Basics of Business Agreements

COVID-19 has been undeniably challenging for businesses across the country, with reduced revenues hurting both employers and employees. Yet, many new businesses have unexpectedly emerged, and the vast majority of Australian small businesses that survived the pandemic expect to see full financial recovery by mid-2021. Small and medium – sized businesses are the cornerstone of the Australian economy, and many have demonstrated their impressive resilience and flexibility this past year.

Across Australia, businesses are being sold or deregistered, accessing new debt restructuring and simplified insolvency schemes, or engaging in succession. There are also new businesses being established or purchased. One shared experience across all stages of the business life cycle is the importance of business agreements. Due to the increased activity in this space, this article outlines important considerations for every business.

Closing or Selling a Business

When you are in the stages of concluding your business, you will refer to existing contracts and create new contracts. There will likely be particular reliance upon your partnership agreement or your business succession agreement, and requisite steps will be undertaken. Otherwise, you may need to take steps to deregister or sell your business. The particular steps you take will depend on the provisions of any existing agreements or sale of business contracts, as well as whether you are voluntarily deregistering your company, winding up a solvent company, or have entered external administration due to insolvency.

Establishing or Purchasing a Business

When establishing or purchasing a business, there are a number of important business agreements to draft and negotiate. These will have to follow a particular form. If you are not purchasing your business, will also need to take steps to register your business. You will likely enter into a majority of the following:

Best practice in the business establishment process is to obtain advice to limit your liability, and to ensure your compliance with legal obligations, such as your obligations under the Privacy Act, the Spam Act, and the Australian Consumer Law. If you are starting a limited liability company, you will also require an operating agreement. If you are hoping to operate as a franchisee, you will need a franchise agreement.

Considerations for Business Agreements

While must-have contracts are a necessity upon business establishment, this is only a starting point to properly establishing and protecting your business. Developing agreements at any stage of a business can be complicated and require detailed attention to your unique circumstances, including your business structure, how long you see yourself running the business, and what you hope to happen when it is time to move on from the business.

If you require contract drafting and review, or have any questions regarding business agreements and how they pertain to your business, speak with one of our experienced business lawyers by calling us at (02) 4929 7002, emailing us or completing an enquiry form.