Binding Financial Agreement (BFA): Perhaps more commonly known as prenuptial agreements, BFAs are legally binding agreements that set out how assets will be divided in the event of a breakup. BFAs are useful where one or both parties have substantial assets or have children from a previous relationship. Both parties should receive legal advice independently before signing the agreement.
Contractor: A contractor runs their own business, has an Australian Business Number (ABN) and provides services to other businesses. They are responsible for their tax and superannuation obligations and are usually paid based on a result achieved or task completed. It is important to be able to distinguish between a contractor and employee, as there are different legal obligations for the two categories. See also “Employee”.
Employee: An employee works for an employer of a business and is considered part of that business. Employees can be casual, part-time or full-time and are paid a salary, hourly rate and commission. Employees take no commercial risks, and the employer is legally responsible for acts of its employees. Distinguishing between a contractor and an employee can be difficult. See also “Contractor”.
Employment Agreement: This is the binding legal agreement between an employer and an employee that sets out the obligations and rights of both parties. Crucially, it should address key terms such as the period, remuneration and termination. The agreement can also set out a requirement for the employee to follow guidelines further set out in an Employee Handbook.
Employee Handbook: This sets out the standards of behaviour expected of a company’s employees and the policies that apply. Employers should provide employees with a copy of this before the employee commences their job. If it is set out in the employment contract that the employee must follow the handbook, then it becomes legally required of them to do so.
Guarantee: Lenders may occasionally ask an individual to provide a guarantee to satisfy the loan agreement obligations of a borrower. A guarantor undertakes to perform the obligations of the borrower should the borrower fail to meet its loan obligations. This is often a high-risk role to take on and it is recommended you seek legal advice on the risks associated with doing so.
Loan Agreement: A loan agreement is also commonly referred to as a facility agreement, which sets out where one party agrees to lend money to another. The agreement may be complicated, and there are important terms that must be considered when entering into a loan agreement. Such clauses include interest, prepayment, repayment and security.
Notary Public: A notary public, also called a public notary or notary, is a public officer who has the power to witness documents, administer oaths, and perform other legal acts and administrative functions which may be used for official purposes. The range of acts a notary public can do includes:
- Certifying copies of documents;
- Photo identification;
- Witness signatures.
Power-of-Attorney: A power of attorney is a legal document made by an individual (the principal) that allows another individual (the attorney) to make decisions on their behalf. The principal may determine the scope of decision-making that the attorney can have.
Note that this is different to an enduring power-of-attorney, which refers to the ability to allow another person to make medical, healthcare and lifestyle decisions if the principal can no longer do so.
Promissory note: This is a negotiable instrument which sets out the terms under which one party agrees to pay a set monetary sum to another party. This is not a loan agreement as only the issuer of the money needs to sign the note for it to be valid.
Unfair dismissal: This is when an employee is dismissed from their job under circumstances that are harsh, unjust or unreasonable. This can include unfairness in the reason or the way you were dismissed. If this is the case, the dismissed employee should make an unfair dismissal application to the Fair Work Commission.
Will: A will is a legal document that sets out how your assets will be distributed and divided upon your death. Often people with significant business assets and interests will have a will drawn up to deal with what happens to their business as well as their personal assets. It is the most effective way to ensure that your assets are dealt with the way you intend.