Australia Consumer Law: How Does it Affect Your Business?

by Jeanette Jifkins | Nov 11, 2021 | Consumer Law, Law for Online Business, Legal

Australia Consumer Law: How Does it Affect Your Business?

australian consumer law: how does it affect your business?

From 1 July 2021 the monetary limit that applies to consumer goods or services under the Australian Consumer Law increased from $40,000 to $100,000. So, what does that mean for you?

Let’s start by looking at who is a consumer.

Who is a consumer under the Australian Consumer Law (ACL)?

Since 1 July 2021, a consumer can be any person or entity that purchases goods or services from you, where those goods or services –

are purchased for $100,000 or less;
or are ordinarily acquired for personal, domestic or household use,
or are a vehicle or trailer used for transporting goods on public roads (more than personal use).

For anything purchased up to 30 June 2021, the value was $40,000. This is the first uplift in that value since 1986 and aims to protect a broader group of consumers. Whether your customer is a person, or a company or any other type of entity is irrelevant is the goods or services purchased were under $100,000. So, if you deal B2B, your business still has to meet consumer law obligations.

Similar rules apply to the provision of financial services under the Australian Securities Investment Commission (ASIC) legislation, and the monetary limit of financial services has also been lifted.

What protections apply to consumers?

As soon as a purchaser is classified a consumer, the ACL consumer guarantees apply. Consumer guarantees are automatic and apply in addition to any warranties you might offer.

A warranty and a guarantee are similar things. They are both promises that you make about your business goods or services. It might be helpful to consider them from an ‘active’ and ‘passive’ perspective. Consumer guarantees are automatic. A business doesn’t have to actively do anything, they just exist. A warranty is a voluntary promise, something you offer in addition to consumer guarantees. So, a ’30 day money back guarantee’ is actually an express warranty. Go figure.

There are nine consumer guarantees for goods, and three for services.

Products	Services
Will receive clear title Will have undisturbed possession No undisclosed security over the goods Acceptable quality Fit for purpose Match description Match sample or demo Repairs and spare parts are available Express warranties will be met	Acceptable care and skill Fit for purpose Delivered within a reasonable time

Clear title and undisturbed possession just mean that when you purchase it, the buyer knows that there is not another owner or some other costs in the background. An example might be a business or relationship break up where one person sells something second hand and it actually belonged to the other partner. The person who really owned it can argue that the person who sold it did not have the right to do so and claim it back. Equally, a customer might want to pick something up from customs only to discover there are fees owed before they can take away the goods.

Undisclosed security is where money is owed. For example, if you want to buy a piece of machinery and there is finance owed on it and a PPSR registration against it, so the lender has priority over your claim and can sell the machinery to recover the debt, even though you bought it in good faith.

Many of the consumer guarantees are straight forward, but acceptable quality will depend on the value and quality of the goods. If you pay $100 for something that is advertised as an outdoor marquee, you might expect it to last at least a day, but you wouldn’t expect it to last for years and you wouldn’t expect it to last through high winds. On the other hand, you would expect a $1200 marquee to be more robust.

For something to be fit for purpose, the consumer has to let you know what purpose is important to them. So, if a customer says it is important to them that the office chair they are buying can recline, but not fall over with someone who weighs 110kg in the seat, then the office chair needs to be able to meet that specification to be fit for purpose.

The availability of spare parts is important because it can affect what people are prepared to pay for an item. A consumer might be prepared to buy something that will last for a limited period without repair if it is cheap (consider home printers), but not pay for a large office copier without the ability to rely on regular service and repairs.

What happens if you do not meet a Consumer Guarantee?

If you don’t meet a consumer guarantee, the purchaser has rights to remedies which can include repair, replacement, refund and may also include damages and consequential losses.

Depending on how the failure to meet consumer guarantees came about, you may also be liable for penalties for breaching a prohibition on making false or misleading representations, another provision of the Australian Consumer Law.

The type of remedy will depend on the problem with the product or service. If it is capable of being fixed, it is probably a minor problem and will need to be repaired or replaced. Depending on the value of the product, you also have the option of providing a refund, or the customer may have the option of requesting a refund.

Consider large retail chains which will refund or replace most items without question simply because it is more efficient than arguing with customers or sending items off for assessment or repair. It also ensures a loyal customer base. Not every business has the same scale to do that.

If it is a major problem and cannot be fixed, then it is the customers choice about replacement or refund and the supplier must provide that replacement or refund and may also have to pay damages for any foreseeable loss resulting from the failure. In considering whether or not something is a major failure, you need to consider whether a reasonable consumer fully acquainted with the nature and extent of the failure would still have purchased the item for the amount that it was sold.

Consider how you might feel in the same position.

