Buying a Business

Did you use the "out of office assistant" to notify people that you were away during the Christmas Break?  Ironically that automatic reply may be proof that you received an email that, you did not in fact receive.  Proof of receipt by the receiving system may be enough to show receipt by you.  We are governed by both the contracts we sign but also by contract law.  The contract does not stand by itself in a vacuum.   Contract Law affects all of our dealings with each other.  If you are entering into a contract of any kind you should see us first for a fixed fee quote.  Contact Riba Business Lawyers The problems that we can experience with email notices are an example. There are legal problems associated with using email to make contracts and futher problems are associated with issuing notices by email under a contract.  Those problems relate to
  1. whether an email notice is a valid written notice and,
  2. the timing of receipt by the intended recipient. Is the email received when it is received to, the server, the computer or when the recipient reads it?  Many contracts specify required time frames. If an email is used then it is essential that the time of receipt can be identified.

You cannot own a business name!

Before you even commence business you must understand the difference between each of these very different business tools  - Business Names, Trade Marks and Company Names. Anyone considering the sale of their business  should also consider these things carefully. If trade marks, domain names, business names and business structures are not all in order, then seek legal advice as early as possible.  We have seen business sales fall over because intellectual property including the business name is not registered. The registration of the name is a process, nothing more, and that process does not guarantee exclusivity. The business owner having registered the business name has no legal right to prevent others from using that name, nor does completing the registration process provide any entitlement to compensation if the name is used by someone else without authority.

So what do you own after registration of your business name?  It may surprise you that, you own nothing.

There is lot at stake for an employer who incorrectly identifies a relationship as one between contractors when in fact the relationship is properly defined as one between employer and employee.  An improper assessment of the relationship can lead to the financial ruin of a business.  The improper assessment may result in a requirement for the unexpected payment of many years of award payments, sick leave, holiday leave, long service entitlements and superannuation.  It is essential to get this right.

It is necessary to note at the outset that you cannot agree that a person is a contractor if in fact that person is an employee.  An agreement between the parties of this kind is of no effect.  The payments due to employees are required by statute and cannot be waived by anyone, not even the employee.

If it looks like a duck and quacks like a duck it is probably a duck.  It should be no surprise that the courts don't place any weight upon the "title" given to a worker.   To assess whether a worker is an employee or a contractor the whole of the relationship must be examined.

Since the High Court decision in Hollis V Vabu (2001) 207 CLR 21 the common law distinguishes employees and contractors by considering various indicators under seven headings:

Most transactions whether for the sale of property or a business include at least two or three important dates. These dates are:

1. The date that the contract is signed by the parties to that contract

2. The date that special conditions are satisfied

3. The date that the contract reaches settlement or completion. The completion date and the settlement date are different words, used to describe the same thing.

Which of these dates do authorities rely upon when determining the date of the sale?

Before a buyer can enter into a contract to purchase a business it is important to seek advice in relation to the most effective structure to use as the purchasing entity. There can be significant tax savings and other advantages if the correct structure is chosen before a contract is finalised.
Here is the most important piece of advice that your lawyer or accountant may not tell you in time. Are you ready? If you are investing money in the business as you almost always will, then you should make sure that this loan is treated as a loan and not a gift. You can lend this money to the business and secure it with a charge. If you register the charge then your initial investment will be protected forever. If things go bad, then you may be able to get your investment back even before the tax man gets paid.
So our first piece of advice is - "Begin with the end in mind". This will be the cheapest and best insurance against losing your home that you may ever buy so when setting up a business get some good advice and set up this asset protection structure from the start.