themselves, following their owners.  Others might show talking animals or other similarly impossible things.  They’re all designed to entice us to products.  However, they’re not misleading under the law.  Why is that?  Well, it’s pretty simple: they’re not designed to induce us into buying a car that we think will follow us around.  They’re simply examples of creative marketing campaigns, which are designed to get us thinking a certain way or making positive associations between feelings and products.  A promotion will become misleading when it is designed, or even has the effect of inducing a reasonable person into buying something that is presented as having qualities that it doesn’t have.

 

Misleading the Public vs Misleading the Person: A Legal Distinction

 

Australian Consumer Law has an unsurprising focus on the consumer.  A lot of consumer law principles are directed at the protection of individuals, against misleading commercial conduct.  However, consumer law expresses further provisions to protect the public more broadly.  Those can be found in sections 33 and 34.  Under sections 33 and 34 of Australian Consumer Law, conduct likely to mislead the public is prohibited.  So how does that differ from sections 18 and 29, for example?  Well, they all share a lot of similarities.  Ultimately, they share similar intentions as well.  However, sections 33 and 34 don’t have the same transactional focus.  Their perspective is more of a broad one.

 

The earlier sections have a primary focus on consumers, specifically, people who are misled into making a purchase.  The later sections, on the other hand, are designed to prevent companies from fostering an inaccurate image seeded in public deceit.  In doing so, the provisions intend to foster a better commercial environment for consumers more broadly.  That is illustrated, for example, by the section 33 prohibition of conduct that misleads the public in relation to the manufacturing process of goods.  In that example, the law prevents companies from claiming social credibility for their ‘environmentally friendly,’ or ‘fair trade’ manufacturing, without proper basis.  In doing so, it gives consumers a greater peace of mind in relation to the provenance of their goods.

 

Keep the Energy but not the Embellishment: Some Tips for Proper Promotion

 

Advertising, marketing, and promotion all require a creative edge to help you get ahead.  After all, their purpose is to make you stand out.  But honesty is of even greater importance.  In every promotion your business undertakes, there’s a balance to be struck.  Get some help walking the tightrope of proper promotion.  Contact Kafrouni Lawyers.  We understand consumer law, but more importantly, we understand business.  Better still, we know how the two can co-exist for everyone’s benefit.

 

 

Disclaimer

The information provided by Kafrouni Lawyers is intended to provide general information and is not legal advice or a substitute for it. Company directors should always consult their own legal advisors to discuss their particular circumstances. Kafrouni Lawyers makes no warranties or representations regarding the information and exclude any liability which may arise as a result of the use of this information. This information is the copyright of Kafrouni Lawyers.

Liability limited by a scheme approved under professional standards legislation.

Service Agreements: A Service Provider’s Perspective

Service agreements are an important part of business.  Often, they are considered from a purchaser’s perspective.  But service agreements are just as important for service providers.  A well-drafted service agreement will ensure that both parties in a service relationship receive fair treatment.  So, what is the trick to drafting a strong and reliable service agreement?  Generally speaking, there are many tricks.  Service agreements needn’t be overly complicated, but they can still be complex.  In this guide, we’ll take a look at some of the features that distinguish the more effective service agreements, from their counterparts.  Hopefully, that will help answer the question: do you need a service agreement between you and your consumers?

 

Before we go any further, though, let’s break down the purpose of service agreements.  As a service provider, your business model is based on an exchange.  Your company provides services to clients and customers, in exchange for payment.  A service agreement is designed to ensure that the exchange between you and your consumers remains fair.  In that sense, service agreements can be collaborative; when you draft one, it’s important to think of your clients’ needs as well.  After all, satisfied clients are the key to a successful business.  But that doesn’t mean your needs have to take a back seat.  It is important that your service agreement is firm in setting boundaries where necessary.  Service relationships often change, so agreements need to be dynamic.  But they also need to ensure that your business has some assurance of stability, going forward.

 

What are some common provisions found in most service agreements?

 

A service agreement needs to have certain provisions.  The precise nature of those provisions will vary, depending on the services your company offers.  For that reason, it’s difficult to offer a one-size-fits-all agreement template.  However, if you were to look at a broad spectrum of service agreements, you may notice that some provisions appear quite frequently, albeit with various alterations.  Essentially, the more common service agreement provisions form a backbone of sorts.  With them, you can find a broad structure for your service agreement.  So, let’s take a look at some of the most common service agreement provisions.

 

Your service agreement needs a description of services – here’s why

 

A description of services often appears early in a service agreement.  It may seem a little pedantic, too; surely both parties are clear on the services being offered?  Often, yes – but there’s more to it than that.  Describing the services you offer places parameters around the service relationship.  Like any relationship, service relationships are robust.  They can change, and often do.  By agreeing on the services you will offer, you can create clearer expectations in your service relationship.  Sometimes, that can be useful in situations where your client requires additional services at short notice.  It might also be useful if expectations arise in terms of value-add services, or other commercial incentives.  With clearly defined, and agreed parameters, your service relationship stands a better chance of staying fair.