For example

ACCC v Jayco Corporation Pty Ltd [2020]

As most people would know, Jayco is a brand of caravans and recreational vehicles (RVs). Jayco is a manufacturer that sells through dealerships.

The ACCC took action against Jayco to determine whether 4 RVs were of acceptable quality (a consumer guarantee), fit for purpose (a consumer guarantee) and whether the manufacturer was compliant with its express warranties. There was also a claim of misleading and deceptive conduct.

The first RV was a camper trailer. The issues it had were mainly a collection of relatively small poor finishes, but there was also a problem with the alignment of the chassis and a strut that failed in lifting the tent, causing further damage. The Court said –

“At that price point ($27,000+), a reasonable consumer was entitled to expect a commensurate level of quality, including fit and finish. That expectation is consistent with the brochure that Jayco Corp published, and which Consumer read, which was calculated to convey the impression that a Jayco camper trailer was a durable, quality product. The combination of defects with the RV had the cumulative effect that the RV as a whole was not acceptable in appearance and finish, and its presentation was not consistent with the impression conveyed by the Jayco brochure…. In consequence, Consumer was entitled in April 2014 to reject the RV on the ground that the failure to comply with the guarantee of acceptable quality was a major failure…. As a result of the failure of the strut for the tent section on the second occasion, the RV was substantially unfit for purpose.”

The second RV was pop-top caravan that leaked, which was something the Consumer specifically asked about before purchase. Over a 15-month period it was in for repair on approximately 10 occasions. The Court considered the inability to provide shelter from the weather (the leaking soaked mattresses) “went to the heart of one of its purposes” and that “a reasonable consumer, fully acquainted with the defects and what was involved in attempting to repair them, would not have acquired the RV, and therefore there was a major failure” which entitled the Consumer to a replacement or refund.

There was also discussion around the fact that Jayco promoted their products as suitable for a relaxing family holiday, and a leaking roof and chassis would make it unfit for that purpose.

In all cases, Jayco had not provided a replacement or refund of the purchase price of the RVs and in one case was found to have led the consumer to believe that the only remedy available was repair. The court found those representations to be misleading or deceptive (s.18 of the ACL) and false and misleading (s.29 of the ACL). As a result, Jayco was required to pay a penalty of $75,000. It then had to deal with the owners of the RVs.

How to manage your risk of a consumer plan

We can help you to review your terms and conditions of supply of goods or services, whether you make them available online through your website or otherwise.

There are provisions that can be written into terms and conditions to provide you with a level of certainty around what you must do to meet consumer guarantees. For example, with consulting services it might be easiest for you to simply provide the services again rather than offering a refund. This will depend on how amicable the relationship remains with your customer, but may be more attractive that having to refund the consulting fee.

The ACL does require specific wording in terms and conditions depending on the goods, services or warranties you offer.

Once we have your terms worked out, then we can look at your processes with you and how information is shared within your business so that you and your employees understand how best to respond to and deal with requests for replacement or refund.

How can Onyx Legal help you?

Your terms and conditions of supply are important documents for managing your risk. Understanding your risks and having a clear understanding of how to respond to and deal with consumer complaints also makes a big difference. Book at time to discuss your situation with one of our team.

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Online Learning: Protecting Your Business Online

by Jeanette Jifkins | Jul 19, 2021 | Law for Online Business, Legal, Training, Video

Online Learning: Protecting Your Business Online

Consumer Protection Laws in Business

Did you know that all businesses must comply with consumer protection laws? So, it is important you understand how consumer rights affect your business. In this video, we give you example of a variety of topics that form part of consumer protection law, and therefore your obligations as a business owner.

Quick Guide to Consumer Protection Law – Video Table of Contents

2:00 Looking at Consumer Guarantees that Affect Your Business
2:35 What are Consumer Guarantees for Products – Maximum value now $100,000 up from $40,000
7:41 What are Consumer Guarantees for Services – Maximum value now $100,000 up from $40,000
10:42 Check out the ACCC Small Business Education Program link
11:22 What is Misleading and Deceptive Conduct
14:50 Examples of Misleading and Deceptive Conduct
17:43 What are Fair Payment Terms for Sellers and Is it Illegal to say “No Refunds”?
20:45 How Important is it for Your Business to Display Prices?
23:32 What about Selling Below Cost?
25:02 Do You have Unfair Contract Terms and How do Unfair Contract Terms apply B2B?
27:07 Why it is Important to Have Clear and Simply Contracts
29:50 Do You Have to Comply with Product Safety Standards
31:33 How to Contact Onyx Legal – NEW booking page link here

PRIVACY FOR SMALL BUSINESSES

All business owners must understand their obligations under Australian Privacy Laws.

To ensure your business stays on the right side of the law, watch our video to see our Principal Lawyer, Jeanette Jifkins, explain Privacy Law in Australia in more detail.

