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Where the law actually lives. And who to ask when something goes wrong.

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In plain terms

Plain-English glossary

The words that turn up in commercial contracts and leases, explained plainly, each with a short example. General information only, not advice on your matter.

Commercial terms

  • Shareholders agreement

    A private contract between the owners of a company setting out how it is run, how big decisions are made, and what happens when an owner wants to leave or sell. It sits alongside the company constitution and, between the shareholders, usually prevails.

    For example. Two founders agree that neither can sell shares to an outsider without first offering them to the other, and that any deadlock on a major decision goes to an agreed mediator.

  • Partnership agreement

    The contract between people carrying on a business together as a partnership. It records each partner's share of profit and loss, what each contributes, how decisions are made, and how a partner joins or exits. Without one, the default rules of the Partnership Act apply, which are rarely what the partners actually intend.

    For example. Three consultants agree profits are split by billings rather than equally, and that a departing partner cannot take clients for twelve months.

  • Supply agreement

    A contract for the ongoing supply of goods or services from one business to another. It fixes price and payment, volumes, delivery, quality, what happens when something is late or defective, and how either side can end the arrangement.

    For example. A wholesaler supplies a cafe with beans each week at a set price, with a yearly price review and a chance to fix problems before either side can walk away.

  • Distribution agreement

    A contract appointing one business to sell or distribute another's products, often in a defined area. It sets whether the appointment is exclusive, any targets, pricing freedom, branding, and what happens to stock and customers when it ends.

    For example. An overseas manufacturer appoints an Australian distributor as its only seller in NSW, with minimum yearly purchases and the manufacturer keeping ownership of the trade marks.

  • Service agreement

    A contract for one party to perform services for another. It defines the scope of work, fees, timing, who owns what is produced, what happens if something goes wrong, and confidentiality.

    For example. A developer agrees to build a booking system for a fixed fee, with the client owning the finished code and the developer capping its liability at the fees paid.

  • Non-disclosure agreement (NDA)

    A contract to keep certain information confidential and use it only for an agreed purpose. Also called a confidentiality agreement. The value is in defining what is protected, for how long, and what counts as a permitted disclosure.

    For example. Before showing its customer list to a possible buyer, a business signs an NDA limiting use of the list to assessing the purchase, with the information destroyed if the deal does not proceed.

  • Terms of trade

    The standard conditions on which a business sells to its customers, usually attached to quotes and invoices. They cover payment times, interest on late payment, keeping ownership of goods until paid, warranties, and limits on liability.

    For example. A supplier's terms say goods stay its property until the invoice is paid in full, so it can recover unpaid stock if the customer becomes insolvent.

  • Business sale: asset sale and share sale

    Two ways to buy or sell a business. In an asset sale the buyer takes selected assets such as equipment, stock, goodwill and contracts, usually leaving liabilities behind. In a share sale the buyer takes the company itself, with everything it owns and owes. The choice affects tax, risk, and what consents are needed.

    For example. A buyer prefers an asset sale so it does not inherit the seller company's unknown tax history; the seller prefers a share sale for a cleaner exit. The structure is settled in the heads of agreement.

  • Heads of agreement

    A short document recording the main terms agreed in principle before the full contract is drafted. Some parts, such as confidentiality and exclusivity, are usually meant to bind; the commercial terms often are not, until the formal contract is signed. Whether it binds turns on its wording.

    For example. A buyer and seller sign heads of agreement fixing the price and a sixty-day exclusivity period, stating the sale itself is subject to a formal contract and due diligence.

    Insight: heads of agreement →

Lease terms

  • Retail lease

    A lease of premises used for retail business. In NSW a retail lease attracts extra tenant protections under the Retail Leases Act 1994: a landlord disclosure statement before signing, minimum terms, limits on certain costs, and disputes heard at NCAT. Not every shop lease is a retail lease; it depends on the use and the premises.

