News

Good Faith, Good Business: Lessons From The Pizza Hut Litigation

The requirement to act in good faith is an important term implied by law into contracts and franchise agreements. What exactly the term requires and how far it extends has been the subject of many judicial decisions over the past two decades. The requirement that a franchisor exercises its discretions under a franchise agreement reasonably, and in good faith was given a thorough review in a recent Full Federal Court case.

The case concerned the franchisor of the Pizza Hut franchise, Yum and 190 of the 200 independent franchisees in respect of a strategy to increase market share by reducing prices and simplifying the product offering. The case illustrates the Court’s approach to determining whether the implied term has been breached, and is indicative of the expectations of those exercising a discretion under a franchise agreement.

Unfair Contract Terms: Update

MST Lawyers’ previous updates on the Unfair Contract Terms provisions in the Australian Consumer Law highlight the Australian Competition & Consumer Commission’s focus on the UCT laws.

A recent speech by Mr Rod Sims, chair of the ACCC, indicates there may be a further focus and crackdown in relation to the UCT laws. Small businesses and financial services providers will need to be increasingly vigilant in ensuring their standard form contract do not contain unfair terms.

A Reminder To Franchisors – Disclosure Document Update Season

30 Aug 2018

Franchisors, the time has come to review and update your Disclosure Document for the financial year ending 30 June 2018.

The Franchising Code of Conduct (the Code) requires franchisors to update their Disclosure Documents within four months of the end of their financial year. For most franchisors, this will mean their Disclosure Documents must be updated by 31 October 2018.

IPSO FACTO CLAUSES: WHAT YOU NEED TO KNOW

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.