CONTRACTS E-COMMERCE AND THE PERSONAL PROPERTY SECURITY ACT

© Priority Business Lawyers Pty Ltd 2015

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PBL – DAVID PRIOR PRESENTS

Contracts, e-commerce and the PPSA

How PBL can assist you with;

• Legal and Commercial Issues

• Tips for Success

• Traps to Avoid

Tips and Traps: Contracts, e-commerce and the PPSA!

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Contracts, e-commerce and the PPSA– OVERVIEW

1. Introduction

2. What is a Contract?

3. The Past

4. The Present – Common Law and A.C.L.

5. The Present - Statutory Protection, ACL Obligations, B2C & B2B

6. Tips and Traps for terms of trade

7. Security : PPSA

8. Security : PPSA- Key terms, Procedures and Why?

9. E-commerce - General

10. E-commerce – ETA and Electronic Signatures

11. E-commerce: Checklist

12. The Future

13. Want More Information?

14. Questions

15. Disclaimer

16. Copyright

Tips and Traps: Contracts, e-commerce and the PPSA!

The transaction

toolkit for small

business!

1. INTRODUCTION

The Purpose of this presentation!

• Provide information about the terms and conditions of e-commerce and the PPSA

• Clarify the Law • Clear up some misconceptions • Crystal Ball Gaze

2. WHAT IS A CONTRACT?

A contract is an agreement between two parties intended to be legally binding.

• The six pillars of the contract;

Distinguish • Deeds from agreements • Standard form from other contracts • Terms and conditions: often standard

3. THE PAST

Contract law principles :

• Parties free to bargain without constraints • Buyer beware : caveat emptor • Common law principles – Australian common law jurisdiction

Some statutory protections:

• E.g. Sale of Goods • Trade Practices • Contract Review Act • Fair Trading legislation

4. THE PRESENT – COMMON LAW AND A.C.L.

Freedom to contract is eroded especially B2C Common law still applies but : Australian Consumer Law

• Unfair contract laws o Applies from 1 July 2010 to standard form contracts

• Contract unfair if – o Causes significant imbalance in rights and obligations and term

is not reasonably necessary to protect the legitimate interests of party advantaged by it and would cause detriment to party if applied or relied on

• Look at contract as a whole • Can excise unfair term from contract

5. THE PRESENT: STATUTORY PROTECTION, ACL OBLIGATIONS B2C & B2B

Many other statutes : • Sale of goods , Contract Review, Fair Trading , Franchising Code ,

Retail Leases legislation, etc etc

Consumer guarantees - ACL imposes obligations on suppliers of goods and services including:

Goods are • owned by the supplier • of acceptable quality • reasonably fit for their intended purpose • comply with express warranty provisions

Some ACL laws also apply to B2B :

• Misleading and deceptive conduct S18 ACL • Unconscionable conduct provisions

6. TIPS AND TRAPS FOR TERMS OF TRADE!

The KISS principle applies

• Payment arrangements : money in advance or on deposit • Strict payment periods • Interest on overdue • Retention of title (ROT) : clear rights required • Security: ROT and the PPSA • Liquidated damages for loss ( cannot be a penalty) Genuine pre-estimate • Personal guarantees required : clear and separate • Exclusion and limitations on liability : repayment or replacement term • Releases indemnities and risk • Jurisdiction applying • Confidentiality and privacy • Variations

7. SECURITY : PERSONAL PROPERTY SECURITIES ACT

What is it the PPSA? A national regime dealing with registration of security interests over personal property in Australia. Why is it important to business?

• It is national • Deals with almost all possible ways to secure interests other than real estate • Registration gives effective security like land • You can obtain priority over unsecured creditors • You can defeat claims by liquidators and administrators if properly secured eg: rot

claims, director loans etc

8. SECURITY : PERSONAL PROPERTY SECURITIES ACT – KEY TERMS, PROCEDURE AND WHY?

What are the key terms? • Security interest : interest in personal property pursuant to a transaction securing payment or an

obligation • Collateral : personal property the subject of a security interest • Attachment: security interest is enforceable against grantor • Perfection: an enforceable security interest usually by way of possession or registration • PMSI: security interest in specific property to extent that it secures all or part of price e.g. :

motor vehicle

What is the procedure required to perfect a security ? • Possession or registration • Documentation prepared executed and security interest registered • What is the difference between general security interests and PSMIs ? • All present and after acquired property v PMSI

Why do it? • Security • Priority • Certainty in most cases

9. E-COMMERCE - GENERAL

What is it? Transactions where participants conduct or transact business electronically in all formats Digital and electronic

What laws apply? • Common law • Statutes • Electronic transactions legislation (CW and States) (ETA)

10. E-COMMERCE – ETA & ELECTRONIC SIGNATURES

Electronic signatures • can take various forms e.g.

passwords , encryptions, typed name , digital signature

• purpose : to verify and authenticate a document

• not necessary in all cases but very useful for enforceability

Electronic Transactions Act (ETA) • Transactions using electronic

means are not invalid merely because those means are used

• facilitates and encourages use of e commerce

• does not mean that contract is made simply by using ETA : usual contract principles apply

11. E-COMMERCE - CHECKLIST

A checklist for a valid e-commerce contract:

display prominently on website fact that there are T n Cs ensure display of T n Cs are read BEFORE transaction completed and

product/ services delivered make sure T n Cs are simple and capable of being understood drawing users attention to important or unusual terms avoid unfair contract terms (CLA) facilitate the ease of reading of T n Cs preferably use a click wrap form so customer has to click to accept T

n Cs before proceeding with transaction identify to customers the point when the agreement is made clearly give customers a choice to reject T n Cs BEFORE proceeding provide opportunity for customers to confirm or correct order display confirmation of order or email to customer

12. THE FUTURE

• Common law • Consumer protection laws will continue to apply • PPSA will expand to include other possible security interests • Unfair contract laws for B2B will be passed probably from mid 2016

• applies to standard form small business contracts • small business contract defined : 1 party has under 20 employees

and value of contract is less than $100000 or $250000 if more than 1 year duration • similar tests for b2c unfair contract laws

Freedom to contract will continue to be eroded!

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DISCLAIMER

The content of this Power Point is a summary of information only that is being provided by Priority Business Lawyers and is not intended to be relied or acted upon by you or any person . None of the content of this Power Point constitutes legal advice whatsoever and you should consult your own legal or financial adviser if you require legal or financial advice about the subject matter of the Power Point. To the extent that it can do so by law , Priority Business Lawyers shall not be liable for any loss or damage ( including consequential, indirect or special loss ) that any person may suffer as a result of relying or acting on any of the content of this Power Point or anything that the presenter represents in any presentation associated with the Power Point.

COPYRIGHT

The content of this PowerPoint has been created by David Prior. It is protected by the copyright laws of Australia and in particular the Copyright Act 1968 (C’W). Any infringement of David’s copyright will be prosecuted. © David Prior 2015