2022 Update

Who is Your Customer

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People (not unsurprisingly) don’t understand how they should describe the parties who they contract with to ensure their contracts are enforceable. There are only two types of “legal persons” with whom you can enter into a contract. One are human beings e.g. you, me and the rest of the world. The other is a company. Obviously, contracts can be between a combination of people and companies. You will know you are dealing with a company because its name will end with Limited or Ltd (apart from some extremely rare exceptions). You should also invariably check the status of a company at ASIC search a register. 

Of course, you may have a contract with a Commonwealth, State or local authority or department. Since they will almost certainly prepare the contract or agreement, the department or authority will ensure they describe themselves accurately in the contract.

What follows from this is a trust cannot be a party to an agreement - only the trustee of the trust in its capacity as a trustee. Similarly, a business name cannot be a party to an agreement e.g. Bob’s Mechanical Repairs (although Bob’s Mechanical Repairs Pty Ltd can be a party).

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Does Your Will Cover Everything It Should?

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It’s always sensible to invest a little time thinking occasionally about whether your Will is going to cover everything you need in the way you want. There are a few questions that will help you know whether you’ve covered the situation.

The main objective is to ensure you feel secure you’ve got it right for you – and the people you want to take care of when you’re not around.

Here’s five questions to get you started:

• Is your Will current? Any recent changes to your family or assets?

• Can your executor carry out their role – are they competent? Can they stay impartial? Will they have time?

• Does your superannuation binding death benefit nomination need to be renewed?

• Is your Will in sync with your super?

• Do any of your beneficiaries have special needs or aren’t good with money?

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New Smoke Alarm Requirements

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From 1 January 2022, all residences offered for sale must be fitted with smoke alarms before settlement. Before listing your property for sale, you must make sure that a smoke alarm is fitted in every bedroom, hallway or part of the property connected to a bedroom, and if there is a storey with no bedrooms, the place where people are most likely to run past when running towards an exit during a fire. If you don’t do it, your buyer will be able to claim a 0.15% discount on the purchase price. It’s well worth a trip to Bunnings to pick up some smoke alarms! Or get a reputable electrician to supply an appropriate system.

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Director ID for Company Directors

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ASIC has introduced new requirements for company directors to register for a Director Identification Number through the newly-formed Australian Business Registry Services (ABRS). Current directors will have until 30 November 2022 to apply, and intending directors will have to apply before being appointed from 5 April 2022. It is extremely important that company directors apply for a Director I.D., as there are new offences in the Corporations Act that carry hefty penalties for those who fail to do so. An information page about Director ID can be found on ASIC’s website DIN Information and you can apply for a Director ID on the ABRS website here: https://www.abrs.gov.au/director-identification-number

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New Clause 6.2 - Settlement Date Extension

This new clause in contracts prepared by the Queensland Law Society in conjunction with the Real Estate Institute of Queensland allows either party in a residential property sale to extend the settlement date by written notice for up to 5 Business Days (days when banks are open for business in the location of settlement). The Queensland Law Society says this is ‘to alleviate the difficulties and potentially unfair result for a buyer who is unable to settle due to delays by financiers’, which is (at best) a mealymouthed way of saying the new clause is there to save the sale/purchase if the bank stuffs up their major job of lending money on time.

The only beneficiaries of this clause are potentially:

• Lawyers. If I get it wrong and cause a delay I should compensate you. If I don’t, you should complain to the Legal Services Commission here. If another lawyer or conveyancer causes the delay they should pay the compensation.

• Laymen who do their own conveyancing. I don’t know why the Queensland Law Society would look to protect the interests of laymen who decide to be their own lawyer.

• Banks failing to settle on time because of their chronic understaffing. Even that’s only half the story - in my experience, banks lending money fail to settle on time significantly less often than when the bank is being paid out by a seller who has a mortgage with the bank. Why would the bank hurry being repaid the loan when they stop charging interest?

I wrote to the Law Society to find out their reasoning on 18 January 2022. I’m still waiting for a response.

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