• Boilerplate clauses are the clauses that are used in multiple contracts issued by the same business; the standard clauses. 
• These are mainly used to assist with the interpretation of the contract and to set out how the contract is to operate, its general terms and conditions.
• Boilerplate clauses are sometimes inserted into a contract as a matter of routine without too much thought but that does not necessarily make them any less binding.
• It is important to read through each clause in a contract, including the boilerplate clauses, to make sure they accurately reflect the intention of the parties. Doing so reduces the potential for disputes to arise later on. If a dispute does arise, the court may give effect to the boilerplate clauses when deciding on the outcome of the dispute.

• A memorandum of understanding, also referred to as a “MoU”, “heads of agreement”, or a “term sheet”, is usually used to record key terms the parties have negotiated in a proposed contract. Unless stated or indicated otherwise, a memorandum of understanding or heads of agreement is usually not binding on the parties. The idea is that they record what has been agreed in principle, with the complete terms to be set out in a contract to be agreed later.
• In order for a memorandum of understanding or heads of agreement to be legally binding, it must be obvious from the wording that the parties intend it to be binding. An introduction or a term in the document may state that the parties intend the document to have legal effect. The terms that are set out must be clear and certain enough to be enforceable. If this is the case, the parties will be legally bound by the memorandum of understanding or heads of agreement, even if a formal contract was not signed later on.
• If the parties have agreed on all the terms of their proposed relationship but have stated that the performance of the transaction is conditional on signing a formal contract, then there may be a binding obligation to enter into a contract.
• Where words like “non-binding”, “subject to contract”, or “subject to formal contract” are used, it is clear that the parties did not intend the memorandum of understanding or heads of agreement to be legally binding, and a contract will need to be signed.

• If you are being sued it is likely that the other party has legal representation and that it is in your best interests to engage us to represent you. There are rules and procedures that need to be followed when there is legal action. We will assist you in navigating the legal system and achieving the best outcome possible in the circumstances.

• If the contract requires you to deliver goods or services you could try and see if the other party will allow you to subcontract the delivery of goods or services by another party.
• If the contract requires you to pay a sum of money for goods or services you could ask the other party whether it will accept a reduced sum of money or to make payments in instalments.
• Depending on the terms of the contract, it may be possible to terminate the contract after giving the other party notice.
• If you are unable to go through with the contract because of an event that could not have been foreseen and that made performance of the contract impossible, the contract may come to an end due to ‘frustration’. This defence is available only in very limited situations. If you think this may apply to you make an appointment with us to obtain legal advice specific to your case. 

• If the contract requires you to deliver goods or services you could try and see if the other party will allow you to subcontract the delivery of goods or services by another party.
• If the contract requires you to pay a sum of money for goods or services you could ask the other party whether it will accept a reduced sum of money or to make payments in instalments.
• Depending on the terms of the contract, it may be possible to terminate the contract after giving the other party notice.
• If you are unable to go through with the contract because of an event that could not have been foreseen and that made performance of the contract impossible, the contract may come to an end due to ‘frustration’. This defence is available only in very limited situations. If you think this may apply to you make an appointment with us to obtain legal advice specific to your case.

• Adjusting a free online template can be a cheaper alternative to using a lawyer to draft one for you. It is a little like diagnosing your own medical condition. If you do a lot of research, know the law and are skilled at drafting legal documents, you may be fine. Alternatively, it may end very badly is something goes wrong down the track, costing you a great deal of money because the contract did not adequately protect your interests.
• An alternative is to draft the contract yourself and engage us to review it.
• A further alternative is to consult us in respect of any specific areas you are not sure about and do the rest yourself.
• If you do use a contract template found online, ensure is tailored to Australia. A common problem people find when using contract templates found online is that by not going through the contract carefully, or not understanding the significance of it, they have unwittingly agreed to have the laws of a state in the United States of America govern the contract even though both parties to the contract are based in Australia.
• It is advisable to get a lawyer involved when a written contract is warranted. 

Question

I ordered a product online from an overseas supplier, and paid the full amount, but I have not received the product and the supplier is not responding to my emails or calls. Other than having to sue the supplier for breach of contract, which I don’t think is worth the effort for the product I ordered, what can I do?

Answer

• In the event of a breach of contract in an online transaction, you have the same rights as when the transaction is offline, when dealing with businesses based in Australia.
• Suppliers that are based overseas will be subject to the laws of their home country. In addition, if there were terms and conditions covering the online transaction, these terms may have specified a non-Australian governing law as applying to the transaction.
• As you have correctly assessed, unless there is a significant sum of money that has been paid, starting legal action against an overseas supplier would be time consuming, costly, difficult, and even after all this you may not end up getting the outcome you wanted.
• If you have used your credit card or PayPal, for example, to make the payment, you could dispute the payment through the financial institution you used. Although it will take some time, depending on your specific incident, the financial institution may be able to claw back the payment you made and refund an amount to you, less any administration costs they may have. 
• If you used an online shopping site, like eBay, you could check with them about any assistance they may be able to provide you with.

