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Online Learning: Protecting Your Business Online

Online Learning: Protecting Your Business Online

by | 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

What Does A Standard Signing Clause Look Like and What Does It Apply To?

What Does A Standard Signing Clause Look Like and What Does It Apply To?

by | Jun 9, 2021 | Contracts, Law for Online Business, Legal

What Does A Standard Signing Clause Look Like and What Does It Apply To?

What does a standard signing clause look like and what does it apply to?

Generally

A person will be bound by the terms of an agreement they sign whether or not they have read it, and whether or not they understand its terms. So, a signing clause can be very simple. The main purpose is to prove that a person has agreed to the contract they have signed.

In most cases in business, a person is entitled to reasonably rely upon the signature of the person signing as being authorised to bind the company they work for. This is not always the case. If you are dealing with a very junior person in a business, it is unlikely they have the required authority to sign something that binds the business, but the signature of a senior manager or director should be able to be relied upon.

For the purpose of proof, the best style of basic signing clause should include:

  • the name of the person signing, in a legible form, which is why signing clause sometimes say ‘print name’ or ‘block print name’;
  • a signature
  • the date.

The reason to include a date is to easily track when the agreement was made. It is very common for signing parties to forget to enter a date on the first page of an agreement (where there is usually a space for the date) and then years later, anyone trying to work out when the document should be dated is trawling through emails and other records to try and figure it out. At least if the person signing has to also date the document, if it is missed on the first page, there will still be an easy reference within the document.

If you’ve been following our recent articles, you would probably know that although not all documents need to be signed to be legally binding, it is always a good idea to use a signature to indicate that an agreement was entered into between the parties. The signature can be a reliable form of proof of agreement.

Different types of documents have different execution requirements. (Execution in this context means the performance of something in a planned way, not the killing by legal punishment meaning.) For example, deeds have different execution requirements than agreements, and we will discuss those differences below. Other documents such as wills, powers of attorney or court documents also have different rules around proper signing.

Having an appropriate signing clause can help ensure that your document is correctly executed and is valid and enforceable.

So, what does a standard signing clause look like? Let’s start by looking at signing clauses for agreements.

Standard signing clause – agreements

A standard signing clause applies to all kinds of agreements (but not deeds). For example, services agreements, licence agreements, contractor agreements, and loan agreements.

The elements of a signing clause would need to be slightly adjusted depending on who is signing.

1. Individual

If you are signing as an individual, nothing more is required than your name and signature.

Although not legally required, it is good practice to have your signature witnessed by a third party. This is good evidence in case a dispute arises as to whether the agreement was properly signed, and particularly if the person signing argues that they did not intend to sign it.

An example signing clause would look like this:

When a signature does not need to be witnessed to be legally binding, then even though there is a section for a witness, the document will still be binding without it.

If someone signs a document without a witness, it is too late for their signature to be witnessed. A person can only witness a signature if they are present and watching as the person signs the document. We sometimes have people ask us to witness their already signed documents, and the answer is always, ‘no, we will have to reprint the page and do it again’.

2. Company

If it is your company that is executing an agreement, you should comply with the Corporations Act 2001 (Act); in particular, section 127 of the Act.

The signing clause for companies usually contains the words ‘signed on behalf of [company name] in accordance with s 127 of the Corporations Act 2001 (Cth)’.

Signing pursuant to that provision means that a person can rely upon the Corporations Act to state that the document was properly signed, however, if a document is not signed correctly in accordance with that section, it may still be binding on the company.

             a) With common seal

If your company has a common seal (which is basically an ink stamp that you can press onto an agreement as the company’s signature), that stamping must be witnessed by:

  • 2 directors of the company;
  • 1 director and 1 company secretary; or
  • the sole director and secretary of a proprietary company.

The use of a common seal is becoming less common. Most companies execute without a common seal. Companies such as registered training organisations, that provide certificates of completion for students, are the types of companies that still adopt a common seal.

             b) Without common seal

Executing without a common seal is a very similar procedure, with the only difference being you do not have to stamp the agreement with a common seal.

It simply requires the signature of:

  • 2 directors of the company;
  • 1 director and 1 company secretary; or
  • the sole director and secretary of a proprietary company.

These signatures do not need to be witnessed.

3. Trust

A trust is not a legal entity on its own and cannot execute agreements. Trustees are the ones that sign on behalf of the trust.

