We've included some answers below to a few of the common questions we receive about Commercial Transactions and the Law.
What is a commercial transaction?
A commercial transaction is when at least two parties come to an agreement to exchange items of value. Usually, money or some other remuneration for goods or services.
This applies to one-off transactions such as sales, as well as ongoing agreements where you might invest into (or receive an investment) into a business.
A Romalpa clause is a provision in a contract for the sale of goods on credit terms specifying that title to the goods will remain with the seller until the buyer has paid the price or met some other requirement.
A Romalpa clause is also known as ‘reservation of title clause’. When there is a contract between a buyer and a seller of goods, a Romalpa clause is a provision of that contract which allows the seller to retain the ownership of the goods, until the buyer has fulfilled their obligations, most often in the form of payment.
The addition of a Romalpa clause in a commercial transaction can be beneficial to both the seller and the buyer, as it allows delivery of goods without full payment up front for the buyer, and security for the seller as they can repossess the goods, should they need to if the buyer does not complete their end of the transaction.
The Nemo Dat Rule, like many legal terms comes from Latin, in this case; Nemo dat quod non habet, which literally translates to "no one gives what he doesn't have".
If the seller in a commercial transaction has no ownership rights to whatever they are selling - even if the buyer enters into the transaction in good faith - the title will not be passed on. It will stay with the original owner.
What are some things I need to know to stay compliant with consumer law?
In order to stay compliant with consumer law you will need to be aware of the Competition and Consumer Act 2010.
One of the primary aims of the Act is to promote a level playing field for businesses of all sizes—including small and micro businesses—through fair competition. It has specific rules regarding price fixing, misleading or deceptive behaviour and consumer guarantees.
You will need to implement strategies such as a compliance program and maintain up to date training to stay compliant and protect your business. If you have concerns about your business staying compliant with consumer law, you should talk to a specialist commercial lawyer.
What are restrictive trade practices?
As a business owner you have a responsibility and legal obligation to operate fairly and ethically in the marketplace. You must adhere to the Fair Trading laws in your State or Territory, as well as working within the confines of the The Restrictive Trade Practices Act which covers agreements affecting goods and services at a federal level.
Restrictive trade practices include:
- Exclusionary Provisions (boycotts)
- Third Line Forcing
- Resale Price Maintenance
- Anti-Competitive Contracts
- Secondary Boycotts
- Exclusive Dealings
- Mergers and Acquisitions
- Misuse of Market Power
What is a sale agreement?
You can use a Sales Agreement for both the purchasing and selling of goods or services. It’s used to specify the terms of a transaction, whereby ownership of goods, or an entitlement to services is transferred from one party to another in exchange for an agreed upon sum, or some other equivalent trade is made.
What is a purchase order?
A purchase order (PO) is a commercial document generated by the buyer (as opposed to an invoice generated by a seller) to request an order of goods or services.
Once accepted by the seller, a purchase order becomes a legally binding document. It benefits both the buyer and the seller as by protecting the seller if the buyer refuses to pay, and holds the seller to their obligation to deliver the items detailed in the purchase order at the agreed costs and within the agreed delivery timeframe.
What are import and export agreements?
Export agreements are those agreements which are created whenever two or more than two parties are involved in any business which involves export of goods or services.
An import export contract is a written document which is framed when two parties are involved in the export and the import of a good or a service.
If you can't find an answer to your query from the set of FAQs above, contact our experienced Commercial Lawyers at either our Sydney or Gold Coast offices.