It could happen to you.

You will only discover you have been dealing with a purple fictitious character after you have provided the service/delivered the goods and not been paid.

Below is a checklist of what to do when entering into any agreements.

1. Make sure it is in writing – either by way of formal agreement, or at least an exchange of emails.
2. If the agreement is with a company (ie. Pty Ltd or Ltd) (1) obtain the Australian Company Number (ACN) and check that the company name matches with the ASIC search, by clicking here; (2) obtain a guarantee from the company director, shareholder or a related company, to ensure that in the event of default of payment, you can demand payment from the guarantor. A Guarantee Clause can be place into your existing Agreement.
3. Obtain a Security Interest (new name for Charge) which ensures that you gain security over the Phantom’s goods/assets, in the event of default of payment of your invoices. Again, a Security Interest Clause can be inserted into your existing Agreement.
4. Ensure that the Phantom you are dealing with has authority to bind the business that they say they are representing. Sections 127 and 129 of the Corporations Act provide some protection.
5. If you are entering into an agreement with a partnership, ensure that the person you are dealing with is a current partner, and that the agreement/invoices issued are addressed to the persons trading as the named partnership eg. John Smith & Adam Jones trading as Smith Partners.
6. Have a Dispute Resolution Clause, which will remove the majority of disputes being referred to a legal practitioner at first instance. The Dispute Resolution Clause should refer the dispute to an agreed mediator (such as an accountant) for preliminary review and determination.

You should first speak to an accountant or other trusted advisor to discuss the above matters and addition of clauses for your business.  SRM Lawyers can assist, if and when required.

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