Fighting Business Disputes
June 2000
There are legal risks in relation to most business relationships. These can be minimised with suitable documents when the venture commences.
If documentation is inadequate, the disputants may be forced to rely on different interpretations of the facts to constitute the best case in a claim for breach of contract or breach of fiduciary duty or breach of trust. A dispute might not be resolved quickly if the competing monetary claims are too far apart and cannot be compromised, or if intervening events (such as insolvency of one party or involvement by a third party) has complicated the action for a suitable remedy.
Legal documents can define the rights and obligations of the parties, such as:
- ownership rights and contract period
- duties to be performed
- capital to be injected
- financing liabilities to be defined
- specifying consents and permits to be obtained
- management responsibilities and remuneration
- business risks management and insurances
- events of default and termination
- warranties and covenants, indemnities and releases
- profit and loss splits and dividend policies
- procedures for key decisions e.g. selling or mortgaging
- budgeting and cashflow management procedures
- buyouts and dissolutions and manner of buyout
- restrictive covenants
- environmental and health risks management
- non-arms length transactions and payments
- GST and other tax issues
- guarantees and indemnities
- governing law
For further information, contact Sam Recht at BALDWINS, Australian Lawyers & Consultants.
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