At Forum Law we know that it's vital to stay up to date with the latest legal developments that are relevant to your industry, workplace or personal circumstances. In our Forum Law News we describe some of the recent cases that may be of interest, and link to the full outlines of the cases and how their decisions affect the relevant laws, on our website.

Restraint of trade clauses have their limits, so use with care

Over time, courts have considered the enforceability of such clauses which can effectively seek to stop employees from working

Restraint clauses are often inserted into employment contracts with the intention of preventing an employee from working in competing business or taking clients or staff to a competing business or even sometimes seeking to prevent an employee from dealing with a particular client after an employment contract has been terminated.

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Exercise care in franchising too with restraint of trade clauses

The courts have recently looked at restraint of trade clauses in franchising agreements

The case of EzyDVD Pty. Ltd v Lahrs Investments Qld Pty Ltd & Ors [2009] QCA 389 involved a restraint of trade clause in a franchise agreement. Courts are generally more inclined to uphold restraints of trade in purely commercial settings or relationships than in cases involving an employment relationship but only where the clause is necessary to protect a legitimate interest of a party (in this case a franchisor) which extends beyond the life of the commercial agreement (in this case the franchise agreement).

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Be cautious when guaranteeing company debts

A warning to all directors who act as guarantors for company debts and then resign as director

The decision in Dwyer v Craft Printing Pty Ltd [2009] NSWCA 405 concerned the operation of the Fair Trading Act (NSW) in relation to a guarantee given by a company director. This case serves as a warning to all guarantors to disclose changes in the identity or legal status of companies for which guarantees are given. Directors must ensure that they properly notify creditors of all changes to protect their position once they resign.

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The court decides to allow a voluntary administration to proceed once an application to wind up a company has been filed

Deputy Commissioner of Taxation v WPS Motorsport Pty Limited [2009] FCA 476 considered the question of whether or not a company's appointment of a voluntary administrator after an application for winding up in insolvency has been made by a creditor would be sufficient to stop the winding up application from proceeding.

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Minimum bankruptcy debt raised

Note that from 11 August 2010, the minimum judgement debt allowed as grounds for a Bankruptcy Notice to be issued will be raised from $2,000 to $5,000.

Tie up your loose ends in a project

In a project that involves a string of arrangements, it is critical to conclude every one so all parties comply with their obligations

Sharjade Pty Ltd v The Commonwealth; RAAF (Landings) Ex-Servicemen Charitable Fund Pty Ltd [2009] NSWCA 373 considered a contractual dispute relating to a property development. In this case the courts have reiterated the need to ensure that all parties to a series of transactions are "on the same page" to ensure the desired outcome of a project is achieved.

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Beware of "sexually transmitted debt" between spouses

The NSW courts revisit the law relating to forged signatures on mortgages

The case of Perpetual Trustees Victoria Limited v English & Anor [2010] NSWCA32 concerned a mortgagee seeking to take possession of a security property following the default of the mortgagor, where one of the mortgagors' signatures had been forged on the mortgage documents.

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Make sure your contract spells out your intentions

Prior negotiations and discussions cannot be admitted as evidence of the parties' intentions when interpreting a mere contractual term of a lease

In Phoenix Commercial Enterprises Pty. Ltd. v City of Canada Bay Council [2010] NSWCA 64, the landlord served a Notice of Termination of the Lease. The tenant sought to resist this termination, on the grounds that it was not in breach of the Lease agreement.

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