ByLawyers News and Updates

Sale of business – QLD

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The new, fourth edition of the Real Estate Institute of Queensland sale of business contract was released on 9 February 2023.

The changes in the new edition incorporate electronic execution and businesses having a digital presence on social media.

The changes to the sale of business contract include:

  • Item J in the Schedule has a new section to insert the details of the business’s social media and electronic media accounts to be transferred at settlement;
  • A new optional special condition annexure requiring the seller to allow an adjustment to the buyer for any prepaid coupons or gift cards that have not expired at settlement. The buyer must accept any prepaid coupons or gift cards that were issued before completion, provided they have not expired.
  • A new optional due diligence special condition annexure, allowing the buyer to terminate the contract if not satisfied with due diligence investigations by a specified date. The seller is obliged to provide access to and copies of any information reasonably required by the buyer.
  • The restraint of trade clause has been bolstered to protect the goodwill the buyer is paying for. The new restraint clause expands what a seller is prohibited from doing during the restraint period and within the restraint area. The prohibited actions now include having an interest in or being concerned with a competing business, dealing with a customer of the business being sold, interfering or disrupting the relationship between the business and its customers or prospective customers, and soliciting any person who was an employee, contractor, or agent of the business.
  • Clause 18 has been amended to require the buyer to notify the seller of the employees it intends to employ five business days before settlement. The buyer must offer employment to those employees at least two business days before settlement. This leaves the seller responsible for employees who do not receive an offer of employment from the buyer, or do not accept its offer of employment within one business day before settlement.
  • A new sub-clause has been inserted through which the buyer indemnifies the seller against any claims under the lease until the date of the lessor’s consent, should they elect to settle before obtaining the lessor’s approval to an assignment of lease.
  • A buyer may terminate the contract if any disclosure required under the Retail Shop Leases Act has not been given.
  • Clause 32 is a new warranty that the buyer has conducted its own searches and satisfied itself of the type of business and the permissible use.
  • Clause 40 now contains an electronic counterparts clause, allowing the contract to be signed electronically under the Electronic Transactions (Queensland) Act.

The By Lawyers Purchase of Business and Franchise (QLD) and Sale of Business and Franchise (QLD) guides have been updated accordingly.

REIQ contracts – QLD

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In line with recent REIQ contracts amendments and regulatory requirements, new commentary and precedents have been added to the By Lawyers Conveyancing (QLD) publication.

The new content in both Sale and Purchase guides relates to:

Unilateral right to extend the settlement date

From 20 January 2022 the new REIQ Houses and Land Contract 17th edition and Residential Community Title Contract 13th edition  provide in a new clause 6.2 the ability for either buyer or seller to extend the settlement date for up to five business days if they are unable to settle.

The new clause allows a party to extend settlement by giving an extension notice to the other party, without any requirement to produce supporting evidence detailing the reasons for the extension. The notice must be given in writing prior to 4pm on the scheduled settlement date, must nominate a new settlement date and state that time is of the essence.

More than one extension notice may be given but the settlement date nominated in a notice cannot be later than 5 business days after the scheduled settlement date.

A new precedent Extension Notice can be found on both the Sale and Purchase matter plans within folder F.

Smoke alarms

From 1 January 2022, dwellings or residential units offered for sale must have smoke alarms installed in accordance with the Fire and Emergency Services Act 1990 and Building Fire Safety Regulation 2008. Clause 7.8 of the new editions of the REIQ contracts imposes an obligation on the seller to install compliant smoke alarms in any dwelling on the land or lot, prior to settlement. If not met, the buyer is entitled to an adjustment on settlement of 0.15% of the purchase price.

Pool compliance certificates

Clause 5.3(1)(e) of the new editions of the REIQ contracts require a seller to provide a pool compliance certificate for a non-shared pool on the land at settlement. The only exception to this obligation is if a Notice of No pool Safety Certificate is given to the buyer prior to contract.

Failure to provide a pool compliance certificate under clause 5.3(1)(e) will mean the seller is not ready, willing, and able to settle and the buyer may terminate the contract.

Updates

Apart from new commentary and precedents in the Purchase and Sale guides, the detailed 1001 Conveyancing Answers (QLD) publication has also been updated accordingly. This is available in the reference materials folder at the top of all By Lawyers QLD conveyancing and property matter plans.

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