Business Common Legal Mistakes in Business and How to Avoid Them

October Coffee & Connect was our last meeting in our latest 3-month series called “The Good, The Bad and The Ugly Side of Business”. We chose this theme because at networking and business events you are often inundated with stories of success, meanwhile you’re sitting there wondering if you’ll have enough money to pay your next BAS.

We therefore decided to focus on the real issues SME’s face, and what you can do to mitigate risk, get through the tough times and get things right so you can future proof your business.

At our last Coffee & Connect in October we had Anika Fleet from WMD Law talk to us about common mistakes people make from a legal perspective, while I talked about common general business mistakes. Read about those here.

For those that weren’t able to make it or want a re-cap, we’ve put together some of the main points of Anika’s talk and a background story about her. We encourage you all to reach out to Anika and her team at WMD Law to assist you in these matters.

Common Mistakes When Implementing Terms & Conditions

One of the most common mistakes in Business is incorrectly implementing Terms & Conditions (T’s & C’s). A common thing that many business owners do is copy T’s & C’s from other companies and adapt them for their own business. Doing this often means that the T’s & C’s don’t cover everything that’s needed to protect the business.

For example, using T’s & C’s from an online retailer when you’re an accountant is not going to protect you effectively from the risks that you might face in your business. The terms for a company that delivers goods and issues an invoice at the time of delivery will be very different to the terms for a company that obtains an upfront payment for goods prior to delivery. The terms relating to the provision of services are also likely to be very different to terms relating to the sale of products. 

Where T’s & C’s can get you in trouble:

  • Verbal agreements – so many business agreements are verbal. Without having written proof of the agreed terms, you may end up in a he said / she said situation which may result in a costly and slow litigation process if there is a dispute. 
  • Not Communicating the Terms to the Customer upfront. Many businesses make the mistake of presenting their T’s & C’s at the invoice stage of the service or goods exchange. Services have already been undertaken at this stage and therefore the Customer has not been given the opportunity to read the T’s & C’s and decide if they agree with them or not. T’s & C’s must be presented to the Customer BEFORE goods or services are dispatched or undertaken so they have the opportunity to change their mind before they any work has been conducted.
  • Having Terms that don’t suit the Business Operations or offer adequate protection to the Seller. This can happen if you download standard T’s & C’s from an online business App, or if you use or adapt terms from another business. A seller needs to think carefully about the specific terms that are needed for the individual operations of the business to ensure they are effective and enforceable. 

While some expense may be incurred for the SME’s to get T’s & C’s in order, if the T's & C's are clear, legally enforceable and implemented correctly it will cost much less money in the long-run if there is a dispute.

Tips for effective Terms of Trade

Put your Terms in writing and give them to the Customer upfront

The most important take-away from Anika was that your Terms should be in writing and given to the customer up-front before money changes hands or before any work is conducted or goods dispatched. This allows the customer the opportunity to not go any further if they do not agree to your conditions.

Clearly Identify your Goods or Services

To protect your business you must clearly state:

  • The services or goods you offer
  • What you will conduct for the customer within those goods or services
  • What you won’t conduct for the customer

Specify the Price and Timeframe for Payment

Ensure you have a fee schedule, and your Terms for Payment. E.g. when you will invoice the client (weekly, fortnightly, monthly or after completion of work) and what are your payment terms? 7 days, 14 days or 30 days? You must also detail deposits – e.g. if you require a 40% deposit before commencement of work, this must be detailed in your Terms. If goods and services are provided on credit before payment is received there needs to be terms for interest for late payment, and in the case of goods, it can be useful to have provisions enabling the seller take back the goods or retain an interest in the goods until payment is received. If the customer is a company, you should think about whether you should request a personal guarantee from the director if a large amount of goods and services are being provided on credit.

Rules about Refunds and Exchanges

You must also include your rules about refunds and exchanges, and ensure that those rules are compliant with the current Consumer Law. If a customer requires a refund – what process must they follow and to what time-frames? Further, if you provide customers with Gift Vouchers, ensure your policy matches the latest legislation in terms of redeeming them.

Limit the Seller’s Liability as much as Possible

Ensure that your Terms don’t land you in a situation where you are unnecessarily liable.

If you’re a ShireWomen Business Member and have existing Terms & Conditions, Anika is happy to look at them for you and provide recommendations for improvements at no cost. Contact her on for more details. If you don’t have any Terms & Conditions at all, Anika will provide you with a free 15-minute consultation to discuss implementing Terms and Conditions for your business.

Classifying Employees

Another common mistake Anika sees a lot in her work is employers incorrectly classifying Employees and Contractors.

