Volume 31 - JUNE 2009

This month we:

• investigate murder as an alternative to mediation.

• look at how legal mistakes change in a downturn.
• Tell you the truth about copyright.
• Offer legal advice on a budget.

Paul Brennan

Editor

paul.brennan@brennanlaw.com.au

Extreme Alternative Dispute Resolution (“EADR”)

For those of you who do not have the money, temperament or time for litigation and have no wish to engage in “limp wristed” mediation then another possibility is to “bump off” your enemy.

I do not include husbands and wives as the trouble with murdering your spouse is that you are usually the prime suspect for understandable reasons.

In my view, murder of your enemy is strictly a DIY activity.  Unless you are well in with organized crime then it is best not to hire a hit man.   They just do not seem to take the same care these days and so often turn out to be police agent provocateurs.

Unless, you are a particularly creative person, do not expect to commit the perfect undetected crime, first time.  Although, this does happen in crime dramas with so many others tuning in, the modus operandi of TV programs can be a little oversubscribed.

Do not broadcast your hatred and you will have surprise on your side having spent your life staying within the law without any criminal convictions, except the occasional bit of shoplifting.  Your participation in a murder could leave the police baffled with no motive.  Even telling your spouse about your hatred can be risky as now they are entitled to give evidence against you and they do.  Frankly, if I can be sexist about this for a moment……. especially the wives.

In my view, the best homicidal method is not stabbing, poisoning or strangling (however satisfying those methods may seem).  It is running your adversary down in a stolen motor vehicle such as a four wheel drive.  The big advantage of a four wheel drive is that owners often leave them open with the keys in the ignition in a sub conscious bid to get rid of them.

But for those of you who are not ready for murder on ethical grounds.  One of the great benefits of age is to watch your enemies die before you do.   Life prolonging, entertaining and entirely legal.

(c)Paul Brennan 2009.. 

Click here if you need to speak to a lawyer

The 7 Greatest Legal Mistakes that Small Businesses make in a Recession….and how to avoid them

In a recession businesses lose interest in solving the usual legal issues and put their time and money into more immediate issues such as “keeping the wolf from the door”.

However, downturns bring their own serious legal issues.  Here are the seven greatest:

Mistake 1.  You don’t get paid.

There are 4 Rules to getting paid:

Rule 1. If you are not being paid stop providing the service.  Many businesses work on, in the hope that the debtor will do the right thing.

Rule 2.  Collect aggressively yourself before handing it over to your lawyer but you cannot get blood out of a stone.

Rule 3. Get proof of acceptance of the deal e.g. a cheque.

Rule 4. Know who you are dealing with and get security e.g. a personal guarantee.

Mistake 2. You try to dig yourself out of your problems with a law suit

When your business is shaky, sometimes it is possible to find someone else to blame other than your spouse such as your accountant.

Clients ask if they have a winner and the usual answer is “yes”.  In the good times, the issue is how much the claim is worth i.e. what “damages” (money) they will receive if/when they win.  In the bad times, they simply cannot afford it in terms of time and money.  So except in exceptional cases,   forget it.  If, you cannot let go then your lawyer will be happy to fight it to your last penny.

Mistake 3. Someone dies and you are not included in the will

In the good times, business owners die without wills and leave a mess.  In bad times, your death can be a bit of a relief and you are long gone before your will or lack of it, may become an issue.  However, you should try to be named as a beneficiary in wills made by others.

Even despised ‘ne’er do well’ relatives can leave substantial sums to you providing that you are willing to put yourself out a bit and of course put aside the bitterness of the years.

A proven method of improving cash flow is to ensure that your relatives, neighbours and friends make wills.  So get on with it.

Mistake 4. You don’t manage the end game to a contract properly.

Courts expect you to honour your part of the bargain however lousy the deal that you have made, unfair I know.

In a downturn, for every business owner insisting on a contract being performed there is a business owner trying to get out of one.

It is important not to pick up your ball and go home too early even where it is obvious  that the other person is messing around.  As you could be blamed for wrecking the contract, allowing your opponent to either get off “scot free” or worse, claim their loss against you. 