 

Standard of performance: your service agreement should set the standard

 

Fairness goes both ways, of course.  Your client is entitled to a satisfactory standard of service.  Further still, your client is likely to want some assurance that they will receive a certain standard of service.  That’s why a lot of service agreements include a standard of performance clause.  As its name suggests, this clause establishes the standard by which your services must be carried out.  A common standard imposed under service agreements is that of ‘reasonable care and skill.’  That standard is adopted from the field of negligence law, in which a duty of care is imposed on the same terms.  However, standard of service provisions can also be implied.  That means your service agreement may bind you to a standard of service, even without an explicit provision to that end.

 

However, some service agreements go further.  Sometimes, customers seeking premium services may want a higher standard.  In such cases, a service agreement can respond by imposing stricter terms.  A clause similar to the following may be helpful: ‘a standard of skill, care and diligence to be expected from a qualified, competent and experienced provider of services of a similar scope and complexity.’  That’s just an example, but provisions like that can be useful – especially for specialised services.  Before adopting one, though, it’s best to seek some professional advice.

 

Costing and charging: make sure your service agreement covers you!

 

Another important provision in a service agreement is one concerning costing and charging.  These provisions are another example of the double-sided protection service agreements offer.  On the one hand, a costing and charging provision will help you manage the terms of your payment.  They can help you get paid the right amount, in a timely manner.  On the other hand, such provisions help your clients.  They offer them some degree of certainty as to the price of your services, and the terms of payment.  If well-constructed, these provisions can lay the foundation for a fulfilling and straightforward service relationship between you and your clients.

Service agreements need to cover a lot of topics – here’s how to pick yours

 

Service agreements need to traverse a wide range of topics, from commencing a service relationship, to terminating one.  And everything in between!  As a result, you may be faced with the question of which provisions to include.  For a lot of business, that can be a challenging question to answer.  It can also be complicated for those who are starting a business, and have yet to gain a great deal of experience.

 

In those cases, the best place to start is at the start.  We suggest carefully thinking through your business model.  What services do you offer; how much do they cost?  What will your clients be expecting?  Simple questions like that can help you build a general framework around your services.  Ultimately, service agreements are important when it comes to managing expectations, setting standards, and maintain fair and amiable service relationships.  For that reason, it’s worth taking the time to draft a strong one.

Get professional help to obtain a fair and enforceable service agreement

 

Service agreements are complex; they’re a legal document.  For that reason, we recommend getting some legal help to put yours together.  At Kafrouni Lawyers, we have longstanding and wide-ranging experience with service agreements.  We have drafted them for many different businesses, in relation to many different services.  We can help you draft a service agreement that will contribute to a fair relationship between you and your consumers.

 

Disclaimer

The information provided by Kafrouni Lawyers is intended to provide general information and is not legal advice or a substitute for it. Company directors should always consult their own legal advisors to discuss their particular circumstances. Kafrouni Lawyers makes no warranties or representations regarding the information and exclude any liability which may arise as a result of the use of this information. This information is the copyright of Kafrouni Lawyers.

Liability limited by a scheme approved under professional standards legislation.

Directors’ Duties: How do They Affect your Business?

As a small to medium business owner, you’ve no doubt got a lot of regulations to contend with.  Almost all commercial conduct is regulated in one way or another.  However, some regulations are a little more complex.  Take directors’ duties, for example.  Directors’ duties apply to the directors of small and medium companies, in the same way that they apply to the directors of large multinationals.  Of course, the latter category of companies is a complex organism.  It requires complex laws to regulate it.  But the same is not always true of small and medium business.

read more…

Social Media Marketing and the Law: The Small Business Guide

Starting a new business requires careful planning.  It also requires publicity.  Publicity is what connects you to your consumers, regardless of your chosen field.  Whether you offer good or services, you need consumers.  Fortunately, in the digital age, reaching them is easier than ever.  With some careful planning, and perhaps some marketing assistance, you can reach thousands of potential consumers with the click of a button.  That’s a pretty hard opportunity to ignore.  However, there are some potential challenges that can arise when you take your business online.  Social media marketing can start robust and dynamic online discussions.  Often, they’re largely outside of your control.  There is always the risk that online engagement may head in the wrong direction, and take your business’s good name with it.  That can have consequences in terms of publicity.  But even more importantly, it can have legal consequences.  So let’s take a look at the obligations placed upon you when you take your business online. read more…

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Our firm is led by Joe Kafrouni, with over twenty years' experience in law. Joe is a Queensland Law Society Accredited Specialist in business law. “I am driven to help my clients succeed."

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We are business law specialists focused on the smaller end of town - SME, private and family companies only. We help business people start, buy, grow and exit businesses and solve business disputes.

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