Business Law Report: Analysis of Business Contracts (LAW101)

This report analyzes three types of contracts that businesses commonly use: employment contracts, business loan contracts, and commercial lease contracts. It examines the key terms and clauses within each contract type, such as roles and responsibilities in employment contracts, interest rates and repayment plans in business loans, and lease terms and rent in commercial leases. The report also discusses the relevant laws governing these contracts, including the National Employment Standards and anti-discrimination laws for employment contracts, Australian Contract laws and ASIC guidelines for business loans, and the Retail Leases Act for commercial leases. Furthermore, the report identifies potential issues and areas of dispute that can arise, providing insights into how businesses can navigate these legal complexities and mitigate risks. The report also references relevant case examples to illustrate the application of these legal principles in real-world scenarios.

Running head: REPORT 0
Business Law
APRIL 11, 2020
student details

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Contents
Introduction.................................................................................................................................................2
Employment contract...................................................................................................................................2
Business loan contract.................................................................................................................................5
Commercial lease contract...........................................................................................................................6
Conclusion...................................................................................................................................................8
Bibliography................................................................................................................................................9

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Introduction
The businesses every so often enter multifaceted contracts with buyers, dealers along with
different organisations. In the requirement contract, the seller makes promise to render all the
products as well as services ordered by purchaser. There is great importance of contact to enter
into the business. These direct and guide the businessperson in relation to various aspects. The
business contracts like employment, commercial lease, and business loan create opportunity to
understand terms and conditions to start business. They are also helpful to run the business
smoothly. The contracts ensure the simplicity and flexibility to run the business. However, the
court can have trouble by these contracts for the reason that they state opportunity of exploitation
or misapplication. Sometimes the court can also face challenges because of the vagueness of
these contracts. In the following parts, employment contract, business loan contract as well as
commercial lease agreement is discussed and critically examined. This essay also discusses the
key terms or clauses contained by these three contract. These below mentioned parts also discuss
issues or areas of dispute along with laws related to employment contract, commercial lease
agreement and business loan contract.
Employment contract
There are various categories of the legal contracts, which can take place during the course of
running the business. The employment contract is one of them. The employment contract is
considered as legal agreement amidst employees and business that explains different terms along
with conditions of the employment, for example benefit along with payment. Some small
companies operate without formal, written employment contracts, but a written contact can
provide more security and certainty to employers and employees than an oral agreement. The
business that hires independent contractors can enter into the contract named as work for hire

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agreement that signify category of the work to be conducted by contractor as well as contractor
pay. Further, it is very essential to know about the key clauses along with terms of employment
contract. It is essential to include the outline of the roles along with accountabilities in the
employment contract. In addition, it should also include the primary probation duration as well
as the prohibition on different paid work at the time of doing work. Further, one can also require
involving the clauses to deal privacy, post employment restraints along with rights related to the
intellectual property. It can say that the contracts always have some set terms. However, it is
required that one should be careful about the situation that can take place on the ending of terms.
Certain would also have auto-renewal requirements. It is stated by various analysts that certain
have one-way renewal, and certain have joint renewal. On the other hand, some have no
rejuvenation. In this way, this is based on what is required by employers or employees1.
It can see that in the situation of the contract end date, it is required to trigger the cautious review
of how this reintroduces. In opposition, in case of evergreen contract, meaning that it inevitably
reintroduces, just be careful about when one wishes to re-negotiate anything, it is required to do
discussion properly prior to the expiry of term. In addition, all the Australian employees would
have the common law contract related to employment (unwritten contract or written) which
specifies terms and conditions with their employer2. However, it should not render conditions
along with terms of employment, which are poorer to the National Employment Standards and
other implemented industrial methods. It is found that it is possible that it can be based on a
workplace agreement between an employer and worker’s group or awards related to industry. It
can see that there are certain terms that should not be involved in the employment contract. In
different terms, it is advisable to not to include things that are contrary to legislation or the
1 Stella Vettori, The employment contract and the changed world of work. (CRC Press, 2016).
2 The Australian common law

