Contracts are commonplace in business and life. A well-drafted contract can provide certainty and clarity for businesses and others by creating legal obligations for each party to do what they say they will. But what if a party to a contract doesn’t do what they promised they would? Are you allowed to penalise that party for not fulfilling their obligations under the contract? We will explore the enforce-ability of so-called ‘penalty clauses’ in light of a recent decision in the Court of Appeal.
What is a penalty clause?
It is common for businesses to try to reduce their risk of suffering a loss under a contract. One way businesses try to minimise their risk is by including a clause in the contract that requires money to be paid to them to compensate for loss if the other party doesn’t do what they promise.
Continue reading “How are enforceable penalties set out in contracts?”
Avoid common mistakes when employing summer staff
With summer fast approaching, many businesses will be hiring temporary staff to meet their needs over the busy summer months. Taking on temporary staff can throw up some tricky issues. Employers often are uncertain about what employment agreement is appropriate for temporary staff and how their holiday entitlements should be met. We explore the pros and cons of different kinds of agreements for temporary employees and provide guidance on their annual leave and holiday pay entitlements.
In general, there are two types of employment agreements that can be used for temporary employees:
Continue reading “Smooth sailing this summer”
Review due in May
The National Environmental Standards for Plantation Forestry (NES-PF) were first proposed in 2010. Following a period of consultation, the Standards came into effect on 1 May 2018, with a review due in 12 months after that (May 2019) to ascertain whether or not they are being successfully implemented.
Ironically, the NES-PF came into effect a month before torrential rain north of Gisborne in the Tolaga Bay area in June 2018. This storm caused flooding which led to tonnes of forestry debris being strewn across farms and blocking rivers. The cleanup was expected to cost around $10 million and to take up to a year to complete. The cost and responsibility for this cleanup is still being determined.
Continue reading “National Environmental Standards for Plantation Forestry”
Directors have personal liability for company debt in liquidation
A recent decision in the Court of Appeal has made a director liable for almost $500,000 of company debt due to the company’s failure to keep adequate accounting records. The decision highlights the importance for directors to understand their duties under the Companies Act 1993. The Act requires directors to ensure that the company keeps proper financial records.
If you are a director and fail to keep adequate accounting records, and the company is unable to pay its debts in liquidation, then the court can make you personally liable if the failure has resulted in:
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High Court provides useful guidance for subcontractors
The collapse last year of Ebert Construction Limited took many in the construction industry by surprise, particularly its subcontractors who were owed retention moneys. In our Spring 2018 edition (No 50) we published an article on Ebert Construction and subcontractors which had a section on retention moneys. Since then, the High Court decision has provided some guidance on the retentions scheme under the Construction Contracts Act 2002. We explain the main aspects of that decision and how subcontractors can help manage their risk.
The retentions regime
The retentions regime was created under the Construction Contracts Act 2002. It requires all principals/head contractors to hold moneys they retain on trust. The regime aims to protect retention funds if the principal/head contractor becomes insolvent. While Ebert was not legally required to establish a separate bank account to hold the retention money, it did so.
Continue reading “Construction industry and its retentions scheme”
The legal implications of diversifying your farming operation
Agri-tourism and food are growing sectors in New Zealand. We have farm tourism where tourists are shown working farms with activities such as sheep dog and shearing exhibitions. Artisan producers are growing their own products and then processing them into, say, cheese, and free-range pigs are becoming salami, bacon and ham.
Often farm and food tourism begins as a way of diversifying a farm’s income stream. Sometimes it starts off as a relatively small hobby or sideline activity but then grows into something much larger in scale.
There are legal implications to consider when you diversify your farming operation in these ways, particularly with regard to health and safety in the workplace and food safety.
Continue reading “Agri-tourism and food”
Protecting your property and getting paid
In light of Ebert Construction’s recent receivership, not taking protective measures opens subcontractors up to recovery and enforcement issues. If you are a subcontractor, you should think about how to prevent your tools and equipment (including cranes and scaffolding) from being seized and sold by a receiver, and to ensure you have the best chance of getting paid.
Protecting your tools and equipment
The first step to take is very practical. If you can, always take your tools and equipment home with you each night. When a construction company goes into receivership, the receivers lock the gates to the relevant construction sites which prevents you from collecting your tools and equipment.
Continue reading “Receivership of construction companies”
Can it be fair for everyone?
Making sure everyone you care about gets a fair share of your property after you die is an issue most of us grapple with. This may also have additional complications when you have a blended family.
It’s not always as easy as just writing your Will and specifying who gets what. There are several statutes that give family members and/or your new partner’s family, a right to contest your Will. The two main statutes are the Family Protection Act 1955 (FPA) and the Property (Relationships) Act 1976 (PRA).
Leaving it all to your partner?
A common way of structuring your affairs is to leave everything to your partner or spouse, knowing they will provide for your children as well as their own in their Will. These are often called ‘mirror Wills’. Unfortunately, this structure doesn’t always satisfy all the children involved, as we have seen in several recent court cases. You also run the risk of your partner or spouse changing their Will at a later date after you have died.
Continue reading “Blended Families – Wills and Trusts”
New legislation in force from 1 September 2017
In February the Contract and Commercial Law Act 2017 (CCLA) was enacted which will repeal a number of commercial statutes and consolidate them in the CCLA. It comes into force on 1 September 2017.
If you operate a business that uses standard form contracts, terms of trade or other such documents which refer to the old laws, you should update those to take account of the new legislation.
Continue reading “Time to Update Your Ts and Cs”
Employment law changes: are you up-to-date?…
the government has introduced the Employment Standards Legislation Bill to Parliament.
Update on financial markets overhaul…
The Financial Markets Conduct Act 2013 is in the process of completely overhauling New Zealand’s financial markets laws.
Incorporated societies reform ahead…
There are more than 23,500 incorporated societies in New Zealand that are currently governed by the Incorporated Societies Act 1908.
Continue reading “Business Briefs”