Here are 10 legal tips for Start-Ups in Australia, presented by Pivot Business Lawyers. www.pivotlegal.com.au

1. Solid Starts & Finishing Well
Legal Tips for Start-Ups &
Entrepreneurs

2. Legal Tips
1. Decide on your set-up
2. Plan your exit strategy
3. Document all agreements in writing
4. Spell out your terms and conditions
5. Ensure you meet all licensing & regulatory
requirements
6. Protect your intellectual property
7. Ensure you are aware of consumer rights
8. Don’t run foul of competition issues
9. Keep proper records
10.Get appropriate advice early

3. 1. What’s the set-up?
 Consider how you wish to structure your business.
This is your foundation. Common structures and
their features include:
 Company: Separate legal entity, limited
liability, tax effects, filing requirements? Who
are the shareholders – can they transfer
shares? Who are the directors? Director’s
guarantee? Reduced Control?
 Partnership: Joint and several liability.
Inexpensive. Who does what? Taxed in your
hands. Risk to property in your name?
Changes of ownership? Reduced Control?
 Sole-proprietorship: Personal liability.
Inexpensive. Difficult to raise capital? Taxed in
your hands. Risk to property in your name?
Control.
 Trust: Can limit liability depending on trustee.
Expensive. Control? Difficult to exit? Cannot
distribute losses only profits.

4. 1. What’s the set-up?
 What’s your business name?
 Check if it has been registered
 Is it misleading or deceptive? Passing off?
 Doesn’t automatically give you a trademark
 Doesn’t stop someone else from registering a
similar name.
 Doesn’t give you the exclusive right to use the
name or a part of it
 Doesn’t stop someone who has registered it as
a trademark from using the name.
 Doesn’t give you the exclusive right to a domain
name.
 Not necessarily the same as a trading name
 Domain names, purchased SEO terms can be
misleading or deceptive as well.

5. 2. What’s the exit strategy?
 Consider what happens if you need to exit for a
variety of reasons:
 Selling out
 Reputational reasons
 Change in direction
 Irreconcilable differences
 Changed character of partnership /
shareholding
 How do you resolve disputes?
 Are you happy to work with a successor / family of
a shareholder?
 Documenting the shareholder/partnership
agreement in painful detail in the beginning saves
trauma at the end

6. 3. Put everything in writing
 Always agree in writing. “Everything” means
everything. Trust is overrated. Faith and belief are
for Sundays. Did you agree to the same thing as
your partners / investors / suppliers / customers?
 Don’t get a Toy Yoda when you expect a Toyota.

7. 3. Put everything in writing
 Read the fine print. That’s usually where the
important clauses are – and it could cost you.
 Consider Gamestation UK’s somewhat onerous
terms:

8. 3. Put everything in writing
 Get your documents right. This assists in
scalability, accuracy, operational efficiency, billing
and receiving payment, and is more professional.

9. 3. Put everything in writing
 Know your contractual rights and obligations. If
you don’t know, seek advice.
 Are there conditions precedent?
 Are there representations and warranties?
 Is there express or implied reliance on the acts
of a third party to the contract?
 What’s the difference (if any) between “best
endeavours”, “best commercial endeavours”
and “all reasonable endeavours”? What about
“take all steps” and “take all reasonable steps”?
 What are the service levels and standard of
performance?
 Is there a limit to liability?
 Are there liquidated damages? Is it enforceable
or a penalty?
 What happens on termination?

10. 4. Spell out your terms and conditions
 Define your terms of supply:
 Are your payment terms pre-payment /
immediate / 30 days / 60 days or a
combination?
 What’s included in the supply?
 How will you supply?
 When is supply complete?
 Deal at arm’s length.
 Avoid personal guarantees where possible
 Avoid warranties and representations where
possible
 Ensure you have the right non-disclosure
agreements in place
 Non-compete clauses
 Confidentiality clauses
 Who gets paid, when and how?