    For example. A tenant leasing a shop in a centre must be given a disclosure statement at least seven days before signing, setting out outgoings and other key facts.

    Retail Leases Act 1994 (NSW) →

  • Assignment of lease

    The transfer of an existing lease from the current tenant to a new one, who takes over the remaining term. The landlord's consent is almost always required, and the outgoing tenant can stay on the hook if the new tenant defaults, unless released.

    For example. A cafe owner selling the business assigns the lease to the buyer; the landlord consents but asks the seller to guarantee the first six months of the new tenant's rent.

  • Option to renew

    A right, written into the lease, for the tenant to extend for a further term by giving notice within a set window. It usually has to be exercised strictly on time and while not in breach, or it can be lost.

    For example. A five-year lease carries a five-year option; the tenant must notify the landlord between six and three months before expiry to secure the second term.

    The Leasing Lawyer: option to renew →

  • Make good

    The tenant's obligation at the end of a lease to return the premises to an agreed condition. That can mean removing the fit-out and repairing, or restoring to base condition. The cost can be large and turns on the exact wording.

    For example. On exit a tenant must strip out its shopfront, patch the walls, and repaint, because the lease requires the premises returned to their condition at the start.

    The Leasing Lawyer: make good →

  • Rent review

    A mechanism in the lease for changing the rent during the term, commonly by a fixed percentage, by CPI, or to market. Market reviews can be disputed and referred to an independent valuer.

    For example. A lease raises rent by 3.5% each year, then to market at the start of the option term, with a valuer to decide if the parties cannot agree.

  • Disclosure statement (retail lease)

    A document the landlord must give a prospective retail tenant before the lease is entered, setting out key facts: rent, outgoings, term, fit-out, and more. If it is not given, is late, or is materially wrong, the tenant may have rights to end the lease or claim compensation.

    For example. A tenant later finds the outgoings were understated in the disclosure statement and claims the difference back from the landlord.

Franchise terms

  • Franchise agreement

    The contract under which a franchisor grants a franchisee the right to run a business under the franchisor's system and brand. It is regulated by the Franchising Code of Conduct and covers fees, territory, training, standards, term, renewal, and what happens on exit.

    For example. A franchisee pays an upfront fee and ongoing royalties to run a food outlet under the franchisor's brand, following its manuals and fit-out.

    Insight: Franchising Code of Conduct →

  • Disclosure document (franchising)

    A document the Franchising Code requires a franchisor to give a prospective franchisee at least fourteen days before signing. It sets out the franchisor's background, the costs, current and former franchisees, and other key facts, so the franchisee can decide with eyes open.

    For example. Before signing, a franchisee reads the disclosure document and calls former franchisees listed in it to ask why they left.

  • Franchise renewal and transfer

    Renewal is the franchisee's ability to continue for a further term when the current one ends, on the conditions in the agreement and the Franchising Code. Transfer is selling or assigning the franchise to a new operator, which needs the franchisor's consent and usually fresh disclosure to the incoming franchisee.

    For example. A franchisee who wants to sell finds a buyer; the franchisor must deal with the request reasonably and cannot withhold consent unfairly, and the buyer receives a disclosure document before committing.

  • Franchise dispute resolution

    The Franchising Code sets out how franchise disputes are handled. One party writes to the other setting out the problem; if it cannot be resolved directly, either can refer it to mediation or conciliation, often through the Australian Small Business and Family Enterprise Ombudsman. Court is a last resort.

    For example. A franchisee unhappy about a territory change issues a dispute notice; when direct talks stall, both attend mediation before anyone considers court.

  • Personal guarantee

    A promise by an individual to be personally responsible for another party's obligations, often a company's, if that party fails to pay or perform. It puts the guarantor's own assets at risk and usually survives even if the business fails.

    For example. A landlord asks the director of a small company tenant to personally guarantee the lease, so the landlord can pursue the director if the company stops paying rent.

    The Leasing Lawyer: personal guarantee →