A trustee can be an individual or a company. The execution method is exactly the same as mentioned above, except that the signing clause would need to specify the signatory is signing in his/her/its capacity as trustee for (ATF) the trust.

If you are an individual trustee (witness is not legally required but is good practice):

If you are a corporate trustee:

4. Partnership

If you are in a partnership, you can sign an agreement on behalf of the partnership and bind the entire partnership to it.  Ideally you would have a very clear partnership agreement which identifies who is authorised to sign what type of document, rather than every person in a partnership signing without the knowledge of the other parties.

Again, witnesses are not legally required but it is good practice to have your signature witnessed by a third-party.

Signing clause for deeds

Different to an agreement, a deed will take effect from the time it is delivered (not physical delivery but where the executing party intends to be bound – ie. at the time of signing).

This is why the signing clause to a deed would need to contain the words ‘signed, sealed and delivered’.

Other than this, executing a deed is very similar to executing an agreement, with the only exception being if you are signing as an individual, you must have your signature witnessed by a person who is not a party to the deed.

There are some exceptions for signing documents under COVID legislation. 

It is important to also note that if you are a partner and want to sign a deed to bind the entire partnership, you must be given authority to do that under a deed (ie. partnership deed). A verbal or other type of written acknowledgement is not sufficient to give you that power. In addition, your signature must be witnessed by a person who is not a party to the deed.

To find out more about deeds, please read our article about Deeds v Agreements.

Need help?

If you need help or have questions about how to correctly sign your documents, please contact us.

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What is the Difference between Trade Marks and Copyright?

What is the Difference between Trade Marks and Copyright?

by | May 19, 2021 | Copyright, Law for Online Business, Legal, Trademark

What is the Difference between Trade Marks and Copyright?

Trade marks and copyright: the difference explained

For many businesses, intellectual property is one of their most valuable assets. We often get questions from our clients on how they can best protect their intellectual property, but what we have noticed is that many of them struggle to identify what specifically they are trying to protect.

This is completely understandable because intellectual property comes in many different forms. The two most commonly used types of intellectual property protection are trade marks and copyright.

In Australia, we refer to trade mark in two words, consistent with the legislation. Overseas, it is common to combine the words to ‘trademark’. They each refer to the same thing.

Some of the frequently asked questions we get include ‘What can I trade mark?’, ‘Can I sue someone for using my trade mark?’ or ’How do I protect my copyright?’. In this article, we will answer these questions for you.

Firstly, let’s explore the difference between the two.

Trade marks – protection of your brand

If you have been running your business for some time and have established substantial goodwill and reputation, your business name becomes your brand. Your brand is your trade mark. Two of the fastest growing trade marks in 2020 were TikTok and Zoom. When you hear those names, you can immediately bring to mind the kind of services each platform offers, even if you haven’t used them yourself.

Think of a trade mark as a ‘badge of origin’. It is anything that distinguishes your goods and services from those offered by other traders in the market. It can be your business name, logo, slogan, colour or even a sound, or a smell – although scent marks are very rare.

Your trade mark is a valuable marketing tool. The purchasing decisions of consumers are often influenced by the brand, so the higher your brand recognition, the more you may want to prevent your competitors from using a similar brand to provide similar services and benefit from your hard-earned success.

Think about how people by cars, or shoes. Many people favour a particular brand of motor vehicle because it is either something they have always driven, or it has a brand promise that they believe in or relate to. For example, Toyota is known for reliability, and Ferrari is the world’s most well known racing car. In shoes, people will often favour a brand like Asics, or Adidas, or Nike depending on their preferred sport, or sports stars.

So, how do you gain the exclusive right to use your trade mark and take actions against those who infringe it?

The answer is by registration. We will talk about this further below, first lets look at how copyright is different from trade marks.

Copyright – protection of your original creative works

Copyright has more substance that a trade mark and is more likely to be judged on the amount of creative input required to develop the work to be protected. Where a word can be a trade mark, a word by itself won’t be protected under copyright.

Copyright protects the creation of literary, dramatic, musical, artistic, and certain other types of intellectual works.

When you write a book, you are the copyright owner of that book (unless you have agreed to transfer your copyright to someone else). When you create online education materials, all your materials, including videos or audios, are your copyrighted material.

Just like trade marks, your copyright materials can be extremely valuable to your business. But unlike trade marks, you do not need to register copyright to gain protection. Copyright is generated automatically upon creation of the work.

