In business, it is common practice to give some customers the ability to pay for what they buy at a later date, in other words, giving them credit. Sadly, it is also not uncommon for some customers to refuse or become unable to pay debts.
This article details how you can protect yourself when dealing with creditors and maximise your chance of recovering unpaid debts.
On 1 July 2018, new Ipso Facto provisions introduced into the Corporations Act 2001(Cth)(The Act) by the Treasury Laws Amendment (2017 Enterprise Incentives No 2) Act 2017 (Cth) commenced as part of the Federal Government’s insolvency innovation reform packages. The new provisions have altered the contractual rights of parties against insolvent counterparties by imposing a stay on the enforcement of Ipso Facto clauses, preventing the termination of a contract upon the occurrence of certain insolvency events. The new provisions apply to nearly all contracts, agreements and arrangements entered into on or after 1 July 2018. However, some contracts and contractual rights are excluded from the operation of the provisions pursuant to statutory instruments.
Given the infancy of the new regime, many companies are yet to fully grasp the changes or the implications for their businesses and what may be required to protect their commercial interests appropriately. The nature of the changes may alter the way you do business with your customers or contract with your clients, so it is important that you understand both the changes and the measures required to mitigate the potential risks to you and your business.
Continuing our commitment to advising and guiding those involved in the franchise industry, MST Lawyers has prepared articles about the introduction of unfair contract terms law for small business. This piece reports on the latest case judgment. Australian Competition and Consumer Commission (ACCC) v Servcorp Limited  FCA 1044 (Servcorp) showcases that the enforcement and compliance of these new laws is a priority for the ACCC and further develops our understanding of what the courts are classifying as unfair contract terms.
As of May 2018, there were approximately 2,598,541 registered companies in Australia. The majority of these businesses fall into the category of a small business. Accounting for 33% of GDP, small corporate entities are vital to the national economy. However, due to their small scale, it is often the case that these small entities only have one or two shareholders, which can create difficulties when conflict arises between shareholders who have an equal stake in a company.