Lawyers v. Smart Contracts & Templates

Lawyers v. Smart Contracts & Templates

Lawyers v. Smart Contracts & Templates

Are Contracts written by lawyers better than Templates?

It helps if you have an idea whether the template you want to use was written by a lawyer in the country where you are, and you know that it is right for the purpose you want to use it for.

Basic website terms of use, a simply Australia privacy policy, an agreement to buy a piece of furniture; these can all be fairly simply documents, until you have something out of the ordinary. For example, a privacy policy will be more detailed if you collect health information, and terms of use for a website will be more detailed if you have a membership area people can login to.

Templates are easy. Or seem to be. Fill in a few gaps and off you go. For a predictable business with low risk, templates may well be sufficient.

But, if you have anything unique about your business or the deal that you are trying to achieve, then a lawyer can help you to cover everything that needs to be covered in your agreement, rather than relying on a template full of gaps. Consider that standard business sale contracts in some Australian States still don’t adequately cover the online assets of a business, like a website, email list or social media pages.

While a very simple contract may be able to be automated, more complex contracts will be a hybrid of automated and manual terms. While contracts generally don’t cover all eventualities, they are created in the context of broader contract law, and therefore the solutions to various contractual issues can be found in the system into which those contracts are born.
Molly Thomas, Proctor 12/2016

What can go wrong with a template agreement?

Templates have to be generic to be effective, and are often limited. If you have specific requirements for your business, they probably won’t all be addressed in a stock standard template, and at that point you need additional help.

The trouble with templates is that if you ask a lawyer to review it and amend it to fit your circumstances, and they did not write it, it might take longer than them drafting it. This is because most lawyers have their own compilation of templates they are already familiar with. Something in a new format has to be understood first.

Not all templates are the same value or quality.

Some have lots of guidance to help you complete yourself, others have none. Different laws apply in different countries, as well as different ways of presenting information. So a contract written for an English company might be similar to something written for an Australian company, and completely different from something written for a company in the United States. If you pick the wrong law, your template might not have any effect, or might even contradict the law that applies.

For example, we had a client who bought a business using a contract from a different jurisdiction. There were some items that simply didn’t apply to the deal, but were included in the document.

The parties ended up in dispute and the dispute was much more expensive to resolve than it would have been if an appropriate contract had been used. It would have helped if either or both parties had sought legal advice before the deal.

Is there a set format or language for contracts?

Some contracts are clearly written for the lawyers involved and have only passing application to what the client actually wants to achieve.

Many lawyers out there might consider that statement harsh, but we do believe that if a client can’t understand what you have written for them without needing you to interpret it for them, then the contract was not written for the client.

On the other hand, downloadable templates are now prolific, both paid and for free. Again, not always written in a way that makes sense to the lay (non-legal) person.

You will see that the way contracts are written in the United States the documents contain more legalese than something written in Australia.

The format followed for writing contracts is more from convention and is not a requirement. An exchange of emails, with no formal layout or order, can be read together to create a contract.

Why is a written Contract better than a handshake?

If you can remember in clear detail everything you did on Friday of last week, congratulations. You have a better memory than 99.99% of the population.

Not only do most people have limited memory, but neuroscience has shown that our memories are selective. You might remember a clear event from your childhood that your sibling, who was there with you, has no memory of at all.

Given that memory is so unreliable, why would you not put a contract in writing? Particularly an agreement you want to keep in place and rely upon for years to come?

What are Smart Contracts?

Technology is constantly evolving.

The next step in evolution is to create ‘smart contracts’. Smart contracts are generated on the basis of your response to a catalogue of questions and are supposed to adapt to your requirements. Smart forms and smart contracts will work in circumstances where there are limited variables, but may not be effective where a novel approach is required.

It is possible that smart contracts might become normal for employment contracts, shareholder agreements and other contracts that have defined limits, but not where creativity and flexibility are required.

The worst thing you can do is sign something you don’t understand.

How can Onyx Legal help you?

