William Chau

“What I wasn’t taught in Law School”

Introduction

• Broad generalisations on my experience in practice

• Your results may vary

• General overview only

• Not a substitute for qualified legal advice

Possession

“Possession is 9/10ths of the law”

- Unknown (likely Roman origin)

Possession

• What it means: Don’t hand over valuable property for a contingency, expectancy or to someone you don’t know.

• Examples:

– Equity in a startup

– Vendor Finance

– Business Purchase where operator forms part of goodwill (e.g. accounting)

Possession

• Why not:• Tom and Jerry form a business together with

good intentions.• Later, Jerry decides that he would like to go on

extended leave to Hawaii. He refuses to sign over his shares to Tom.

• Tom might be able to bring legal action against Jerry for the shares

• So what it will cost Tom at least $20,000 to do so – crippling his startup.

Reading ≠ Lawyer

“I can read real good”

- Unknown

Reading ≠ Lawyer

• Just because you can read does not make you a lawyer.

• English is merely the tapestry through which legal concepts are expressed.

• Even worse is the person who doesn’t read a document

• Even reading and understanding is not enough – most of the job of a lawyer is to spot what is missing

Reading ≠ Lawyer

• Examples:– “The driver shall not proceed beyond the road

marking applicable in relation to the light in the direction that makes with the direction directly ahead an angle that has approximately the same number of degrees as has the smaller of the angles that the direction in which the arrow is pointing makes with the vertical”Motor Traffic Ordinance 1936, s.112B(1) (on approaching a traffic light with a red arrow pointing at an angle between the vertical and horizontal)

– “The tenant must seek the landlord’s approval before altering the premises”

Alarm Bells

“Fools and obstinate men make lawyers rich ”

- Unknown (Spanish)

Alarm Bells

“Fools and obstinate men make lawyers rich ”

- Unknown (Spanish)

Alarm Bells

• Guarantee

– Guarantees originated during medieval times

– Guarantor was a prisoner of the beneficiary unless/ until the guarantee was satisfied

– Subsequently evolved so that the guarantor was not required to be a prisoner but had to present themselves on demand to the beneficiary

– In modern times, guarantor stands in the shoes of the guaranteed

Alarm Bells

• Indemnity

– Notice how insurance is called “indemnity insurance”

– Ever wondered why?

– An indemnity shifts the risk from the indemnified to the indemnifier

– E.g. From the driver to his insurance company or from the Seller to the Buyer

Alarm Bells

• Restraint/ Non-Compete

– AKA Corporate Handcuffs

– Effectively try to minimise the flexibility

– Sometimes unavoidable

– Critically consider, why is it necessary? To what end? Can you live with it?

– If not, negotiate early when you have bargaining power and not later when already tied down

Ending Comment

“God, law is some tricky shit, isn't it?”

- Thelma in Thelma & Louise 1991

Q & A

• In order to produce an “at a glance” summary of the law, certain simplifications and generalisations must be made. This document represents a generalisation regarding the law in Australia as at the date of the presentation.

• The information and content of this presentation is of a general nature only and does not constitute legal advice. Any opinions expressed in this document are the personal opinions of the author only and not any organisation the author is employed by, related to or affiliated with.