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appropriate instruments, discriminatory, vague, imprecise, inconsistent or unclear. National
Employment Standards3 render for some minimum privileges that are applicable to the
employees, irrespective of the fact that whether they have made sign on the contract, are refugee
employees or subordinates or casual employees. It involves maximum ordinary working hours,
request about supple works, minimum leaves entitlement covering per annum leave, carer leave,
private leave, empathetic leave, long-services leave, public holiday, minimum termination’s
notice and joblessness payment. Additionally, there are various strong anti-discrimination laws
in Australia. These laws cover wider range of individual features like disabilities, oldness and
sexual category. Further, the general protection provisions as per the FW Act restrict negative
actions based on involvement in the functions of trade union, a provisional non-appearance from
functions because of injuries, workplace’s rights and sickness4.
It is surprising to know that there are no obligations at law to contain written employment
contract in Australia. The written contract of employment is primarily framed for the security of
employer. In absence of the written employment contract, dispute regarding terms along with
conditions of employment is probable to take place. In the case of Crawford v Steadmark Pty
Ltd5, it was held by the court that oral evidence was clearly the effort to reconstructing the
reasoning procedure with the benefits of retrospection because of the inspection made related to
the company. The employers face issues or challenges in dealing with the employees while there
is no any employment contract for directing the employment relation. After the selection of the
employment contract’s type, it is required to take decision about the clauses to be involved and
to be excluded6. In a way, it creates the issues for employer. Therefore, certain problems take
3 National Employment Standards
4 The FW Act
5 (No.2) [2015] FCCA 2697
6 The Employment law

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place that make the contract void as well as null. The formal agreement that is unlawful and
unenforceable from starting may create the contract void.
Business loan contract
In business loan or business contract, all the situations are exclusive. There is everything
negotiable in business contract. The business loan contract mentions offer, acceptance of offer
along with consideration. It may include the legal situation related to business. the same facts
have been mentioned in the famous case of Yerkey v Jones7In addition, they are documented by
the commitment letter and agreement that reflects understanding reached among included
contracting persons, the promissory note along with collateral agreement (like personal
guarantees or mortgage). Additionally, this contract is divided into various sections. The
significant parts for smaller business owners include positive conventions, reporting requirement
along with negative conventions. These significant sections provide overview of things can do or
cannot do. It renders the structure for yearly or three-monthly reporting habit.
Furthermore, the terms as well as conditions of business loan contract include standard fared,
borrowing amount, rate of interest, re-payment plan, security, late fee, as well as penalty in
relation to defaults. However, there are various reasons for that business loan agreement has
important place to enter into the contract. It can see that the business loan agreement is an
evidence to confirm that money included was loan rather than gift. It can also see that there are
various key clauses in the business loan contract. The main clauses of the agreement are interest
and default interest clause, repayment clause, commitment clause, security clause, pre-payment
clause as well as syndication clause. In this way, these six clause are helpful to take decision
whether it is beneficial or in best interest to enter into business.
7 [1939] HCA 3 (06 March 1939) - 63 CLR 649

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In addition, it is essential to follow the fundamental principles of the Australian Contract laws at
the time of making business loan contract8. The Australian Securities and Investments
Commission issues guidelines related to new securities for small business in against of the terms
related to unfair lending contract. The Treasury Legislation Amendment (Small Businesses along
with Prejudicial Contractual Term) Act 2015 extends securities confined in the Australian
Consumer Law against imbalanced contract terms of small businesses9. These new amendments
would encompass the range of the Australian Consumer Law for considering small businesses
lending, wherever loan is made pursuant to a “standard form contract.” The modifications are
already made to the Australian Securities and Investments Commission Act 2001 (Cth)10 for
clarifying the conditions of business loan contract. Moreover, the Lending and Secured Finance
Laws and Regulations states various common issues and areas of dispute. The dispute can take
place between the parties of contract due to the unclear general loan conditions, conditions
related to overdraft, undefined term loan conditions, and uncertain commercial rate loans. As per
this, the court can declared the business loan contract void because of the practice of unfair
contract terms.
Commercial lease contract
The commercial lease is considered as binding contract that gives permission to the tenant to use
right to utilise the properties of property owner for the commercial activities or business related
activities in the exchange of rent11. Additionally, the commercial lease contract mentions the
overview of the rights and accountabilities of the property owner along with tenants at the time
of lease term. Additionally, It is significant to consider that what key clauses and terms should
8 The Australian contract law
9 The Treasury Legislation Amendment (Small Businesses along with Prejudicial Contractual Term) Act 2015
10 The Australian Securities and Investments Commission Act 2001 (Cth)
11 Lynden Griggs, Commercial and Economic Law in Australia. (Kluwer Law International BV, 2018)