Lawyers v. Smart Contracts & Templates

How to Deal with Unfair Contract Terms

How to Deal with Unfair Contract Terms

Rules Against Unfair Contract Terms Apply to B2B Transactions

As you can see, I’m on the road today visiting some clients and business meetings, and that is a plane I can hear in the background.

One thing I wanted to talk to you about today is we’ve got a client who has been involved in a business-to-business relationship. The relationship started early in 2017, so after the changes to Australian Consumer Law in November 2016, and some of the provisions in the contract that our client has entered into are unfair contract terms.

Under Australian Consumer Law, unfair contract terms are terms that, for example, will give one party the right to do something but not the other party. So for example, only one party being able to end the agreement.

In this particular instance, our client was signed up to do a certain thing for a certain period of time. The other party didn’t deliver, so they cancelled and they exited. But the person they signed up with is still trying to charge them money. It’s just not going to be enforceable under the changes to Australian Consumer Law, unfair business terms because it matches all the indicators that would enable the court to determine the provision void and unenforceable. As a business owner, you should be aware that unfair contract terms now apply in business-to-business transactions involving small business. 

How can Onyx Legal help you?

Contact us to review your contracts and bring them up to date for ease of understanding and legal compliance. If you worried that your contracts include unfair terms that affect you, or affect your customers, we can let you know your available options. 

Mandatory Data Breach Notification Laws Australia – FAQs

Mandatory Data Breach Notification Laws Australia – FAQs

Mandatory Data Breach Notification Laws Australia – FAQs

Do mandatory data breach notifications apply to you?

 

If you are in Australia and collect personal information from clients, customers, suppliers, partners or anyone else for that matter, then maybe they do.  But a compliance perspective, these laws don’t affect you unless you are already required to comply with Australian Privacy law. Which means, you must comply if:

  • you operate a public, private or not for profit organisation with more than $3m turnover per year
  • you are a health service provider (not just doctors, this can include gyms, childcare centres, life coaches and schools), regardless of turnover
  • you are part of a federal government agency
  • you are part of a credit reporting agency
  • your business buys or sells personal information

What are mandatory data breach notifications about?

Data breach falls within Australian privacy laws and is all about cyber security.

The objective of the new law is to give individuals (those who care) confidence that their privacy is being protected. The laws apply regardless of technology, and encourage transparency and accountability.

What does it mean if you have an eligible data breach?

Mandatory data breach notifications only related to personal information. Personal information is defined in the Privacy Act as:

Personal information is –

information or an opinion about an identified individual, or an individual who is reasonably identifiable:

– whether the information or opinion is true or not; and– whether the information or opinion is recorded in a material form or not.

So if your business is hacked and you lose commercial information, that is irrelevant to this law.

The key components of a data breach are:

  • it involves personal information
  • it does not have to be bulk data, personal information about one person may be enough
  • the data has been accessed or disclosed
  • the data has been lost in circumstances where it is likely to be accessed or disclosed (like when NASA employees left a laptop containing access codes to the space station in a cab…)
  • there is a likely risk of serious harm to the people who have had their personal information accessed, disclosed or lost

What does ‘Serious Harm’ mean for a data breach?

Serious harm is a broad concept including physical, psychological, emotional, economic, financial or reputational harm (like when Ashley Madison got hacked and all those people cheating on their partners risked being exposed…)

What is serious harm is likely to be different for each organisation and probably associated with the reason why data has been collected. Customers of a financial institution might risk economic loss, and customers of a medical clinic might risk psychological, emotional or reputation damage.

Think about what is important to your customers, or the people who’s personal information and data you collect.

What should you have in place to handle mandatory data breach notifications?

Not surprisingly, a large proportion of small businesses have adhoc systems in place and no real understanding of what they collect, or how they control their data. This is particularly the case when using third party systems that also store data, like Eventbrite.

IT, management and communications teams will need to work together for data breach notifications.