There is one exception to that rule, and that is the registration of digital works in the United States. If you want to claim protection of a digital representation of your work in the United States, you must first register that work with the Electronic Copyright Office.

To have copyright protection, you must document your ideas and have it in some sort of tangible form. The easiest way would be to write it down. A visual or audio recording is also sufficient. It is important to understand that a mere idea is not protected. This is part of the reason that businesses rely on non-disclosure agreements and confidentiality deeds. Those sorts of agreement can provide you with protection of an idea before it is discussed and before it has been documented or produced in some other form capable of copyright protection.

What protections do you need?

As you can see, trade marks and copyright are two very different types of intellectual property. What you can do to protect them is very different too.

Trade marks – protection by registration

A trade mark can exist without being registered; however registration gives you the exclusive right to use your trade mark and makes it much easier to defend.

What this means is that you will have the legal right to stop others from using your trade mark and when necessary, take legal action against them to defend your rights. Just be aware that it is your responsibility as the trade mark owner to keep an eye on the marketplace and identify any infringement or potential infringement of your trade mark. When you see someone using your brand, or something very similar to your brand, you should tell them promptly, and request that they ‘cease and desist’ the infringement.

From time to time, we have clients who have already contacted someone they believe to be infringing their mark without persuading that person to stop their infringement. Sometimes, this is because our client doesn’t have the rights they thought they did, and sometimes it is because they have stated their rights incorrectly. It is important to check what rights you have first, before making any claims. We have a number of strategies for communicating with infringers to bring about a quick resolution to your concerns.

In Australia, if you do not have a registered trade mark, it can be an offence for you to threaten legal action against someone for using your trade mark. If you do have a registered trade mark, you should be notifying infringers that you do, and asking them to stop infringing your trade mark. This is usually done with a cease and desist letter.

Copyright – protection by documenting your ideas and creating tangible material

Registration is not required to protect copyright. Copyright material is protected as soon as it is created (in tangible form, that is). As the copyright owner, you have the exclusive right to reproduce your work, commercialise it, and be recognised as its creator.

As already mentioned, the one exception is the requirement to register a digital work with the Electronic Copyright Office in the United States if you want to take action against someone in the United States for copyright infringement.

Unlike trade marks, we are not aware of any countries outside the United States that have official registers or databases for copyright, so in most cases, people won’t be able to conduct searches to see if something is an original creation.

Because there is no form of registration and in pursuing someone for infringement you might be required to demonstrate that you are the original creator of the work, it is especially important for you to use one or more of the following strategies to protect your copyright:

  • keep a record of your evolution of ideas – as evidence of the progression of your work
  1. drafts, sketches, rough recordings, plans etc
  • insert footprints into your work (eg. deliberate mistakes or hidden data that identify you as the author)
  • watermark your work
  • use technology to make it harder to copy your work electronically
  • include a copyright statement on your work – this alerts people to the fact that your work is subject to copyright and you intend to protect it © [your name] and [the year the work was created]
  • include copyright use provisions in the terms of use or terms and conditions of your website that clearly set out what people can and cannot do with your published work
  • provide your contact details so people can ask for permission to use your work
  • if your work gets used regularly in educational institutions, government or big business, then register your work with the Copyright Agency to receive any royalty payments collected on your behalf
  • have template cease and desist letters you can send to people you believe to be infringing your work, politely asking them to stop.

What happens if you don’t take steps to protect your interests?

Under both trade mark and copyright law, if you don’t take steps to protect your interests you can lose your rights.

For trade marks, you must use the mark in the form registered, and take steps to stop others using your mark in order to keep the protection that registration provides.

For copyright, if you don’t let people know that they are infringing your copyright, you can make it harder to prove that you created the work in the first place, and if you knowingly let things pass, you may be deemed to have given permission for use.

Consider creating an intellectual property register for your business so that you can keep track of your different types of intellectual property, when they were created, who created them, and what you have done to protect it. Your intellectual property is an asset to your business.

How long do protections last?

Trade marks – 10 years

A trade mark registration lasts for 10 years from when you first file your application. You can renew your trade mark registration by paying renewal fees any time before the expiry of six months after the date your registration is due to lapse.

Copyright – creator’s life plus 70 years

The duration of copyright can vary depending on the type of work and whether the owner is an individual or a company, but generally in Australia, it is the life of the author plus 70 years.

