If you want to operate a business in Australia, you must be aware of the three major risks associated with business operations. The three main risks of operating a business in Australia are:
- Debt risk.
- Disputes with consumers, suppliers, partners, and even the government.
- Disputes arising from reliance on verbal commitments.
To effectively mitigate these risks and protect your business, you should consider hiring a lawyer to implement the following legal strategies:
- Before engaging in business transactions with others, you should first understand their background information. One method is to conduct an Australian Business Number (ABN) search. Additionally, you need to verify the existence of the other party’s company and their authority to represent the company. Do not easily trust others based solely on a business card.
- For all verbal commitments, you should have a lawyer document them in contracts to ensure their legal enforceability. Over-reliance on verbal commitments increases the risk of disputes, which may ultimately result in expensive legal proceedings.
- When drafting contracts, it is essential to clearly specify key details, including delivery times, payment dates, and the consequences of breach by either party.
- If the transaction involves a significant amount of money, it is preferable that the directors of the other company are willing to provide personal guarantees for the company’s debts. This way, even if the company goes bankrupt, the directors are still liable for the debt. Additionally, you should ensure that these directors have personal assets available for debt repayment.
*Disclaimer: The above content is intended to provide general legal knowledge and should not be considered specific advice for your individual situation. The law is complex, and we strongly recommend seeking professional legal advice. Canaan Lawyers is not responsible for any loss or damage incurred by anyone as a result of information included or omitted in the above content.