TERMS AND CONDITIONS

Terms and conditions help protect you and your consumer. So what do you need to include on your website?

Watch our video to see our Principal Lawyer, Jeanette Jifkins, explain.

website ownership basics

Who owns your website and what does that mean?

Did you know there is a difference between your domain name and what people see on your website?

Watch our video to see our Principal Lawyer, Jeanette Jifkins, discuss website ownership.

understanding copyright law

Watch the full video on Understanding Copyright Law below.

managing testimonials, comments, and reviews

Let’s talk testimonials and no, you can’t make them up.

How do you manage them? Are you allowed to use testimonials for advertising? Can you edit them?

Watch our video to see our Principal Lawyer, Jeanette Jifkins, answer all these questions.

anti-spam

Spam is an electronic commercial message that can include email, phone and even online chat platforms.

When done incorrectly it can be easy to create marketing that your audience may categorise as spam.

If you want to avoid this we recommend watching our below video to see our Principal Lawyer, Jeanette Jifkins, explain anti-spam in more detail.

How can Onyx Legal help you?

As a Small Business Owner it is sometimes hard to know where to start and scary not knowing what is important for your business from a legal perspective. Book your chance to get some quick, practical legal answers from the Onyx Legal team here and clarify your Next Steps in Business.

Find out more

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How do the Casual Employee Changes Affect You?

by Jeanette Jifkins | Apr 27, 2021 | Employment, Law for Online Business, Legal

How do the Casual Employee Changes Affect You?

Changes TO THE FAIR WORK ACT – MARCH 2021

In an effort to provide business with more confidence to employ people under casual and part time employment arrangements, a number of significant changes were made to the Fair Work Act, effective 27 March 2021, by the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021.

It appears that the Federal Parliament have taken the May 2020 decision in WorkPac Pty Ltd v Rossato (which was under appeal before the High Court at the time) into consideration in making changes to employment law.

The decision in Rossato had the effect that an employee who accepted casual employment, but was then engaged in such a way that they had either certainty about future work, or the days and hours of work that may be required of them, was in face a permanent employee entitled to paid leave entitlements.

Unfortunately, the Court went on to find that neither the contract of employment nor the law was sufficiently clear to allow the employer to off set casual loadings already paid to the employee against those leave entitlements.

The concerns raised after this decision revolved around an employee’s ability to effectively ‘double dip’ against entitlements paid and the potential cost to employers with large casual work forces.

WHO IS CONSIDERED A CASUAL EMPLOYEE?

Casual employment was not defined under the Fair Work 2009 and remained a term subject to interpretation of the Courts, until now.

This new definition of ‘casual employee’ applies across all Modern Awards, and all employment agreements not covered by an Award.

15A Meaning of casual employee

(1) A person is a casual employee of an employer if:

(a) an offer of employment made by the employer to the person is made on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person; and

(b) the person accepts the offer on that basis; and

(2) For the purposes of subsection (1), in determining whether, at the time the offer is made, the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person, regard must be had only to the following considerations:

(a) whether the employer can elect to offer work and whether the person can elect to accept or reject work;

(b) whether the person will work as required according to the needs of the employer;

(d) whether the person will be entitled to a casual loading or a specific rate of pay for casual employees under the terms of the offer or a fair work instrument.

(3) To avoid doubt, a regular pattern of hours does not of itself indicate a firm advance commitment to continuing and indefinite work according to an agreed pattern of work.

(4) To avoid doubt, the question of whether a person is a casual employee of an employer is to be assessed on the basis of the offer of employment and the acceptance of that offer, not on the basis of any subsequent conduct of either party.

(5) A person who commences employment as a result of acceptance of an offer of employment in accordance with subsection (1) remains a casual employee of the employer until:

(a) the employee’s employment is converted to full-time or part-time employment under Division 4A of Part 2-2; or

(b) the employee accepts an alternative offer of employment (other than as a casual employee) by the employer and commences work on that basis.

WHAT DOES THIS MEAN FOR SMALL BUSINESS?

As a small business owner, you can now employ someone as a casual with confidence that the casual loading you pay them (25% under most Modern Awards) as compensation for not accruing paid leave entitlements, can be applied against any leave entitlements the employee might seek to claim as a permanent employee in the future.

With clarity around the conversion from casual to permanent employee, the risk of employees claiming that they should be deemed a permanent employee in the future is also now reduced.

Conversion to permanent employment is now simpler

Under Part 2-2 of the Act, if you employ someone as a casual for 12 months and they have a regular pattern of employment during the last 6 months of that period, you must offer them conversion to permanent employment (attracting paid leave entitlements).