Summary

To summarise the differences between trade mark and copyright protection:

  • your brand and logo are protected as trade marks, upon registration
  • your content and materials are protected by copyright, upon creation
  • you can and should take a variety of different steps to protect your intellectual property

Need help?

If you would like help identifying your valuable intellectual property, creating an intellectual property register and protecting your intellectual property, contact Onyx Legal.

Make an Appointment

How do the Casual Employee Changes Affect You?

How do the Casual Employee Changes Affect You?

by | 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

(c) the person is an employee as a result of that acceptance.

(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;

(c) whether the employment is described as casual employment;

(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. 

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Coaches and Consultants – 3 Legal Case Studies

Coaches and Consultants – 3 Legal Case Studies

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

Coaches and Consultants – 3 Legal Case Studies

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:

  1. with a clear Coaching Services Agreement including specific provisions regarding copyright,
  2. 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,
  3. if the Coaching Services agreement included a specific provision limiting the number of people to receive that coaching for the specified fee,
  4. if the Coaching Services Agreement required payment up-front of expenses (travel was involved) and a deposit before delivery, and
  5. 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. 

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Legally Binding Contracts: What You Need To Know

Legally Binding Contracts: What You Need To Know

by | Mar 11, 2021 | Contracts, Employment, Law for Online Business, Legal, Service Agreements, Website Terms

Legally Binding Contracts: What You Need To Know

LEGALLY BINDING CONTRACTS: WHAT YOU NEED TO KNOW

There is no doubt that running a business has risks. These risks may come from your employees, your contractors, your suppliers or customers.

As a business owner, you need to take control of your business by assessing these risks and determining how to reduce these risks. One of the best ways to protect your business is to understand contracts. The terms and conditions on your website document the contract between you and every user of your website. If you don’t have any written terms and conditions, you are guessing about the agreement you have with your website users. 

When you sell your product or services, you need a written sales contract to be certain that you are protecting your interests. If you operate an online platform to market or sell your products or services, you need a contract for use of your website (usually terms and conditions). Or, if you want to protect your confidential information such as your client list and trade secrets, then you need a confidentiality deed.

Contracts are an essential part of all businesses as they form the basis of the majority of business relationships and transactions. It is, therefore, crucial for you to know when you do and do not have a binding contract. A binding contract is something that is legally enforceable. So for example, having fun with your friends in a pub is not going to be a binding contract, it’s going to be a bit of a joke and a bit of fun. In order to get a binding contract, you have to have all of the essential terms agreed and an intent to create legal relations. You also need to be able to give evidence of the terms of the agreement.

CASE STUDY

We recently had a client who entered into a contra deal with another service provider, each expecting to complete between $3,000 – $5,000 of work for the other party. Our client wasn’t able to, or wasn’t prepared to trawl through historical emails to specify the details of what they had committed to provide, and they had not invoiced periodically. (An invoice with a credit applied can assist in evidencing that an agreement was made.)

The other party provided a written engagement for services and invoiced regularly. After 12 months, the other party claimed they had received nothing from our client and took legal action to seek payment in full of their invoices. Because our client was not organised, wasn’t able to specify the agreement made or clearly identify the work produced, they ended up in a position of having to either invest in legal services to defend a court matter, or compromise the claim and pay the other party.

A bitter pill to swallow!

For a contract to be legally binding in Australia, it must contain at least the following elements:

 

1. offer

A contract is essentially a promise between people to do or not do certain things, and it starts with an offer.

An offer must be clear, unambiguous, and contain the essential terms that are to be agreed upon between the parties. That might include the parties to be involved in the contract, the timing of the contract, payment terms under the contract, and any other essential terms necessary to make sense of the purpose of the contract.

When you communicate to another person your promise, you are making an offer. For example, if you promote your services in three different packages on your website, then you are making an offer to each person who views that webpage.

When thinking about business contracts, a company that prepares a proposal is making an offer. If the business looking at that proposal accepts it, that is the first step toward a binding contract, but if they come back and says, “we want something different,” then that offer no longer stands as the offer It’s a counteroffer and the counteroffer takes the place of the original offer.

This will go on until the parties reach a point where there is an offer that is capable of being accepted, and that’s where you get acceptance.

 

2. acceptance

There must also be acceptance of the offer through a clear statement or conduct in response to the offer. Acceptance can be evidenced in a variety of ways, so it could simply be an email, a telephone conversation, or the signing of a formal written contract.

