Small businesses are often subject to unfair contract terms in standard form contracts. New legislation has been introduced to address this issue.

What is the issue?

Small businesses are often subject to unfair contract terms in standard form contracts as they may not have the necessary resources, power or experience to negotiate the contract compared with larger businesses.

To address this issue, the Federal Government has introduced new legislation which will extend the unfair contract provisions which are currently in place for household consumers. This means that from 12 November 2016, unfair contract terms in standard form contracts provided to small business customers may now be considered void.

What is a 'small business contract'?

A contract is a 'small business contract' if the following criteria are met:

At least one party is a business that employs less than 20 employees,
The upfront contract price does not exceed $300,000, or $1 million if the duration is longer than 12 months.

The contract must be for the acquisition or supply of goods or services, or for the sale or grant of interest in a land.

This will apply to all standard form contracts entered into on or after 12 November 2016, as well as contract renewals or rollovers which occur after this date. Also, if an existing contract is amended or changed on or after 12 November 2016, the new law will apply to the amended contract.

Please note some exceptions do apply. For example, industry-specific laws which provide equivalent protections may make the unfair contract terms exempt from the small business protections. Certain insurance contracts are also excluded.

What is an 'unfair' contract term?

An 'unfair' contract term is one that would cause a significant imbalance in the parties' rights and obligations under the contract. For example:

terms which allows one party (but not the other) to terminate the contract or vary its terms
terms which favour one party and which are not reasonably necessary, and would cause detriment (whether financial or otherwise) to the other party if those terms were enforced

If a term of a contract is found to be void by a Court, the rest of the contract will continue in full force to the extent that it is possible to do so.

Be prepared!

Consider undertaking a review of your current standard contract terms and delete or amend any terms which are likely to be considered unfair. It might even be worth having one contract for small businesses and another for larger businesses.
Assess the contracts you currently have with small businesses (e.g. leases, franchise agreements, consultancy agreements). Any renewals or variations after 12 November 2016 are covered by the new laws.
If you are a small business and have been given a standard form contract, be aware of your rights and the protections available to you.

How can Sharrock Pitman Legal help me?

We have helped many businesses with ensuring they comply with their contract obligations, and it would be our pleasure to assist you. We provide fixed prices and offer substantive free benefits to all customers who run a business. See here for full details.

Call Sharrock Pitman Legal today on 1300 250 506. Mitchell Zadow (Managing Principal and Accredited Specialist in Commercial Law) and our team would be pleased to help you.

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

Liability limited by a scheme approved under Professional Standards Legislation.

Written by a member of our Legal Team

Mitchell Zadow

For further information contact

Mitchell Zadow

Mitchell is the Managing Principal of our law practice.

He is an Accredited Specialist in Commercial Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate. For further information, contact Mitchell on his direct line (03) 8561 3318.

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Small businesses are often subject to unfair contract terms in standard form contracts. New legislation has been introduced to address this issue.

However, in this article we will set out the factors that influence how long it will take to obtain a Grant of Probate and to administer an estate in Victoria.

The basics

First things first: what is a Grant of Probate? A Grant of Probate is effectively a document issued by the Supreme Court of Victoria which formally authorises an executor to manage the estate of a deceased person in accordance with their Will. Without Probate, the asset holders (say a bank or share registry) cannot be satisfied as who has the correct authority to receive the deceased's assets and may refuse to pay out.

Sometimes, for smaller estates or if assets are mostly jointly owned with a surviving spouse, asset holders might agree to release payment without requiring a Grant of Probate. This is usually on the basis that the person who receives payment promises to repay (or Indemnify) the asset holder if it turns out they paid to the wrong person.

If there is no Will, then you cannot obtain a Grant of Probate. Instead you obtain Letters of Administration. This is effectively the same, in terms of authorising someone to administer the estate, and would usually be obtained by the person who is the closest next-of-kin to the deceased.

“A Grant of Probate is effectively a document issued by the Supreme Court of Victoria which formally authorises an executor to manage the estate of a deceased person in accordance with their Will.”

Timeframes for Probate in Victoria

In order to obtain a Grant of Probate, the Supreme Court needs to be given information about the assets and liabilities of the estate, the deceased person, the witnesses to the Will, the executors and the Will itself. An advertisement of your intention to apply for Probate must also be published on the Supreme Court website for at least 14 days prior to any application being lodged.

Often, making enquires to obtain all the necessary information can take a number of weeks. Also, you will need the Death Certificate for the application for Grant of Probate and possibly for making proper enquires regarding the assets and liabilities. Waiting for the Death Certificate to issue can therefore add a few more weeks to the process. Overall, if you have your application for Grant of Probate lodged within 1 to 2 months from the date of death, you are making timely progress.

The Court itself usually does not take long to process the application (maybe another 1 to 2 weeks) and this is completed using the electronic Supreme Court filing system. This means you do not have to go to a Court hearing. The timeframe for processing applications for Letters of Administration is even less, given that there is no Will document for the Court to consider. There is also a general discretion for the Court to raise a 'Requisition' asking for more information before they review the application - this can sometimes delay matters.

“Overall, if you have your application for Grant of Probate lodged within 1 to 2 months from the date of death, you are making timely progress.”

So, here we are a few months after death and you finally have a Grant of Probate or Letters of Administration. It is important to remember that this is the start of the estate administration and not the end. For a very simple estate, you might only need a further month or so to cash the assets and pay them to the correct beneficiaries. However, it can often be more complex than that. Factors that determine the timeframe to administer the estate include:-

Some assets will take time to cash or transfer. For example, if selling a property, final settlement might be 60/90/120 days from the day of sale.
There is a 6 month period for challenges to be brought against the estate and executors must wait until this period expires before distributing the estate, if there is any risk that a disgruntled family member might come forward.
There might need to be final tax returns for the deceased or for the estate. Failing to wait for the ATO to process these could leave the executor personally liable for a tax bill.

You might need to advertise for creditors to come forward and wait for a period of months while this advertising timeframe expires. This protects the executor if they are unsure of all of the deceased's financial dealings and creditors.
It might not always be a good time to immediately cash estate assets. For example, the shares just took a nose-dive, do you still sell regardless of available price?

There is a general rule that executors have an 'executor's year' to complete the estate administration. This means that you should be aiming to have the estate finalised and distributed within 12 months from the date of death.

Liability limited by a scheme approved under Professional Standards Legislation.

Need help with Probate?

Our expert legal team is ready to take your call!

Mitchell is the Managing Principal of Sharrock Pitman Legal. He is an Accredited Specialist in Commercial Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate and can answer all your questions related to probate.

For further information, contact Mitchell on his direct line:

DIRECT LINE:

(03) 8561 3318

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Unfair Contract: Small business protection

Small businesses are often subject to unfair contract terms in standard form contracts. New legislation has been introduced to address this issue.

What is the issue?

What is a 'small business contract'?

What is an 'unfair' contract term?

Be prepared!