Some common legal risks with small and medium-sized businesses

Inadequate Client/Customer Engagement Documentation

These are terms and conditions of trade or a more specific agreement, such as a Consultancy or some form of Services Agreement. Alot of businesses neglect this and it can cause significant loss of income.

Why are they necessary?

• It's crucial that your client engagement documentation is clear about the scope and cost of your services, when you will be paid and what will happen if you don't get paid. There are other various other industry specific issues which need to be taken into account.
• A professionally drafted set of terms and conditions or engagement agreement creates a positive image for your business and shows that you take your business and your customers seriously.

Inadequate Intellectual property (IP) protection, especially trade marks.

Most businesses do not have trade marks registered with IP Australia

Why are they necessary?

• Many businesses think that if they have a company or a registered business name, then they have adequate IP protection. That's not the case, as a company or business name provides no meaningful IP protection.
• It's important that if you have a well-developed brand name and/or product/s, then you should be registering trade marks to protect your business from other businesses trading in a similar name, costing you money and creating confusion in the marketplace.
• Trade marks can be valuable assets, particularly if you are selling your business.

Inadequate or Incorrect Employment Contracts

In most businesses employees are your most important asset, who can make or break your business and you need to distinguish between so-called "normal" employees and independent contractors and use the correct contract.

Why is this necessary?

• The difference between standard Employment Contracts and Independent Contractor Agreements can be quite subtle and the fact that you may have an Independent Contractor Agreement with someone or call them that is not the legal test. The law considers the substance, rather than the form of a contract, regardless of what you call the arrangement.
• If you get it wrong, the financial consequences can be significant, resulting in employee entitlements being back claimed for months or even years and significant fines.
• Both employment and contractor agreements also need to take into account protection of confidential information and protection of your IP. Changes to non-compete and non-solicitation laws for ex-employees are also about to be introduced to Parliament, so I will report back on those later. In the meantime, make sure you manage your most important asset properly.

 

Any queries, please contact us for further advice