11. 5. Play by the rules – licensing & regulations
 Ensure you can sell what you’re selling.
 Do you have the appropriate qualifications and
licenses?
 Ensure you are selling correctly.
 Are you dealing in personal data? (Privacy)
 Are you creating software based on a non-
commercial licence? (Licensing)
 Are you working in a highly regulated area like
credit, broking, financing, telecommunications,
debt collection? (Regulatory issues)
 Are you a franchisee or a franchisor?
(Licensing, Contractual issues)
 Are you selling a consumer product?
(Consumer issues, safety issues)
 Consider: Uber.

12. 6. Protect your Intellectual Property
 There are four main types of intellectual property
rights of relevance to small & medium enterprises:
 Copyright (Works including text, maps,
databases, arrangements)
 Trademarks (Images, sounds, smells)
 Patents (Inventions)
 Registered Designs (Designs that have a
commercial or industrial application)
 Generally, IP rights do not protect the idea. They
protect the expression of the idea.
 Copyright is automatic, but the other IP rights
should be registered to ensure exclusivity.
 Breach of IP rights can be expensive.
 The same acts that breach IP rights may also be
the subject of a claim for misleading or deceptive
conduct under the Australian Consumer Law.

13. 6. Protect your Intellectual Property
 Protect your IP (it forms part of your business’s
assets, and may be the main asset) via:
 Registering / asserting your rights
 Ensuring contracts preserve your IP rights
 Non-disclosure / confidentiality agreements
 Ensuring partnership / shareholder / employee
contracts clearly state IP ownership: who owns
what is brought into the business, and what is
created within the business?
 Use other people’s IP properly:
 What licence do you have? What is “non-
commercial use”? Do you want to have to
credit ‘hothacka75’ for the use of code?
 Shareware / Freeware / API standards?
 Sharing on social media – e.g. Facebook auto-
display of images in links
 Hyperlinking vs Deep-Linking

14. 7. Be aware of Consumer Rights
 The Competition and Consumer Act 2010 grants
the main consumer protections in Australia.
 Be aware of what constitutes:
 Misleading or deceptive conduct
 Unconscionable conduct
 Unfair contract terms
 Unfair sales techniques
 Consumers in Australia have the benefit of:
 Consumer guarantees
 Safety standards
 Public enforcement and private remedies
 Lawyers love claims for “misleading or deceptive
conduct” – very broad, covers any commercial
enterprise and activity. Consider effects of
purchasing SEO terms such as the “best broker in
Melbourne”, “best free app” or a competitor’s
name.

15. 8. Avoid Anti-competitive behaviour
 The Competition and Consumer Act 2010 prohibits
certain types of anti-competitive behaviour
including:
 Anti-competitive agreements
 Exclusive dealing & Third Line Forcing
 Misuse of Market Power
 Predatory pricing
 Price signalling
 Unconscionable conduct.
 Consider the following scenarios:
 Business A will only provide the consumer with
widgets if the consumer also purchases doo-
hickeys from Business B.
 Business A will only provide a discount if the
consumer spends $X with Business B.
 Businesses A and B control the market and
agree to only provide widgets at a price of $X.

16. 9. Keep accurate records
 No one enjoys paperwork – but get used to it.
 Keep accurate and complete records for legal,
tax and administrative reasons.
 Minimum document retention periods may
apply, especially if you are running a company.
 Ensure your records are accessible.

17. 10. Get appropriate advice – early.
 Don’t neglect to speak to your accountant, lawyer
and insurer.
 Choose your advisors well – do they understand
your business, your operating environment and
your plans?
 Choosing an advisor is like choosing a partner –
take the time to determine if you can work well with
them.
 Listen to, and consider their advice. You are
paying them for their professional opinion. This
doesn’t mean always doing what they recommend,
as you are in charge of risk-taking, but keep an
open mind and consider the options carefully.

18. Contact Details
Jared Pereira
Principal Solicitor
Pivot Business Lawyers
j.pereira@pivotlegal.com.au
www.pivotlegal.com.au
0435 177 345
Copyright 2015 Pivot Business Lawyers ABN 58 611 276 813. This presentation has been provided for general
information only, and should not be relied on as legal advice. You should seek independent legal advice in respect
of your personal circumstances