Even the best of operators can face financial struggles and at such times a wounded business loses friends quickly.
When a business starts to look shaky, creditors will often tighten their trading terms for fear of suffering losses themselves. Assertive creditors may choose to seek liquidation of a company or bankruptcy of an individual. These options can lead to very poor outcomes. The result can be staggering liquidation costs, lost jobs for employees, lost owners’ equity, disruption for customers and losses to other creditors.
Sometimes it makes no sense for creditors to shut down a business. In these instances there are legal mechanisms available to companies and business owners to make compromises with creditors possible and, to an extent, put the fate of the company or the business owner/s in the hands of common sense.
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The way we live our lives and operate our businesses is always changing. Amongst the biggest changes is the move to electronic communication and information. Despite its potential for quick, efficient communication and the reduction in the need for paper and storage, ironically, many people find themselves surrounded by more paper than ever!
Historically, good practice has been to record agreements in some sort of tangible document, a letter, fax or a written agreement and for information to be stored in physical files. Today, emails and other electronic communications are taking the place of letters and faxes. Electronic files such as PDFs, TIFs and Word files are taking the place of hard copies, and information is being stored electronically rather than on paper.
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Misrepresentations in property transactions: keep to the facts
The difference between ‘misrepresentations’ (which may support a claim for damages) and ‘mere puffery’ (being statements no reasonable person would take seriously) isn’t always clear. Enticing a purchaser into a contract by misrepresentations was a costly mistake by the vendor in a recent case. (1)
Aldrie Holdings Ltd (through its director Ms Laboyrie) purchased a farm for $2,900,000, but failed to make proper investigations before confirming the contract. Instead Aldrie chose to rely on statements made by Mr Prout, the vendor’s agent. Mr Prout boasted that the level of pasture, milking shed and water at the property were ‘excellent’. Given Ms Laboyrie’s general business experience, the judge held that these statements were clearly puffery as a reasonable purchaser would have made further enquiries to validate those claims.
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It’s standard to test drive a vehicle before you buy it, so it‘s equally as important that you also do your homework on a property before you sign up. ‘Due diligence’ is a term that means investigating and researching everything about a matter before entering into a contract. Completing thorough due diligence is likely to lessen the chances of any nasty surprises coming to light after settlement, saving you a lot money and hassle in the long run. (3)
Take your time
If you don’t have time to investigate a property before putting in an offer, ask the agent to insert a due diligence clause into the agreement. This will give you time to ensure that the property is suitable for you in all respects, as well as giving you the ability to cancel the agreement if you discover anything untoward about the property within the due diligence period.
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You have just moved into your new home and your neighbour knocks on your door. They say that your garage is two metres into their boundary, and that they need this space to widen their driveway. Suddenly you wish you had known where your boundary was before you purchased the property.
There is a great deal of information now available which shows the boundaries on properties that were previously not apparent without a survey. With the rise of the internet, prospective purchasers are raising issues as to the location of legal boundaries that existing owners may never have known about previously.
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Computer virus scams
There can be very few of us who have not been rung with the caller saying they’ve noticed your computer has a virus. They give you directions on where to look on your computer, and then helpfully suggest that you download some software and sign up to a service that is meant to keep your computer safe.
And of course there is no virus, but you’ve lost your money and your computer may have been hacked.
To protect yourself from computer virus scams, the Ministry of Consumer Affairs has some advice:
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In recent years there has been a significant increase in online abuse particularly of vulnerable young people. A high profile example was the 2013 ‘Roast Busters’ case involving teenage boys bragging of sexual activities with girls. This article looks at what remedies are available when cyberbullying takes place.
Cyberbullying has become commonplace with dreadful consequences for the victims including depression and suicide.
In September 2015, a 24 year-old-man was arrested in Denmark after a joint investigation between New Zealand and Danish authorities. The man posted private photos of an Auckland schoolgirl on websites and subsequently hacked the computers of the girl’s family and school.
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If you are in a de facto relationship, there could be significant financial implications for you if you separate, or if your partner (or you) dies
The principal piece of legislation which deals with the division of property belonging to couples or married couples is the Property (Relationships) Act 1976 (the PRA). Substantial reforms in 2001 extended the scope of the PRA to cover de facto relationships. But what exactly constitutes a de facto relationship in the eyes of the law?
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New health and safety legislation comes into force in early April. Organisations should always be aware of their obligations and responsibilities regarding health and safety. This is even more so now as new law, the Health and Safety at Work Act 2015, comes into force on Monday, 4 April this year. A summary of the most significant changes is set out below. We follow this with some practical steps to take to give you and your organisation the best chance of complying with the new legislation.
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All too often shareholders overlook the need to properly secure the advances they make to their company, or the guarantees they grant in favour of their company, without being aware of the consequences that can result from this oversight. By registering security over the assets of their company, shareholders can effectively and efficiently secure their advances to that company and feel assured that steps have been taken to safeguard their investment.
If you’re a business owner, you should endeavour to structure your affairs in a manner that reduces risk. As part of mitigating your risk, it’s important you understand that when you advance funds to your company, or grant guarantees for the benefit of your company, you’re just as entitled as any other creditor to take security.
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