For online services, acceptance will be when your customer clicks on that button that says, ‘Buy Now’. That is accepting the offer that has been made available on the website.

Contracts are commonly accepted by signature, or by checking a box next to a statement that says you agree to the terms and conditions.  Many contracts are binding without a signature, but not all contracts can be legally binding without being signed. Contracts for the sale of land must be in writing and signed. Wills must also be in writing and signed to be enforceable without needing court intervention.

A form of signature is preferred because even if the parties did not read the contract before signing it, their signatures indicate that they have read and understood and are bound by the terms.

However, this does not mean that if your contract is not signed, it is not valid and therefore not enforceable. Parties can also accept the contract terms through their conduct or other circumstances. It all depends on the circumstances and intention exhibited by the parties. As long as it has been sufficiently communicated, it will be valid acceptance.

For example, completing work referred to in the contract signals acceptance of the contract terms, and that person will be entitled to seek payment under the contract.

A counteroffer is not acceptance, it is a new offer that needs acceptance.

 

3. consideration

A person must give some value in return for a promise to create a legally binding contract. In other words, each party must receive a benefit.  The most common form of consideration is payment in exchange for goods or services.

With the online example, you’ve clicked the ‘Buy Now’ button. The consideration is the payment of money, and as soon as that consideration has passed, there is a binding contract in place.

Using the example of a proposal, once the terms of the proposal are agreed and accepted by one party, either the payment of money or the start of work or both, will be consideration. The essential terms of the contract must be agreed before the point of consideration to be binding.

So, if you ask a client to pay first and then give them terms and conditions after payment, then the terms and conditions won’t be binding because the consideration has occurred before those elements of the contract are agreed. This can be different where a deposit is conditional upon certain terms being accepted.

Terms and conditions of a contract given to a purchaser only after the contract was formed will not be binding.

 

4. Intent to create legal relations

As entertaining as it might be to dare a friend in a pub to do something, if they do it, your payment to them is only enforceable based on your goodwill and is not legally enforceable.

This is different to a restaurant promising that a huge meal is free if you can eat it all. That can be enforceable because the restaurant intends people to rely upon that promise in ordering the meal in the first place.

    other elements of a binding contract

    Aspects of contracts that can affect whether or not a contract is binding include capacity, mistake, illegal intent, fraud, misrepresentation, duress or no intent to create a legal contract.

     

    capacity

    Capacity is whether somebody has the legal capacity to make a contract. Only an adult can enter into a contract; that is somebody over the age of 18 years. A person under 18 years does not have legal capacity to form a binding contract.

    A person with a disability or an older person who has lost capacity through dementia or Alzheimer’s disease may not have capacity to make a contract, or may have only intermittent capacity.

     

    mistake

    A mistake in a contract can sometimes invalidate a contract. Typographical errors are generally not fatal mistakes.

    Usually, a party will be bound by the documents they signed, whether or not they’ve read or understood them. However, where a party signs a contract that they fundamentally believe to be something different to what it is, this may be a mistake sufficient to affect the binding nature of the contract. For example, if a person believes that they are purchasing a copyright work (say a painting) where in fact, what they’re signing is only a limited license to use that copyright work for a limited purpose (hanging  the painting in their office). In those circumstances, there is quite a significant difference between what the first person understands they are paying for, and what they are actually getting under the contract.

    That may give rise to a doctrine of what’s called a non est factum, which means, ‘it’s not my deed’ or ‘it’s not my contract’ or ‘I didn’t agree to this’. It is very rare to argue this type of mistake.

    There are other types of mistakes, for example, one party could be mistaken about what it is they are buying. A party might think they are buying a website with all the existing content and so on, where in fact, what they’ve done is entered into a contract to buy a domain name.

    Now, it is likely that the seller in that circumstance knows that they are only selling a domain name and they probably have a level of awareness that the purchaser is mistaken as to what they are actually getting.

    In those circumstances the purchaser may not be able to end the contract, there might not be a remedy under contract law or common law, but there may be a remedy in equity. In equity, the party who knew the other party was mistaken as to what was involved in the contract, may be required to allow the other party to revoke the contract or to have rectification of the contract.

    Rectification is amendment to the contract to make it reflect what was understood to be the terms of the contract. Occasionally, both parties to a contract have mistaken some aspect of the contract, but different aspects.

