COVID-19 – General Legal Advice

We understand that many of our clients are facing unprecedented challenges in light of the COVID-19 pandemic. The purpose of this email is to provide some general guidance to our clients on the key issues that they might face.

Australian Consumer Law

If you are a supplier of goods or services, you must continue to comply with your contractual and statutory obligations during this period, unless:

• you have reached an agreement with your customer; or

• you have implemented a loss and damage mitigation strategy.

The Guarantees

As a supplier of goods, you must comply with the following guarantees as set out in the Australian Consumer Law:

• Guarantee as to acceptable quality (fit for purpose, free from defects, safe, durable

• Guarantee as to fitness for any disclosed purpose etc. (fit for any disclosed purpose)

• Guarantee relating to the supply of goods by description

• Guarantee as to repairs and spare parts (there is a guarantee that the manufacturer of the goods will take reasonable action to ensure that facilities for the repair of the goods, and parts for the goods, are reasonably available for a reasonable period after the goods are supplied)

As a supplier of services, you must comply with the following guarantees as set out in the Australian Consumer Law:

• Guarantee as to due care and skill (this includes within a reasonable period of time)

• Guarantees as to fitness for a particular purpose etc (if the service is to be rendered by a particular date, for a particular purpose)

• Guarantee as to reasonable time for supply (fixed date, agreed term or reasonable time)

Steps to minimise the impact of breaching a Guarantee

Notwithstanding the above guarantees, we recommend you take the following steps:

• Communicate with your supply chain (write to suppliers, communicate with your supply chain and get commitments from them)

• Communicate with your customers (notification that there will be a delay, there are no spare parts but there are limited replacements)

• Offer refunds or replacements if you can

What do your terms and conditions say?

Although you are required to comply with the above Guarantees, often times your terms and conditions will provide limitations to the Guarantees, such as the provision of a credit, instead of a refund, or the right to extend delivery dates or vary the scope of works. Accordingly:

• Have a review of your contract terms and conditions and inspect the termination clauses, extension of time notices, dispute resolution provisions, refund provisions, credit provisions, replacement provisions, delivery provisions and see if there is a force majeure clause

• Follow the terms and conditions of your agreement

Managing Cash Flow

Below are some matters which you should consider during this period:

Financial Modelling

• Start preparing your cashflow, projections and forecasting and know if or when you need to pull the trigger and start retrenching staff, and cutting costs

• Do you need to consider raising short term funds, and if so, where are you going to find those funds and what documents do you need prepared for obtaining a loan?

• What kind of funding do you require (R & D funding, line of credit, credit card, private funding)

• Consider extending your tax due dates or enter into payment plans with the ATO

• Take advantage of the Government incentives

Collection of debts

• Undisputed debts – Statutory Demand may be appropriate, notwithstanding, the Government changes the laws regarding Statutory Demands on 22 March 2020

• Disputed debts – consider taking legal action quickly, whilst debtors have funds available

Issue invoices

• Issue all invoices

• Payment terms should be varied to around 7 to 14 days

• Take payments in advance where possible

• If you wish to use our trust account, please contact us to discuss this option

Next Steps

If you think your casual employee may be deemed a permanent employee, feel free to contact us for a free consultation on (02) 9262 5495 or (03) 8899 7870; visit our Website; Like our Facebook Page.

This article is written by Damin Murdock. This article is not legal advice and should not be relied upon as legal advice. All articles found on this website are intended to provide informative information, nevertheless, in many instances legislation and case law has been simplified and/or paraphrased. If you would like personal legal advice based on your current circumstances, you should contact MurdockCheng Legal Practice for a free consultation.