The top 10 things to consider are:

  1. Every organisation covered by these laws should have a clear understanding of how their data is collected, stored and used and the vulnerabilities of those systems.
  2. Identify ‘who’ in the organisation is responsible for managing data.
  3. Identify the likelihood and consequence of an eligible data breach.
  4. Put in place staff training and security measures to reduce the chance of an eligible data breach.
  5. Understand what ‘serious harm’ could arise if there was a breach.
  6. Work out what would need to happen to avoid ‘serious harm’ and how quickly that could be implemented if there was a breach.
  7. Put in place a recovery plan in case of a breach.
  8. Put in place a communications plan that includes (as a minimum) the communication to those affected, a press release to reduce reputational damage, and the notification to the Privacy Commissioner.
  9. Check the business cyber insurance to see that it covers data breaches and the consequences.
  10. Test a data breach scenario to ensure your business has the ability to manage an eligible data breach.

And lastly…

Remember that data breach laws are technology neutral.

Just because you still operate with a largely paper based system does not mean that this law will not apply.

As someone pointed out to me, most filing cabinets can be unlocked with a paperclip.

How can Onyx Legal help you?

If you need help identifying risks to disclosure of personal information in your business and procedures to manage those risks, or need support developing policies and procedures for managing personal information, then contact us to find out how we can help you. 

Is the Law Black and White?

Is the Law Black and White?

Is the Law Black and White?

No, the law is not black and white

I’m on the road today in between meetings and just thought I’d share something with you. I’ve heard again this morning that law is very black and white.

Actually, it’s not. If it was black and white we wouldn’t need lawyers, we wouldn’t need courts to argue over what something means.

There’s a joke going around that if you give a sentence to six lawyers and ask them to tell you what it means, you’ll get six different meanings. It’s true. So, don’t assume that law is black and white.

Yes, we try and get clear, concise decisions by putting together contracts, and agreements, and stuff like that, but if things weren’t subject to interpretation, we wouldn’t have courts and we wouldn’t have a whole bunch of lawyers that we do today. So, no, law is not black and white. It’s all shades of grey and it is subject to interpretation.

One thing I say to people is, if you’re going to get into a dispute, if you think court is the answer, you have never got better than a 50/50 chance of winning.

I’ve been involved in cases which we thought we were dead set going to win, and we’ve lost. I’ve been involved in cases where we just thought we were going to lose and we’ve won.

There’s so many things that it’s subject to on the day, or on the days of court, that you can’t predict what the decision is going to be. So don’t think law and courts are the only way, and you’re going to get justice or it’s going to turn out your way.

You can’t make those assumptions. You’ve got to look at the cost, and the time, and everything else involved. So, please keep that in mind. 

How can Onyx Legal help you?

If you’d like to resolve a dispute without having to go to court and need a hand with your negotiation, contact us to find out how we can best support you in getting to a result you can live with now, so that you can get on with business.

Should you Register a Trade Mark?

Should you Register a Trade Mark?

Should you Register a Trade Mark?

Knowing When to Register a Trade Mark 

I’ve just been at a Angel Investor and Entrepreneur breakfast. One of the things we were talking about this morning was branding and looking at how to use your branding and how you might leverage your business and change the direction of your business in the future. So, whether or not you actually want to register trade marks now, what trade marks are worth registering? All of those sorts of questions came up.

One of the considerations that you can give before making a decision to register a trade mark or not is:

Where is the value in my business?

So, if the value is in the trade mark, then it’s worth registering. If the value is in some other aspect of the business, maybe you want to invest your money more in that first before you register a trade mark. Just something to think about.

Also, remember that not all things are capable of being registered as trade marks.

General descriptions and place names can’t be registered. We had a client once who said, “Hey, I want to register this trademark and it’s just been rejected by the trademark office. Can you tell me why?” The reason their application was rejected was because they wanted to register something like “Auto Sales, Brisbane“. It’s too generic. There’s no way you’re going to get that registered as a trade mark, because too many people in the same industry need to be able to use those words in that kind of order.

So just remember that not everything is capable of being registered as a trade mark and trade mark registration, although important, may not be your top priority right now.

How can Onyx Legal help you?

We can help you get your trade mark registered. We will help you identify the right classes and descriptions to protect your business and manage the process until your registration certificate comes through.