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Contract Law - Limitations of Contract with Australian Company?

Discussion in 'Commercial Law Forum' started by sunnycalifornia, 22 January 2016.

  1. sunnycalifornia

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    I am a US citizen who has been contracted by an Australian company, so I'm not too familiar with the commercial law and time requirements there. The company basically doesn't have enough money to pay its bills, but I knew it was risky working with them, as it is a startup.

    I have a contract stating that I have a few shares now and that more shares will be awarded on completion of milestones to be specified later. This was signed about 7 months ago, and although I am not demanding they sign over the shares, they keep delaying with very dodgy excuses. I also have a monthly invoice which the contract states is to be paid within 7 days. For the past few months, I have noted on the invoice that part of it is deferred and can be paid later, although no time is specified. The contract says that invoices should be paid within 7 days of my submission, but they are a few months behind on the amounts that are not deferred.

    I know that they don't have the money now, but they are starting to produce an income and might be able to pay in the next few months. However, we are having a falling out because of this issue and their refusal to at least sign over the shares that cost them nothing.

    If I wanted to take legal action, is there any limitation on the time period that I have to do so under contract law? In the US, it's usually 2 years from the time one party breached their terms. Also, is the vagueness of the agreements not having specific deadlines for the milestones, share assignments or deferred payment going to be an issue?

    Thanks in advance for any help!
     
  2. Rod

    Rod Well-Known Member

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    6 years from breach is the maximum for simple contracts (in Victoria, not sure about other states).

    Vagueness is always an issue. Can work for you, can work against you. If you wrote the contract, vagueness counts against you. If they wrote the contract, vagueness helps you.
     
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  3. Sophea

    Sophea Well-Known Member

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    What state are you in? Different legislation applies to each state but most specify 6 years from the date the cause of action arose. Generally, when a time limit is not specified for an obligation to be carried out in an agreement, it must be performed within a "reasonable time". What is reasonable depends on the circumstances. However in extreme cases, uncertainty can render a contract completely invalid.
     
  4. sunnycalifornia

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    The company is based in Queensland and the contract is about 6 or 8 months now. They don't really have any assets worth suing over at the moment, but that might change over the next year or two. I don't want to take any legal action while they have nothing because it could be a waste of time and money. But I don't want to let the time lapse if they could become profitable in the next year or two. If it's six years then I guess I have plenty of time.

    Thanks for the help!
     
  5. Sophea

    Sophea Well-Known Member

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    Yes, QLD's limitation period for contractual breaches is 6 years. I would write to them acknowledging that they are behind in their payments and that you will exercise some leniency in this regard, due to the current cash flow shortage, however that this does not amount to a waiver of their obligations to pay this money or your right to enforce those obligations and recover the owed money at a later time.
     

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