Question

I don’t agree to one of the clauses in a contract but the company I am dealing with is substantially bigger than mine and they are refusing to delete the clause or even change it. It would be detrimental to my business if I don’t deal with them but I don’t think they are playing fair, what can I do?

Answer

• If a court finds that the terms of a contract are unfair, it can change or even void the contract.
• However, it is not advisable to sign contracts expecting the court to take your side if things go wrong. It may be useful to obtain the services of a lawyer who is a skilled negotiator to act on your behalf and see if they can have the clause changed, if not removed altogether on this basis.

Question

I am a small business owner, and I really don’t have the time for all the paperwork involved with having contracts for everything I do. Am I putting myself at risk by not doing this? If my contracts are not in writing does this mean I won’t be able to enforce them?

Answer

• Not all contracts have to be in writing to be enforceable, but certain contracts, such as those dealing with land, do have to be in writing.
• It is more difficult to enforce verbal or informal contracts. The terms of informal contracts may not be easily discernible. If there are forms involved, such as purchase orders and invoices, which contain their own terms, this may give rise to what is called a “battle of forms”, where each party exchanges documents with different terms. This makes it difficult to determine which terms actually form part of the contract. In this case there is a risk that you end up having to do business under terms which you did not agree to.
• While time constraints on small business owners are understandable, to reduce your exposure to risk, it is a good idea to get your terms and conditions of business drawn up in the form of a standard contract which can be used for your regular business transactions. It is important to make sure you have your high value or key transactions covered by a written contract. 

Question

I had signed two copies of a contract which I had carefully read through and handed over both copies to be signed by the other party. I was given back a copy of the contract that was signed by the other party, however I noticed that they had changed a clause in the contract without discussing it with me. I no longer want to deal with people that try and get one over me by doing something like this. Is there any way I can get out of the contract even though I have already signed it?

Answer

• Your contract may contain a clause, perhaps under the heading “Variation”, which sets out how a party to the contract can change its terms. It may state that the contract can only be changed if both parties agree to amend it, or it may allow for one party to change the contract, by giving notice to the other party in writing, for example. 
• The later situation is common where a business, such as a bank, has the same contract with a large number of customers, and they specify that they can amend their contracts with the customers by giving notice in writing. This is because it will be impractical for them to re-negotiate the contract with each customer whenever they want to make a change. 
• It comes down to how the variation clause, if any, in your contract is worded, and it would be good to get the opinion of a lawyer if it is not clear. 
• If there is no clause setting out whether the contract can be changed, the change made by them may not be valid. If they have initialled the change they made, for example, you may not be bound by the change since you have not initialled it.
• If there is a variation clause which has wording that allows one party or either party to change the contract, then this change may be valid, as long as they have complied with any other requirements, such as a requirement to give the other party notice of the change.
• If the clause states that the contract can only be amended by both parties agreeing to it, then the change they made to the contract is not valid until you agree to it, generally by initialling the change.
• If you want to get out of the contract, regardless of whether the change is valid or not, you will need to check the termination clauses in your contract, which should tell you how the contract can be terminated.

Question

I signed a contract with “Bob” who was a General Manager in a company I supplied goods to. When I chased up my invoice which was not paid, I was put through to the Accounts Payable department. They told me that “Bob” had been fired recently, that they had no knowledge of the goods I had supplied, and that the company had not given “Bob” authority to sign any contracts, so my contract was not valid. How can I resolve this and get paid?

Answer

• Generally, companies enter into contracts by having two directors, or a director and the company secretary, both sign the contract. If the company only has one director who is also the company secretary, then that director can enter into contracts on behalf of the company. 
• It may not be practical to always have directors sign all the contracts a company enters into, and for this reason, some companies allow authorised employees to sign contracts on behalf of the company. This is usually done by the company’s board of directors passing a resolution to this effect.
• An outside person dealing with the company is not expected to inquire into the inner workings of the company, and is entitled to assume that an employee in a position of authority has been allowed to sign contracts on behalf of the company, unless there are circumstances to indicate that this is not the case. 
• To start with, you can provide the company with a copy of the contract, along with any other documents, such as a Purchase Order, confirmation of delivery, and any relevant email correspondence between you and “Bob”, and request that they pay your invoice. 
• If they still refuse to pay, you can try having a lawyer assess your situation by going through your contract and other documents, and then contact the company on your behalf.

Question

I have entered into a contract with a website developer “James” to get my website up and running by a certain date. However I had not heard from him in a while so I called him up to check on the progress. He then told me that he had been too busy to get to it and will have to push back the deadline. This does not work for me as I had already sent out marketing material telling potential customers that my website goes live on this date. Due to an oversight on my part, I had not specifically stated in the contract that I need the website ready by a certain date. Is there anything I can do?