Permanent Employees

You may have seen a recent case in the news of a Casual Employee winning their case against their employer because the court determined that they were in fact a casual employee.

How do you differentiate between a permanent and casual employee?

  • Permanent Employees work on a regular and systematic basis
  • Are entitled to paid leave
  • Are entitled to Notice of Termination, Redundancy and Unfair Dismissal Laws Apply to their employment

Casual Employees

Casual Employees work patterns should be irregular, uncertain and un-predictable.


Contractors should:

  • Be engaged for specific tasks (e.g. be brought onboard to build a website)
  • Have control over the hours they work to complete the task
  • Use their own tools and equipment
  • Have their own Insurance (which they need to provide you copies of their Certificates of Currency)
  • Have their own ABN and submit and invoice for their work

Consequences if Employees and Contractors are Incorrectly Classified

If you don’t correctly classify your employees and they make a claim, you may be required to pay accrued annual leave, payment in lieu of notice of termination, redundancy pay or many be subject to unfair dismissal claims. This could be extremely costly for your business, so you must ensure you are paying them correctly. Note that in some circumstances you may need to pay these additional entitlements regardless of whether you have paid them the 25% loading required for Casual Employees.

For Contractors, you may also be required to pay Superannuation. If the amount paid for the work is less than the minimum wage, you may also be required to pay the difference between the contractor’s fee and the minimum wage.

Moral of the story – keep yourself up to date with the requirements for your staff on the Fair Work website (all awards and payment calculators are available there) or get yourself a good HR consultant and get legal advice on your Employment Contracts and classifications.

Business Partnerships

Just like a marriage, no-one thinks their business partnership is going to end badly, and as a result many people don’t have an adequate Business Partnership agreement in place. This is not something you should think of as optional – they protect all parties and can assist with a smooth exit if you need to go your separate ways.

Here are some common issues that can arise in Business Partnerships:

  • Decisions are unable to be made about the business operations in a timely manner or at all
  • Where a partner reduces their work in the business or stops work altogether 
  • Whether money advanced towards the business is to be classified as capital or a loan
  • Where a partner takes money from the company bank account or uses company property for their personal use 
  • Where a partner makes derogatory statements about the business or other partners
  • Where a partner is forced into giving up or selling their share in the business for less than its true value

How do you overcome potential issues in Business Partnerships?

  • Talk with your business partner about the business operations, the types of decisions that may need to be made and how those decisions should be made
  • Talk with your business partner about what should happen if a partner wants to leave the business
  • Have a written Partnership or Shareholder Agreement 
  • Have a written Employment Agreement if partners are also required to work in the business
  • Have a written Loan Agreement if money is to be advanced as a loan

About Anika

Anika grew up in The Shire, went to Woolooware High School, and studied at Wollongong University completing a Bachelor of Commerce & Bachelor of Law. She completed her Master’s Degree in Law at Sydney University.

Anika didn’t originally plan to become a lawyer, but found while studying at Uni that she loved how it made her think outside the box. She felt an immense satisfaction in the knowledge of law – a feeling that solutions to many problems can be found somewhere in the law and legal procedure.

Anika has been with WMD Law since she graduated at University and was offered the position of Director and Principal in 2017. There are 4 owners of WMD Law, with 7 Directors and around 40 employees.

Anika deals with numerous cases with a focus on Commercial Law, Civil Litigation and Estate Litigation. She finds that with Commercial Law being so broad she gets to learn about many different businesses in all types of industries, and she advises on many interesting legal issues affecting business.

Anika finds as well as providing legal advice, her time is often spent guiding her clients through the legal process. Because most people’s experience of legal cases is mainly through American TV Shows, they often have a misconception of the legal system in Australia, and how their case will be handled. Anika treats each of her cases like a journey and ensures that every client is treated fairly with the care and support that they need.

WMD Law’s focus is to provide the quality and services you'd expect from a city law firm, in the heart of the Sutherland Shire. In addition to WMD Law's Commercial Law team, the firm also has teams working in Family Law, Property Law, Estate Law and Criminal Law. They plan to continue to grow and continue to be the one-stop-shop for all things Legal in The Shire.

If you need some legal advice, Anika and the team at WMD Law can provide you with a 15-minute free phone consultation to provide initial guidance on your legal issue. .

Remember - for our ShireWomen Business Members, Anika has offered to help you all and make sure you are properly implementing your terms and conditions.

For those businesses that already have written terms, WMD Law have offered to review your terms and conditions and provide recommendations on any improvements for no charge.

For those of you that don’t have written terms already in place, WMD Law will arrange a free consultation with you to discuss implementing appropriate terms for your business.

Learn more about WMD Law by clicking here and read their e-business guide by clicking here.