It is very easy to get sued or let your opponent escape if you spit the dummy.  So don’t.

Mistake 5. Your business partner turns from best friend to worst enemy

Your business is in bad shape and secondly, it is all your partner’s fault.  You knew it and so did your spouse. 

You are fully liable for every wrong move he (or possibly “she”) makes on behalf of the partnership.  If you get sued a creditor can claim all the money from your assets and then it is up to you to get the money out of your partner.  Not an easy task.

If your partner goes bust three things may happen:

1. You will pay all the debts of the business not just half.
2. His trustee in bankruptcy may recall any loans that he had made to finance the partnership.  You will need to come up with the cash to replace his share.
3. If you took out a joint bank loan to finance the business the bank could recall its loan as your partner’s bankruptcy is probably a breach of the loan agreement. 

So have a partnership agreement, take out separate loans and document loans from your family.

Getting rid of a useless, underperforming partner is one positive, feel good thing that you can do in a down turn as to keep them on, can be a liability.

Mistake no. 6. You do not have terms and conditions.

Writing your own terms and conditions (Ts and Cs) and putting them on the back of your order form enables you to snooker an enemy long before you even meet.  Who would not want to set the rules of the game?  Well, many small business owners don’t seem to bother. 

Here are 5 terms that are particularly good in a recession:

• If the customer goes broke the deal is off.
• Only varied in writing. 
• The customer relies on his inspection and not on any representations made by your company especially any of your salespeople.
• Your customer does not own the goods until you are paid even if they have been delivered.  Will a condition like this work, in practice?  Who knows? But it is worth a try.
• You have a right to charge all their real estate and take their kids hostage until they pay up.  That’s right they are your Ts and Cs, be imaginative.

Are they petty and nasty?  Well yes, but your good customers will not read them and they may avoid you being sued or at least give you the edge in any threatened court action. 

Mistake no. 7. You go broke and lose everything

Creditors are generally very gullible people who will swallow hard luck stories and promises to pay as well as accepting minimal payments. Often, it is only when you stop communicating or tell them to get lost that they “spit the dummy”.  Even a small creditor can pull your empire down.

When your back is up against the wall here are five things to remember:

• Don’t panic and use your credit cards to pay your existing debts, you may need that credit for essential items as the situation gets worse.
• A threat to be sued is not the same as being sued and sometimes suing or being sued can be a slow process.
• A court judgment against you is not the end.
• Be nice to your spouse or they may use this opportunity to clear out the bank accounts and do a runner.
• As a last resort, rather than putting your head in the sand make a list of all your debts and send it to each of your creditors.  Treat them all equally and offer a small sum per week.  If the alternative is not to get paid at all, many creditors will accept this offer.  This “Open Kimono” approach works.

In a downturn, many small business owners cannot afford legal advice and use gut feeling i.e. the lunatics take over the asylum.  So beware.

© Paul Brennan 2009.  Click here to read his article on

Copyright the truth

Intellectual Property (“IP”) Rights (“IPR”) such as copyright are in fact a bundle of rights which is legalese for " often up in the air" with many exceptions.  So why do so many people talk about IP in a way that sounds like they know what they are talking about?  Beats me, but we just can’t help it.

 © Paul Brennan, post graduate in copyright law.

Click here for articles on copyright and other legal subjects

Law on a budget

If you want to get some idea of what the law is without the expense and irritation of speaking to a lawyer then try Paul Brennan's eBooks and other publications which cover litigation in bad times, the 10 greatest business mistakes, a legal guide to dying and more. 

Some frequent questions:

Q.  Could I sack my own lawyer and rely on the helpful advice and cartoons in these eBooks? 

A.  Yes, if you are a slightly crazed individual who enjoys risk and excitement.

Q.  What if my own lawyer's advice differs from the eBook?

A.  This is extremely unlikely but there can be differences depending on the facts and local law.

Click here for legal eBooks and other publications

(c) Paul Brennan 2009.