Answer

• Even if there is no clause in the contract that gives a due date for completion of the website, have you included or referred to a Statement of Work setting out when the website is to go live? If so, this would form part of the contract if it is attached or referred to and “James” would be bound to deliver the website by this date. 
• If there is no Statement of Work attached or referred to in your contract, is there a clause that states time is of the essence when performing this contract or similar wording to this effect? In this case, while “James” may not be in breach of the contract if he doesn’t have the website ready on the date you were expecting him to, he is still under an obligation not to unnecessarily delay his performance of the services.
• Could you also check your contract to see if there is a clause that states the contract forms the entire agreement, and any previous communications are not part of the contract, or words to that effect? 
• If so, then there is likely to be no breach of the contract by “James” in not delivering the website on the expected date.
• If there is no clause in your contract stating that previous communications do not form part of the contract, you may be able to assert that any other communication/s where you had requested, and “James” had agreed, that the website be up and running by a certain date forms part of the contract, which “James” has to comply with.

Question

Our company is working on a major project where we are dealing with numerous businesses that will be supplying goods and services to us. We had a standard set of contracts drawn up which we get our suppliers to sign. Suddenly we were given notice by one of our key suppliers that he was terminating his contract. We read through our contracts again and realised that our suppliers are indeed entitled to terminate their contracts by giving us thirty days notice in writing. We heard through the grapevine that this supplier was not happy with how one of our employees treated him, but we have no way of finding out what went wrong as he is refusing to provide any details, saying that he is not under any obligation to do so. This will become a huge problem for us if our other suppliers also terminate their contracts with us. Suppliers of the goods and services that we need are not readily available, so if our other suppliers go the same route we will then have to start over again by sourcing suppliers, signing contracts, and so on, significantly delaying our projected completion date. Is there alternative wording we should be putting in our termination clauses that will not allow our suppliers to terminate their contracts this way? 

Answer

• Instead of a clause that allows either party to terminate for any reason by giving notice to the other party, you could have a clause that allows a party to terminate only in certain situations, and specifically state what those situations are in the contract.
• You could also include a clause stating that in the event a party wants to terminate, they must first make a good faith attempt to resolve the dispute through a meeting with key people from each party.
• If your existing contracts allow amendments, you could change the termination provisions by the method set out in the variation clauses. Depending on the wording of the variation clause, this could be either by you providing notice of the change to the other parties, or by both parties to the contract agreeing to the change.

Question

I had been subcontracted to do some kitchen renovation work, which I had completed on time. However, when I submitted my invoice for payment, I was told that the owner of the house had not paid the main contractor, and I have to wait until they receive payment in order to get paid. This was not part of my contract, nor was it discussed. My contract states that payment is due within 30 days of submitting my invoice. I have spoken to the owner and he did confirm that he only has to pay the first instalment in three months time. I cannot wait that long and I asked if he could pay me directly for my portion of the work, but he said that he is not responsible for paying me. Is this correct as he is the one that owns the house in which I did the work? Do I now have to wait three months to get paid, even though I did not know about this when I signed the contract?

Answer

• If your contract states that you are to be paid within 30 days of submitting the invoice, then you are entitled to be paid, irrespective of when the owner is paying the main contractor.
• The owner’s contract is with the main contractor, and not you, so there is no obligation on him to pay you, even though the work was done on his house. 

Question

I hired a photographer to take photos at my wedding. I was given a contract to sign and paid the requested deposit. One month before my wedding the photographer called to say that she had another booking on the same day, which she said she had not realised before. She said that she will not be able to photograph my wedding, but will send her brother in law who had recently started his own photography business. I would rather get my deposit back and look for someone else, but the contract she had me sign makes no mention of refunds. Is there any way I can get my money back?  

Answer

• Does your contract have a clause allowing the services to be subcontracted or the contract to be assigned?
• If so, the photographer may be able to get her brother in law to do the work, as long as she meets any other requirements specified in the contract regarding assignment or subcontracting, for example it may require her to give notice in writing to you. Sometimes an assignment or subcontracting requires the other party’s consent. If this is the case, you can withhold your consent, thereby preventing the photographer from getting anyone else to do the work. Some contracts may specify that consent cannot be unreasonably withheld. You have probably hired the photographer for her artistic style and experience, therefore it is unlikely that any refusal by you to consent to another person doing the work will be considered unreasonable.
• If your contract does not refer to assignment or subcontracting, then the photographer must complete the work herself. 
• The deposit you paid, in these circumstances, is to cover the photographer for any expenses she may incur, or bookings she would have lost, in the event you cancel.
• Even though the contract does not refer to a refund, if the photographer is not able to provide the services which she received the deposit for, through no fault of yours, she must refund the deposit to you.