The offer of conversion should be made at the end of any 6 month period where the regular pattern of employment they have undertaken could be converted to permanent part time or full time employment ‘without significant adjustment‘.

The offer must be made in writing within 21 days of the end of the first 12 months of employment. This provision does place an obligation on an employer to offer a longer term casual who has secured a regular pattern of employment over 6 months after the initial 12 months of employment.

If an employee rejects the offer of conversion, they remain a casual employee.

The requirement to make an offer of conversion doe not apply:

to small business operators with less than 15 employees
if there are reasonable grounds not to make the offer (some examples are given in the Act).

If an employer decides not to offer conversion, the decision not to make an offer must also be given to an employee within 21 days of the end of their first 12 months of employment.

An employee retains the right to ask for conversion at the end of any 6 month period of regular pattern of employment after the initial 12 months, provided that:

the employee has not previously rejected an offer of conversion
the employer has not previously issued a notice of grounds for not offering a conversion
the request is made more than 21 days after the employees first 12 months of employment

The Act specifically allows for employers and employees to reach agreement on conversion outside the provisions of the Act.

Casual Employee Information Statement – Fair Work

When do you have to give a CEIS to an employee?

As an employer you will be familiar with the obligation to provide an Fair Work Information Statement to new employees which explains the National Employment Standards (NES).

With the inclusion of a definition of casual employment, employers now also have the obligation to provide a Casual Employee Information Statement to new casual employees.

Small business employers (less than 15 employees) need to give their existing casual employees a copy of the CEIS as soon as possible after 27 March 2021.

Other employers have to give their existing casual employees a copy of the CEIS as soon as possible after 27 September 2021.

Need help as an Employer?

If you are struggling to understand your obligations as an employer, or just want to check how the recent changes in law impact you, get in touch through our contact form or by booking an appointment.

Make an Appointment

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Coaches and Consultants – 3 Legal Case Studies

by Jeanette Jifkins | Apr 25, 2021 | Contracts, Copyright, Law for Online Business, Legal, Service Agreements

Coaches and Consultants – 3 Legal Case Studies

The challenge with coaching or mentoring, whether that’s life coaching or business coaching, is that your students often expect you to do it for them instead of them doing it themselves.

This is completely contradictory to the sports setting where people understand that the coach is the person who does not end up on the field, who is not part of the game, and who supports the players get the best out of themselves.

As a coach you are likely to have a variety of offerings for your clients, which might include any one or more of:

downloadable, self-paced individual programs
moderation of online forums
facilitation of mastermind groups, online or offline
individual coaching sessions, in person or via technology
a combination of individual and group coaching sessions, in person or via technology
face-to-face events
consultancy

Some of the coaches we work with have limited number high end programs which provide a combination of the different offerings above.

Due to the variety of different offerings the coaches we work with provide, rather than one case study, we will share three snap shots of the problems some of our coaches have encountered, and the solutions we provided.

We would also like to thank Si Harris, Business Strategist, for requesting these case studies.

PROBLEM 1 – managing expectations

Your advertising, and your Coaching Services Agreement should manage the expectations of your client. You should be clear before coaching commences that it is the client’s responsibility to get what they can out of the coaching program, and if the client does not participate fully, they will not get the results they expect.

It is also important that you carefully assess the capabilities of your potential client before agreeing to provide services to them. If it were obvious before coaching commenced that your potential client could not afford your services, you run the risk of ending up in dispute over payment. Similarly, if you recognise that your potential client has a particular personality trait or disorder that you do not want to manage, or do not have the qualifications or experience to manage, it is best not to start the relationship at all.

CASE STUDY 1 – Complaint about Services

We have a coach who focuses on assisting their clients to develop a business plan. Business planning is not an easy process. It requires time and effort. This coach provides a 13-week program with the promise that at the end of the program their client would have a completed business plan.

The problem they faced was clients seeking refunds at the end of the program if they were not happy with their business plan.

We restructured the coach’s Coaching Services Agreement to clearly set out and include what the coach provided, what they did not provide and what actions the client was responsible for undertaking throughout the coaching program. The client had to sign up to their responsibilities and was responsible for completing different sections of a template business plan from the start of the coaching relationship. We also prepared a disclaimer for our coaching client’s website which clearly set out the limits of their services, and the obligations of the participant. The disclaimer was easily accessible through the footer of the website, reflected the terms of the Coaching Services Agreement and was in unambiguous plain English terms.

This agreement was tested by almost the first client who signed it.

That client turned up every week for thirteen weeks and consumed more than the allocated 90 min window of time allowed by the coach but failed to do any homework in between sessions and made no effort to prepare their own business plan.

The coach, just like the coach on a playing field, was there each week, supporting from the sidelines, encouraging the client to play, but the client consumed the attention only, and failed to play the game.