    There have been some recent cases in Queensland regarding property development, where two parties to a development contract had different understandings of different aspects of the contract and they were ventilated when it went to court. Again, it is rare to have a circumstance where there is a unilateral mistake by both parties about different issues to the contract.

    A common mistake is where both parties are mistaken about something to do with the contract. A good example is where both parties think a description of a property refers to a visual address they agree upon, only to find in a property title search that the property they thought they were transacting is the property next door.

    For online content, the contracting parties might both think that the website is built with a particular programming language, for example, HTML, when it is built on a different system or with different programming language.

    Where there is common mistake, all party’s expectations around the contract are altered because something has risen that none of them were aware of when they first went into the contract. Again, the remedy is more likely to be an equity in terms of a rescission of contract or rectification of the contract, rather than a specific ability to terminate the contract. However, if all parties are mistaken and they have a mutual agreement to end the contract, then that is not a problem at all. It is only a problem when the parties are in dispute.

     

    illegal purpose

    Another aspect that will affect the binding nature or enforceability of a contract is whether or not it’s for an illegal purpose. A contract for the purpose of committing a crime is not enforceable. There are differences in criminal law in the different states and territories of Australia.  There are also proposed changes around Australia regarding slavery laws at the moment.

    Consider modern slavery, such as people immigrating from overseas and then having their passports taken from them and essentially going into indentured labor services. An offer to find work for someone in exchange for their payment to get help in immigrating will not be enforceable if it results in indentured labor.

     

    fraud or misrepresentation

    If there is misrepresentation or fraud before the contract is made, which influences one party to enter into the contract, then the contract may be challenged. Fraud is a deliberate untruth that can be relied upon to void a contract. Misrepresentation is something less.

    Consider an IT Service Provider. They say that they will be able to provide you a secure computer system and a phone system (being very simplistic, obviously), for a set monthly fee and an installation cost. Then you find out halfway through installation that it simply will not work with your existing systems, unless additional products or services are purchased, or there is some variation to what needs to be done.

    This may be misrepresentation, particularly if you have asked the service provider to review what your requirements are and tender on that basis, then you have accepted the tender and they can’t deliver what they said they would deliver. A remedy for misrepresentation is likely to be damages.

     

    duress

    Coercive control is a form of domestic violence that is very topical at the moment, and difficult for the legal system to articulate. Duress or coercive control is putting someone in a position where they feel they have no choice but to enter into the agreement.

    In a business situation, holding up payment pending an agreement can be a form of duress if the party withholding payment knows that it will have an adverse effect on the party due to be paid, and they intend to use that as leverage for future negotiations. It is effectively holding the company that is owed money to ransom for money it is already owed.

    Although the creditor company might have remedies in terms of taking the debtor to court for recovery of payment, the time involved in recovering that payment may be sufficient to effectively put the creditor out of business without the payment due being received.

    A threat can also form duress, unless there is a term of the contract that was agreed which supports it. “If you don’t sack that person, we will terminate this contract” is a threat unless the contract includes a provision that you can require the contractor to replace people if you are not happy with them.

     

    spoken contracts, or partly spoken and partly written

    An oral contract can also be valid and enforceable. A contract can be partly written, partly verbal and partly included in an exchange of emails. [https://onyx.legal/articles/contract-dont-have-to-be-in-writing/]

    For this reason, you need to be aware of when you’re making promises to other people and when you might be creating binding contracts, whether you intended to or not. Having a formally written contract with signatures on it is proof of the contract that was agreed. The documentation is not what is required to make it binding.

    Evidence obviously becomes an issue when contracts are oral. That is when disputes end up in courts, with different people claiming perfect, and differing, recollection of what was agreed.

     

    contracts and deeds are different things

    There is a difference between deeds and contracts. Contracts need consideration, which is the doing or giving of something in exchange for understanding that the other party to the contract or the other parties to the contract have obligations that they will fulfill in exchange.

    A deed is binding without consideration, and as a result, there are specific rules around the signing of a deed before it can become binding.  

     

    remedies

    Once a contract is formed, the nature of the remedy depends upon the nature of the problem in the contract and can include a variety of remedies from voiding the contract from the beginning through to payment of damages, specific performance, damages for losses occurring within the contract and so on. These all depend on the terms of the contract agreed between the parties.

    Want more information?

    We love writing contracts. Especially contracts you understand, so that your customers understand them too. Keep it simple. Let us know what contracts you would like to put in place in your business by booking an appointment. 

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