UNCLASSIFIED

UNCLASSIFIED

Develop good business

practices and avoid

business disputes

Webinars for Law Week

2015

UNCLASSIFIED

UNCLASSIFIED

Commercial disputes are a part of doing business (unfortunately)

• 3%-5% of small businesses experience a serious commercial dispute with another business each year

UNCLASSIFIED

UNCLASSIFIED

• What can you do to prevent a dispute arising?

• If it does arise, how can you resolve it effectively?

UNCLASSIFIED

UNCLASSIFIED

Four broad areas of state government assistance for small business

Policy / Legislation

Assistance Program

design /delivery

Dispute resolution /

fair market practices

Regulatory burden

reduction

SMALL BUSINESS COMMISSIONER

UNCLASSIFIED

UNCLASSIFIED

Type of disputes?

• Any commercial agreement between businesses, or business-to-government or not-for-profits Licensing / agency agreement

Franchises

Buying a business

Leases

Supply chain

Distribution

Services

• No definition of ‘small business’

UNCLASSIFIED

UNCLASSIFIED

For example …

• The business sale contract had a ‘not compete’ clause, but the vendor is operating in breach of this

• The lease says 300 sq. metres but the shop is only 237 sq. metres

• The accountant is not fulfilling the terms of our contract

• I signed up for Search Engine Optimisation but it’s had no effect, and I’m locked into a 24 month contract

• The franchisor is not providing me with the number of business referrals promised

UNCLASSIFIED

UNCLASSIFIED

Statutory referral of some disputes

Retail Leases

Farm Debt

Owner Drivers / Forestry Contractors

75% of our

business

UNCLASSIFIED

UNCLASSIFIED

Our dispute resolution services

• Mediation $195* per party

half day session

CBD, Metro or regional locations

Scheduled within 6-8 weeks

Can occur rapidly if parties agree

• Information & Assistance No Cost

• Pre-mediation dispute resolution No Cost

* For most mediations. May change in 2015-16

UNCLASSIFIED

UNCLASSIFIED

High levels of customer satisfaction

2013-14 feedback from mediation participants

93.6% 93.5% 93.4%

60.0%

65.0%

70.0%

75.0%

80.0%

85.0%

90.0%

95.0%

100.0%

Total Applicant Respondent

UNCLASSIFIED

UNCLASSIFIED

Completed disputes 2013-14

83% mediation settlement rate

Settled prior, 26.6%

Can’t find/ No mediation/

Refusal, 26.5%

Successful mediation,

38.8%

Unsuccessful mediation,

8.1%

UNCLASSIFIED

UNCLASSIFIED

Avoid the costs of litigation

$174 $141 $224 $269

$2,130

$15,808

$1,308 $1,297 $1,119

$2,204

$9,069

$25,352

$-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

<$1k $1-2k $2-5k $5-10k $10-20k >$20k

Direct costs

Total Costs

Amount of dispute

Co

sts

in

cu

rred

per

part

y

Survey of businesses in certain business-to-business disputes at VCAT in 2012

UNCLASSIFIED

UNCLASSIFIED

... and other adverse effects of litigation

Litigation had an

adverse impact on:

ORIMA 2013 research for VSBC: certain business to business disputes at VCAT in 2012

0% 10% 20% 30% 40% 50% 60% 70%

Your health and wellbeing

Your overall level of work-related stress

The performance of yourbusiness

0-4 employees 5+ employees

UNCLASSIFIED

UNCLASSIFIED

... and other adverse effects of litigation

ORIMA 2013 research for VSBC: certain business to business disputes at VCAT in 2012

0% 10% 20% 30% 40% 50% 60% 70%

Your health and wellbeing

Your overall level of work-related stress

The performance of yourbusiness

0% 20% 40% 60% 80%

% ‘High’ impact Litigation had an

adverse impact on:

0-4 employees 5+ employees

UNCLASSIFIED

UNCLASSIFIED

Build good relationships and prevent disputes

• Put it in writing. Don’t rely on oral assurances.

• Read and understand a contract before you sign it

• Recognise mutual interests (not a win-lose arrangement)

• Communicate early and often

• Be accountable and responsible for your obligations

• Treat each interaction as the start of a long term relationship

• Interact with businesses of like-values

• Conduct yourself professionally

• Have pre-agreed, effective, quick and fair dispute resolution procedures

•

UNCLASSIFIED

UNCLASSIFIED

Top Retail Lease dispute characteristics

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

1 2 3 4 5 6 7 8 2010-11 2011-12 2012-13 2013-14

1. Payment of outstanding monies by tenant

2. Repairs and Maintenance

3. Value of expenses, outgoings, rent

4. Security Deposit

5. Premature termination of lease

6. Options and renewals

7. Make good on expiry

8. Transfer/ assignment of lease

UNCLASSIFIED

UNCLASSIFIED

‘Unfair’ contract terms in business contracts

• No statutory protections for businesses signing up to ‘standard form’ contracts

• No cooling off periods for unsolicited sales

• Watch out for: Unilateral variation clauses

Extreme indemnities

Roll-over contracts with impractical termination rights

Unequal termination provisions / payout obligations

• Good news: announced extension of consumer protections to small businesses <20 employees; and

Transaction <$100k in 1 year or <$250k in multiple years

UNCLASSIFIED

UNCLASSIFIED

May Webinars – Law Week

• Mon11th 3.15 pm Build relationships and avoid disputes

• Tue 12th 10 am Retail leases

• Wed 13th 12.15 pm Build relationships and avoid disputes

• Thu 14th 3 pm. Retail leases

• Fri 15th 3.15 pm Build relationships and avoid disputes

UNCLASSIFIED

UNCLASSIFIED

Don’t let a commercial dispute drag your business down

Contact the VSBC for

Information

Assistance

Guidance

Dispute resolution

vsbc.vic.gov.au

13 VSBC (13 8722)

enquiries@vsbc.vic.gov.au