At the end of the program the client demanded a refund because they did not have a completed business plan that they were happy with, or at all.

The client had signed the Coaching Services Agreement, in that instance in wet ink, and was bound by its terms. They had also claimed they relied on representations on the website, enabling our client to also point to the disclaimer.

The coach was able to simply direct the client back to the plain English, unambiguous responsibilities the client had agreed to at the start of the relationship through the Coaching Services Agreement and disclaimer, and the complaint about services and demand for refund was not pursued.

Note that it is important you fulfil on the promises you make about the delivery of your programs.

A 2011 Queensland QCAT series of cases involving Venzin Danielli Pty Ltd as defendant, required the coaching services provider to refund to four participants 77.5% of their program fees after the participants withdrew part way through the program for the provider’s “failure to provide the various benefits that were represented as flowing from participation in the Inspire Series program”.

In that case, the coaching service provider over promised and under-delivered. Make sure your advertising is accurate and does not over promise what you can deliver.

PROBLEM 2 – REFUNDS

Australian Consumer Law Guarantees

Before looking at case studies, it is important you know that a ‘no refunds’ policy is not supportable under Australian Consumer Law. You CAN advise clients that a refund will not be provided if they change their mind about completing the program, there is a difference.

If a provider of services with a value of less than AU$40,000 does not meet the following consumer guarantees:

provision of services with due care and skill
provision of services in a timely manner
provision of services that are fit for purpose

then the purchaser has a right to request a refund or replacement of the services.

For a major fault (an irreparable fault or collection of faults that would have influenced the purchaser not to buy in the first place if they had known about those faults), the purchaser is entitled to a refund.

High-end Coaching Programs

High end coaching programs are often year long programs with limited places and application processes before acceptance. It is not uncommon for coaches offering high end programs to allow participants to pay by instalment over time, rather than require the full amount up front.

So, what happens when someone gets part way through a coaching program and discovers they just do not want to finish it?

The first risk mitigation strategy we recommend for high end coaching programs is a clear application process, including a written, signed application accepting the terms and conditions of the program, and a face-to-face interview process. Applications and interviews can be conducted electronically. Applications can be signed electronically.

During the application process, as a coach, you can validly ask that your potential client tell you that they have considered the cost of the program and that participating in the program is not going to affect them badly financially.

Some providers we work with may it clear that to get the most out of the program, the participant will need to have further money to invest – say in set up costs for a new business or development costs in a property purchase – and the coach will also ask for confirmation that the possible further investment is affordable for the potential client.

CASE STUDY 2 – Refund request, or stop payment request, part way through program

So, what do you do when you get a request for release from a program that has not been paid in full, or a refund part way through a program? This happens for our coaching clients once or twice a year.

When it comes to the Coaching Services Agreement, we make it clear that participation is limited, and the place purchased means someone else misses out. On that basis and taking into consideration the costs attributable to their participation, the whole of the program must be paid, whether paid by instalment or in full up front.

We ensure the wording is very clear regarding instalments and cannot be mistaken for a monthly fee. We also suggest a provision that makes the full balance of course fees payable if an instalment is not made on time. This allows for immediate debt recovery instead of having to wait until the end of the period for payment of the instalments.

If your Coaching Services Agreement has clear terms about the payment for a program, you will not be obliged to refund any amount received, or to forgive any payments still outstanding.

A 2015 Victorian VCAT case of Quick Coach Pty Ltd v Papalia made it clear that return of signed terms and conditions and a deposit, together with receipt of materials, attendance at some workshops and access to a website built for the client (although not the whole of the program), were sufficient to support an order that the client pay for the program in full.

However, if your client is in genuine personal difficulty (such as having lost income due to a downturn resulting from COVID, or been diagnosed with cancer) then, regardless of the terms of your Coaching Services Agreement, you might consider releasing the person from the program without further payment, or partial refund of the program, or deferral of participation until a later date. Any agreement not to require full payment, or to defer participation, must be documented in a deed signed by you and the client.

We have assisted our coaching clients to recover unpaid fees, and have also assisted clients to prepare a deed of release of a person from their program.

We have also had a client have to refund a portion of fees for a program where a tribunal expressed a view that the cost of the program was disproportionate to the benefits received, and where there were allegations of undue influence or high pressure sales tactics used in the sign up process.

PROBLEM 3 – Protecting intellectual property

It is important to document your ideas and create tangible material as part of your programs. This can include printable materials like workbooks, or downloadable materials like PowerPoint presentations, or materials for online consumption like video or audio materials.

Once you have any sort of material that can be reproduced, you can protect it under copyright law. Enforcing protection of your work may require you to start legal proceedings, but if you have already included specific terms in your Coaching Services Agreement about the use of your copyright material, you can specifically include all of the materials you use in your coaching delivery.