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be included in commercial lease contract. The terms of the commercial lease may vary
depending on a duration of the tenancy. In addition, it can also be differ in relation to the type of
commercial properties, as well as aim to give the space on rent. The commercial loan contract
should include the lease terms, security deposit, rent, utilities, as well as outgoings, building
maintenance, signing incentives, refurbishment, and insurance. In this way, it is clear that the
tenant should review the lease contract by considering the clauses of lease contract, like
insurance, duration, or extension of lease, rent and related outgoings, head of agreement and
inspection to review agreement12.
Further, it can see that the commercial lease contract should be designed as per the governing
legislations in the states and territories of Australia. One should consider certain related laws at
the time of making commercial loan contract. These laws include the Retail Leases Act
1994 (NSW)13. The case of Darzi Group Pty Ltd v Nolde Pty Ltd14 is great example. A latest
Supreme Court judgement in Darzi Group Pty Ltd v Nolde Pty Ltd15 states the risk of renter
moving into control of premises before the execution of formal lease. In this case, it was held by
the court that both the contracting persons had no intention to be bound by a lease until
performance and discussion had occurred, for the reason that property owner stated conduct that
was not consistent with the agreed conditions of the lease. In this way, the decision states
influence that the conducts of contracting persons to the commercial lease contract may have
while deciding whether contract is effective from date of agreement or date of execution.
Furthermore, it is also possible that different issues or challenges can take place at the time of
formation of commercial lease contract. It can see that there can be disagreement between tenant
12 William Duncan and Christensen Sharon, Commercial leases in Australia. (Thosmson Reuter, 2017).
13 The Retail Leases Act 1994 (NSW)
14 [2019] NSWSC 335 at [108]
15 [2019] NSWSC 335 at [108]

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and property owner regarding the insurance term, rate of rent, use of premises, investigation
process as well as duration of lease. The court can declared the contract void on the occurrence
of conflict because of these unclear and unethical terms16.
Conclusion
As per the above analysis, it can be concluded that the owners of small business generally put
focus on the core business concepts and rendering values to the customers. However, the
operations of business often involve legal footraces, which can lie outside of the expertise area of
owners. In conclusion, the contracts are considered as agreements between 2 or more than 2
contracting persons that are enforceable by legislature. In this relation, the commercial leases,
business loan along with employment contracts have important role in the world of business.
Henceforth, it is essential to consider key clauses, terms along with conditions, and applicable
laws to take decision in relation to business. Therefore, it is also required to consider related
challenges of these above discussed contract.
16 Darren Catton, Should retail lease legislation in Australia be simplified?. (Queensland University of Technology,
2017)

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Bibliography
A. Articles/Books/Journals
Catton, Darren, Should retail lease legislation in Australia be simplified?. (Queensland
University of Technology, 2017)
Duncan, William, and Sharon, Christensen, Commercial leases in Australia. (Thosmson
Reuter, 2017).
Griggs, Lynden, Commercial and Economic Law in Australia. (Kluwer Law International
BV, 2018)
Vettori, Stella, The employment contract and the changed world of work. (CRC Press, 2016).
B. Cases
Crawford v Steadmark Pty Ltd (No.2) [2015] FCCA 2697
Darzi Group Pty Ltd v Nolde Pty Ltd [2019] NSWSC 335 at [108]
Yerkey V Jones [1939] HCA 3 (06 March 1939) - 63 CLR 649
C. Legislations
National Employment Standards
The Australian common law
The Australian contract law
The employment law
The FW Act

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The Treasury Legislation Amendment (Small Businesses and Prejudicial Contractual Term)
Act 2015
The Australian Securities and Investments Commission Act 2001 (Cth)
The Retail Leases Act 1994 (NSW)