Volume 40 - March 2010

This month: defamation, why spouses should read legal documents and the dangers of getting involved in your brother-in-law's get rich schemes.

Also, the opportunity to get involved in a new book on IP law to be released shortly.  

Paul Brennan

Editor

info@lawanddisorder.com.au

Brothers-in-law and the Disclosed Agent

In the real world it is not Godfathers who are the problem, it’s brothers-in-law (BIL).  When they are not trying to borrow your money, they are involving you in cockamamy business schemes. 

For instance, your BIL asks you to take orders in your area for some sort of product.  You collect money from various customers and send it to your BIL.  However, your BIL has miscalculated, been cheated or in any event has done something stupid, so the product does not arrive.

The customers are angry with you and are owed thousands of dollars.  Your BIL’s solution is to ask you for a loan.  You refuse, your wife stops talking to you and your BIL goes bust. 

With your BIL out of the picture, the customers want you to pay as they made their contract with you.  You say that you were only taking orders (a variation on the Nuremberg defence).

Are you liable?  Well, it depends whether or not you are a “Disclosed Agent”. 

Companies cannot be everywhere, so independent “Agents” are retained by “Principals” and if a customer deals with the Agent it is the same as dealing with the Principal.

The Agent who discloses to the customer that he is an Agent and acts within the authority given by the Principal has no personal liability.  Even if the customers do not know the name of the Principal, provided they know you are acting as an agent, you are not liable.  

Of course, the customers may deny knowing you are the Agent in order to get their money back, so you will need to prove it. 

The best proof is by having a contract/order form which you sign “on account of” “as agent” or “for and on behalf of”.

However, if the product is lousy and breaches regulations you can be prosecuted, Agent or not. 

The best way to avoid BILs and many of life’s other challenges is to stay single.

(c) Paul Brennan 2009 is a lawyer practising in on the Sunshne Coast, Queensland and is author of “The Law is an Ass-Make Sure it Doesn’t bite yours!”

Five Reasons for Spouses to read legal documents

Dear John

The roles in my marriage are clearly defined.  My spouse earns the money and I spend it.  However, I have fallen behind in recent years and money has accumulated to an extent that I now worry about losing our nest egg.

From time to time, my spouse asks me to sign documents for the benefit of the business.  I completely trusted my spouse when there was nothing to lose but, now wonder are there documents to avoid?

R.S.

Missouri

Dear R.S.,

I assume that your spouse is male and you are right to be concerned that the rat has either got another woman, or is going broke.

Sometimes the risk is obvious from the name of the document however some risks are less obvious. Here are five ways that your money can disappear like MAGIC:

1. Mortgagor.  If you borrow money on the security of your house when you sell it the loan must be paid off i.e. your nest egg can evaporate.  The obligation can be hidden in the document and secured later by a caveat.
2. Attorney. If you give your husband a power of attorney he steps into your shoes and can sell everything including your jewellery, as if he were you.
3. Guarantor.  No money passes hands when you sign a guarantee and it can feel deceptively easy.  But, have no doubt that banks and others will call upon the money if your spouse cannot pay e.g. he is bankrupt.
4. Indemnitor.  Giving an indemnity is like providing an insurance policy if something goes wrong.  Lawyers are forever sticking indemnities into legal contracts or at least I do. Avoid them as they are given very lightly and it is an easy way to become bankrupt if something goes wrong.
5. Company director.  Although, such a title is flattering it can give you responsibilities that you do not want.  Such as owing money to the tax office or other creditors if the company cannot pay.  If you are not involved in the business it is best to avoid this accolade.  

Can you easily avoid liability by saying that you signed the document but you did not know what you were doing?  Are you kidding?

Extract from John Fytit’s International Legal Problem Page. (c) Paul Brennan 2009. Now written on the 101 Reasons to Kill All the Lawyers Blog at http://101reasonstokillallthelawyers.com/

Defamation- what is the damage?

All coppers are bastards, or at least that is what most football crowds would have you believe.  Yet, despite it being broadcast to the nation and repeated on Match of the Day, policeman do not tend to sue for defamation.

This is more because defamatory statements are usually ignored or treated in kind rather than police officers having a sense of fun.

As an alternative to violence (or a good kicking in the back of a police van), a court action for defamation comes as a poor second.  Most people want a grovelling apology and compensation.  They usually settle for an early apology and modest or no compensation even if they have a lay down hand.  But, they can also enter into a death struggle with their intransigent defamer as they face the anxiety of a trial with their homes on the line, until they both spend some money and decide it is not worth it, or their spouses tell them to knock it off.

You can claim not only for financial loss such as loss of business, customers, employment.  But also for personal injury such as depression and your personal distress, anxiety, grief, annoyance, hurt feelings caused by the injury to your reputation which is presumed, even for financial planners. 

You do not need to prove that the defamer was being malicious but it can result in a bigger payout as well as their recklessness or indifference, lack of apology or general stupidity. 

Unless, you can prove financial or physical injury do not expect to make a killing.   Somewhere between $10k and $50k would not be unusual and over $100K is fairly exceptional.  The costs awarded against the losing side are usually a significant penalty.

The dead cannot be defamed and a defamation action dies with you.  This is a big incentive to hang around or to finish them off.

(c) Paul Brennan 2009 author of eBook and CD the 10 Greatest Legal Mistakes in Business…and how to avoid them”.   

Easy IP -

How to Use the Law to Protect your Money-Making Ideas

The book shall be released in about August 2010.   If you wish to review it for your industry, be named as a sponsor, buy advance copies to give to your clients, be involved in a launch in your state or invite Paul to speak at your event, please contact us at

info@brennanlaw.com.au or call 07 5438 8199.

Click here for other books, ebooks and CDs by Paul Brennan   

Disclaimer:

The content of the Law & Disorder eZine is to give you legal basics and in some instances included unashamedly to try and make you laugh.  In law it is sometimes difficult to work out what is serious and what is just for fun.  Therefore, if you plan to do anything legal, rely on your own lawyer’s advice or instruct me to look at the particular facts of your case.  Not only will I deny responsibility for the legal content but also for some of the jokes.

© Paul Brennan 2009.

Editor

Author of the The Law is an Ass...Make Sure it Doesn't Bite Yours!

mailto:info@lawanddisorder.com.au