Yes, someone can still take your ideas and run with them, but they won’t be able to closely copy what you have created, or you will be able to pursue them for infringement of your rights. If you can apply catch-phrases to what you have created, like Porter’s Five Forces Framework, then it can be easier to protect your ideas.

CASE STUDY 3 – What can you do with Coaching clients, or consultants who steal your stuff?

We had a new client who had developed and delivered a leadership program to an organisation without receiving payment of any part of the $15,000 fee up front, and without a clear agreement with the organisation. The head of the organisation refused to pay for the training delivered, rebranded the slides used in delivery of the program and started offering the program as something developed by the organisation.

Our client did have the option to start legal proceedings to recover payment for delivering the training, and for copyright infringement but was concerned about taking action to the expense and fear that the head of organisation’s partner was also a lawyer, and the organisation would probably not incur legal fees in defending that claim.

Unfortunately, our client decided not to take action and treated the event as an expensive lesson in business.

How could our coaching client have done it better? Our coaching client’s position would have been stronger:

with a clear Coaching Services Agreement including specific provisions regarding copyright,
if a wet ink or electronic signature was required on the Coaching Services Agreement before the booking was confirmed, or the agreement included other provisions to make it binding upon receipt of payment of deposit,
if the Coaching Services agreement included a specific provision limiting the number of people to receive that coaching for the specified fee,
if the Coaching Services Agreement required payment up-front of expenses (travel was involved) and a deposit before delivery, and
if the Coaching Services Agreement included fixed dates for payment of the balance of fees, and provision for the application of interest and recovery of costs if debt recovery had to be pursued.

TAKE AWAY POINTS FOR COACHES AND CONSULTANTS –

Share a clear Coaching Services Agreement with your clients before the point of purchase
Ensure your agreement and advertising are consistent and accurate
Protect your intellectual property
Seek at least part payment up front
Ensure that payment terms are clear around the full amount to be paid, due dates for payment and any interest or acceleration of payments that apply if payments are not made when due.
Include a disclaimer to explain what you do not do for your clients
Seek applications from potential high end clients to check their ability to participate fully, and your ability to work with them.

Need Support as a Coach?

Would you like to improve your Coaching Services Agreement, your Online Program Terms & Conditions, your Disclaimer or your Privacy procedures? Make an appointment to see how we can help.

Make an Appointment

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COVID-19 and Signing Contracts

by Jeanette Jifkins | Jan 4, 2021 | Contracts, Law for Online Business, Legal, Service Agreements

COVID-19 and Signing Contracts

*Last updated 12 December 2021*

Very few documents are legally required to have a ‘wet’ signature. That is a signature applied using pen and ink.

Most business contracts you enter into don’t require a ‘wet’ signature and may not require a signature at all to be binding. Contracts are not formalised by a signature; a signature simply serves as good evidence that a person agreed to the contents of a contract. Some examples of documents that would normally need a wet signature are:

Wills
powers of attorney
deeds
documents that need to be witnessed, verified or authenticated in some way
some court documents
some documents for lodgement with land titles offices
some governance documents, such as minutes of meetings of directors
some regulatory documents, depending on the regulator

Since the introduction of electronic transactions legislation by the Australian federal government and most Australian state and territory governments around the year 2000, it has been possible to sign a lot of agreements electronically.

Rules do apply.

Broadly speaking, the requirements for using an electronic signature are:

you must be able to identify the person signing, either directly or through additional evidence
the person signing must agree to be bound by their signature
the method for identifying the signatory and his or her intention in the circumstances is reliable
all the parties agree to accept e-signatures, which agreement can be inferred by conduct

Provided that all parties agree, a typewritten name can be used as a signature. Consider that you may be one of many people in business who have a formal typewritten signature as a standard footer to your emails.

Case study

In Stellard’s case (Stellard Pty Ltd & anor v North Queensland Fuel Pty Ltd [2015] QSC 119) a signature was required because the transaction involved property. There requirement for a signature was in s.59 of the Queensland Property Law Act, which says “No action may be brought upon any contract for the sale… of land… unless the contract… or some memorandum or note of the contract, is in writing, and signed by the party to be charged…”

All exchanges relied upon were either via email, or by conversation. Stellard argued that they were entitled to rely on NQF’s acceptance of their offer to purchase, contained in an email, by virtue of the Queensland electronic transactions legislation. The Court decided that:

the parties agreed to accept electronic signatures through their conduct, being negotiation via email including stating the offer in the body of the email and receiving the acceptance in the body of an email
the identity of the person sending the email acceptance was found through evidence of conversations held earlier than the date of the email, and an admission of the sender that they were the person sending the email

What does that mean for you?

Be aware of what you are negotiating and agreeing to by email.

