Commercial Law FAQs
Read answers to our frequently asked questions regarding commercial law below. Our experienced lawyers can offer professional advice for your business on a wide range of commercial matters.
What does a commercial lawyer do?
Commercial lawyers provide advice relating to commercial matters and deal with issues pertaining to business transactions. They may review paperwork relating to companies, partnerships or trusts, particularly contracts, and draft business documents. They also prepare due diligence reports.
The documents they prepare may be related to establishing or dissolving a business, merging two businesses, creating sales contracts, establishing non-compete clauses or changing a business's organizational structure. When necessary, commercial lawyers collaborate with their clients, other lawyers, accountants, or government agencies to prepare various types of documentation and paperwork, or complete transactions. They often engage in negotiations on behalf of their clients.
Why does a business need a commercial lawyer?
A commercial lawyer assists with the legal, financial and commercial aspects of running a business and provides expert advice on a range of areas. Here are some of the circumstances in which you may need a commercial lawyer.
1. Setting up a company
When starting a company there are a range of legal documents that you will need in place to ensure your compliance under the Corporations Act 2001 (Cth). Commercial lawyers can assist in reviewing and drafting company documents such as your company’s constitution, shareholders agreement and employment agreements.
2. Reviewing a shareholders agreement
A shareholders agreement is an essential document for any new company. The document outlines the rights and responsibilities of shareholders, and assists with the management of potential risks and disputes. It is vital to the success of your business that the agreement is reviewed by a lawyer. A commercial lawyer can review your shareholder agreement as well as help you determine the class of shares you will distribute to your members.
3. Purchasing or selling a business
A commercial lawyer can assist in reviewing and drafting your business purchase or sale agreement. This is an essential document that stipulates the terms of the purchase or sale, and will ensure that the contract is favourable to all parties and will reduce any likelihood of conflict associated with the transaction.
4. Purchasing, leasing or selling commercial property
If you are in the market to either purchase, lease or sell a business premises, it is always beneficial to consult with a commercial lawyer before signing an agreement. Depending on the nature of the lease, the agreement may run for many years, as a result you should be fully aware of the terms before signing the agreement.
5. Legal issues for online businesses
Website Terms and Conditions of Use includes how users can use your website, what is prohibited and a disclaimer to limit your liability for your website. If you are selling goods and services on your website, you are required by Australian Consumer Law to state your business service standards and have terms and conditions on your website. This Website Terms and Conditions of Use also allows the operator to set out the rules for using their website, protect their intellectual property and limit their liability for the website.
Engaging a commercial lawyer will further ensure that your online business is legally compliant.
What are the major business structures and how do I choose what is best for my business?
The most common types of business structures in Australia are:
- Sole trader
If you are thinking of starting a business, you will need to look at the advantages and disadvantages of each different business structure and work out which structure best suits your needs. Before deciding which business structure to use, it is important you seek advice from a professional business adviser, a lawyer or an accountant.
What is bankruptcy?
Bankruptcy is a legal process where you are declared unable to pay your debts. It can release you from most debts, provide relief and allow you to make a fresh start.
You can enter into voluntary bankruptcy. We refer to this as a debtor’s petition. It is also possible that someone you owe money to (a creditor) can make you bankrupt through a court process. We refer to this as a creditor’s petition.
Bankruptcy normally lasts for 3 years, but may be extended in certain circumstances.
When you are bankrupt:
- you must provide details of your debts, income and assets to your trustee. The trustee will be appointed by your creditors (in the case of a creditor’s petition) or yourself (should you present a debtor’s petition).
- your trustee notifies your creditors that you are bankrupt – this prevents more creditors from contacting you about your debt.
- your trustee can sell certain assets to help pay your debts.
- you may need to make compulsory payments if your income exceeds a set amount.
Bankruptcy may have a serious impact on you. It may affect your ability to get credit, travel overseas or gain some types of employment. Therefore, before entering bankruptcy, it is important for you to seek appropriate advice about your financial situation and understand your options.
What can a business do to collect a debt?
When an individual or business owes you money, you can:
- use a debt collector
Debtors are often moved to pay at the prospect of having their credit rating downgraded.
Engaging a debt collector to contact a customer about an outstanding payment can put an end to payment delays.
All debt collectors in Queensland must be licensed. They are also bound by a code of conduct that sets down standards, provides a complaint resolution system and ensures consumers do not feel unduly harassed by the debt collector.
By law, a debt collector cannot threaten to have the debtor sent to jail, as a person cannot be jailed for an unpaid civil debt in Queensland.
- make a minor debt claim
If someone owes you $25,000 or less and will not pay, you can make a claim through the Queensland Civil and Administrative Tribunal.
- commence Court proceedings
You may wish to engage a solicitor to commence Court proceedings for recovery of your debt. Depending on the amount of the debt, a solicitor will commence the proceedings in the Magistrates Court, the District Court or the Supreme Court of Queensland.
- engage in mediation
Consider using mediation as an alternative to having a magistrate settle minor debt claims. Mediation can save you time and settle the matter in a way that suits both you and your debtor.
- take steps to collect an outstanding debt in the event of a debtor bankruptcy
If someone who owes you money is declared bankrupt, they are usually freed from debts they cannot pay.
As a creditor, you can make a claim called a provable debt. This entitles you to share in the distribution of debtor funds and vote at meetings related to the bankruptcy.
The Australian Financial Security Authority is a government agency that provides information for both debtors and creditors affected by bankruptcy.
If you are not able to recover the debt, consider writing off the bad debt in your tax return and seek advice from your business adviser.
These options should be considered when all other efforts to chase a debtor have failed.
Why choose ABKJ as my commercial lawyer?
ABKJ Lawyers has been conducting business on the Gold Coast since 1970 and provide a comprehensive range of legal services to its clients, which include large corporations, local authorities and institutions as well as many small business and private individuals located throughout the Gold Coast, Queensland, interstate and overseas. While being one of the larger and longest established firms on the Gold Coast, they have not lost sight of the necessity to maintain sound personal relationships in dealing with all clients.
Can you help me with employment agreements/contracts?
Yes, ABKJ Lawyers’ commercial solicitors can provide advice, assistance and reputation in the area of Employment Law. Their extensive experience in dealing with issues concerning commercial law, which includes but is not limited to the rights, relations and conduct of persons or businesses engaging in commerce, merchandising, trade and sales. ABKJ Lawyers can advise you on almost any issue that may arise and offer comprehensive legal and business advice services to meet your needs.
My partner has done something to endanger our business. What can I do?
Every act which a partner does whilst carrying on business of the kind usually carried on by a business, will bind the partnership and other partners, except:
- where the partner exceeds his or her authority in a particular instance and the person with whom that partner is dealing knows of the limit on the partner’s authority; or
- where the person with whom that partner is dealing does not know or believe that person to be a partner.
Once either of the stated circumstances above is satisfied, you and your partnership may be exempted from the partner’s behaviour. Otherwise, all partners are jointly and severally liable for wrongful acts or omissions of the partner committed in the normal course of business or pursuant to authority of co-partners. Therefore, it is necessary to clearly outline job responsibilities and consider all partners when making decisions.
A partner cannot be expelled by a majority of the remaining partners unless a partnership agreement specifically allows this.
I am selling my business. Do I need a lawyer?
Selling a business can be a challenging task as the process can be time consuming and complicated. There are a number of factors to consider when selling your business, such as value your business, find buyers for your business, negotiate the sale and prepare the contract etc.
Business lawyers are professionals who specialise in buying and selling businesses. They can help you understand legal and government requirements and make the process of selling your business less stressful.
If you're looking for an experienced commercial lawyer contact ABKJ.