CHANGES TO 10 DECEMBER 2021

UPDATE: Electronic signing of certain documents has been made permanent in Queensland, Victoria, and New South Wales. We are yet to see if the other states will follow suit.

Unfortunately, electronic execution by companies and the holding of hybrid and virtual meetings have not yet been made permanent under the Corporations Act and will be considered at the next Senate sitting in 2022.

CHANGES TO 1 JULY 2021

Federal

On 23 April 2021 ASIC extended their temporary ‘no action’ position on the following activities for reporting dates up to 7 July 2021:

the holding of meetings using appropriate technology;•
electronic dispatch of notices of meeting including supplementary notices; and•
public companies holding AGMs within an additional 2 months on the extended term.

There is no allowance or exemption for signing documents electronically. Wet signatures are still required for minutes of meeting, although scanned copies of documents can be kept.

ACT

On 20 February 2021 The ACT Parliament extended the timeframe of relevant COVID legislation.

NSW

On 25 March 2021 NSW Parliament extended COVID timeframes under a variety of legislation with the COVID-19 Recovery Act 2021, to 31 December 2021, but excluded the Electronic Transactions legislation, which had been previously amended on 28 September 2020 by the Stronger Communities Legislation Amendment (Courts and Civil) Act 2020 until 1 January 2022.

QLD

On 14 April 2021 amending legislation was passed by QLD Parliament to extend the expiry date of various legislation impacted by COVID measures to 30 September 2021. However, the time available for electronic signing and witnessing of Wills and enduring powers of attorney ended on 1 July 2021.

Changes were made by SA Parliament in February 2021.

VIC

On 23 March 2021 Victoria led the way for all Australian jurisdictions by permanently adopting changes to the Electronic Transactions (Victoria) Act 2000, enabling witnessing of signatures by audio visual link, and the electronic creation and signing of Deeds and mortgages.

No other changes were tabled before parliaments around the country before 31 March 2021.

Signing documents during COVID-19 restrictions

After COVID-19 was declared a pandemic and Australian federal and state governments started enacting temporary legislation for greater flexibility, laws were introduced to change the way certain documents, which usually required a wet signature and a witness, could be signed using electronic means.

Changes are not consistent around Australia. Each state or territory has slightly different requirements and not every state or territory enacted relevant laws, so you do need to be conscious of the location of the person signing, and the applicable rules in that place, and when those rules will expire:

	Legislation	Start Date	Expiry Date
Federal	Corporations (Coronavirus Economic Response) Determination (No. 3) 2020	5 May 2020	EXPIRED*
ACT	COVID-19 Emergency Response Act 2020	14 May 2020	12* months after COVID emergency ends
NSW	Customer Service Legislation Amendment Act 2021 (NSW) Electronic Transactions Amendment (Remote Witnessing) Act 2021 (NSW)		PERMANENT CHANGE
NT	N/A
QLD	Justice and Other Legislation Amendment Act 2021 (QLD)		PERMANENT CHANGE
SA	Oaths (Miscellaneous) Amendment Act 2021 (SA) Oaths Regulations 2021 (SA)		PERMANENT CHANGE – Affidavits and Stat Dec
Tas	Notice under Section 17 of COVID-19 Disease Emergency (Miscellaneous Provisions) Act 2020	3 Apr 2020	EXPIRED
Vic	Justice Legislation Amendment (System Enhancements and Other Matters) Act 2021 amending Electronic Transactions Act		PERMANENT CHANGE
WA	COVID-19 Response and Economic Recovery Omnibus Act 2020	12 Sept 2020	31 Dec 2021

*The above table mentions only the first applicable legislation, which is likely to have been amended by further legislation over time, resulting the expiry dates listed. Expiry dates are subject to change.

Signing of corporate documents under australian federal law during covid

Federal law covers signing for and on behalf of companies, as well as the holding of shareholder or member meetings electronically. The legislation was due to expire on 5 November 2020 but was extended.

The Corporations Act is specifically excluded from electronic transactions legislation, so you will normally require a wet signature of directors or secretaries who are signing a document in accordance with s.127 of that Act. The document can still be shared electronically, it just cannot be signed electronically.

Pursuant to s.127 you would usually require two directors, a company secretary and a director or a sole director and secretary to sign on behalf of a company. You usually require both people (if two are signing) to sign the same document on behalf of the company.

The temporary legislation allows for electronic application of signatures when signing for a company, which can occur on separate documents, provided that each document contains the entire contents of the document, and a method was applied to identify each person signing and their intent to be bound, and that method was reliable.

A document signed on behalf of a company another way can still be binding. Section 127 does not limit the ways in which a company can sign a document.

Permanent changes to the Corporations Act will be considered at the next Senate sitting in 2022 which would allow for electronic signatures and virtual meetings.

Nothing in the legislation appears to enable the electronic signing of minutes of meetings, whether of a board or shareholders.

Signing documents in the Australian Capital Territory (ACT) or New South Wales (NSW) during covid

Measures were introduced to allow for the witnessing and attestation of documents including affidavits, Wills, powers of attorney and health directives. Witnessing can be done by audio visual link provided that:

both video and audio are active
the witness watches the signatory sign in real time
the witness confirms the signing was witnessed by signing the document or a copy of it
the witness is reasonably satisfied that the document signed and the document witnessed are the same
the witness includes a statement on the document about how the document was witnessed in accordance with the ACT legislation.

To demonstrate confirmation of witnessing the original signature, that can be done by signing a full copy of the document (counterpart) as soon as possible after witnessing the original or signing a scanned copy of the document signed by the original signatory.

These changes have now been made permanent in New South Wales.

Signing documents in the Northern Territory (NT) during covid

Although the NT does have electronic transactions legislation, no specific amendments have been made to that legislation as a result of COVID. As a result, any documents that needed a wet signature in the NT before COVID restrictions started, still do.

Signing documents in Queensland (Qld) during covid

UPDATE (8 December 2021): Queensland has made permanent the electronic execution of certain documents such as deeds and general powers of attorney for businesses. However, the electronic execution of wills and enduring documents has NOT been made a permanent change and had expired.

Queensland appears to have adopted the most complicated provisions. In Queensland, the witnessing a Will, powers of attorney, affidavit or statutory declaration can be completed by audio visual link, provided that:

the person witnessing is an Australian legal practitioner, justice of the peace (JP) or commissioner of declarations, notary public or other person mentioned in the regulations
the witness completes a certificate that is kept with the document
the witness sees the person sign in real time
the person signing signs each page of the document
the witness is satisfied that the signing person is making the document freely and voluntarily

Confirmation of witnessing, in addition to the required certificate, can be done by signing each page of a counterpart or scanned copy of the document signed by the original signatory, as soon as possible.

There are additional variations for affidavits and statutory declarations.

Documents other than Wills and enduring powers of attorney can also be signed electronically provided the method used to identify the signatory and their intend to be bound is reliable, in the circumstances.

Deeds can be signed electronically without a witness provided that the document is clearly identified as a deed. This applies to both individuals and companies, and for companies, where a second director or secretary is to sign, they can sign a counterpart.

Signing documents in South Australia (SA) during covid

While South Australia made amendments to make meetings by electronic means easier, rather than expanding the ability to apply electronic signatures to documents they simply expanded the categories of professional people documents could be sworn or attested in front of.

Witnessing documents by audio visual means is expressly excluded.

Some alterations were made for property related transactions in June 2020.

Signing documents in Tasmania (TAS) during COVID

Rather than specifying document, in Tasmania the legislation is focused on actions taken. So where a document requires a physical actions such as the making, taking, receiving, swearing, signing or witnessing of a document, those actions can be completed electronically, or by audio visual link provided that:

the witness watches the signatory sign in real time
the witness attests to the signing by signing the document or a copy of it
the witness includes a statement on the document about how the document was witnessed in accordance with the Tasmanian legislation.

Signing documents in Victoria (VIC) during COVID

Victoria expanded the categories of people who could take oaths and affidavits first, before then introducing broader measures for the use of electronic signatures. Timing is very important in Victoria. A witness must apply their signature on the same day as the person signing the document.

Witnessing is permitted by audio visual link provided that:

the witness watches the signatory sign in real time
the witness confirms the signing was witnessed by signing the document or a copy of it on the same day
the witness includes a statement on the document about how the document was witnessed in accordance with the Victorian regulation.

There are specific rules around attachments, counterparts and copies of documents that must be met to comply with Victorian requirements.

Under the Victorian Oaths Act a person can electronically write anything on a document, sign, initial or date it electronically under the COVID rules. There is also provision for Wills to be signed and witnessed by audio visual link, provided that the actions result in one document with all signatures and statements relevant to any signing by electronic means, and that all actions are taken on the same day.

Signing documents in Western Australia (WA) during COVID

Witnessing can be done by audio visual link provided that:

both video and audio are active
the witness watches the signatory sign in real time
the witness is satisfied that the document signed and the document witnessed are the same
the witness signs the document or a copy of it
the witness includes a statement on the document about how the document was witnessed in accordance with s.23 of the WA legislation.

Want more information?

Where documents do need to be signed in a particular way, or witnessed, to be enforceable, then it’s important you understand the requirements that apply in the place of the person signing if you want to be able to rely on those documents in the future.

If you need help with deeds, agreements, Wills or powers of attorney and worry about what COVID rules apply, contact us.

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