Rainey Collins Lawyers

Casually signing a terms of trade form can put all your personal assets at risk

By Alan Knowsley, Monday, 20 December, 2010, Business

If you are in business then receiving and signing terms of trade from suppliers happens all the time but how often do you read them?  In a recent example a businessman had his business run through a company to avoid putting his family home at risk.  However, he signed terms of trade without reading them and nearly lost his home as a result.

Terms of trade often set out:

• Personal liability if your company does not pay;
• An unreasonably high interest rate on amounts outstanding;
• An indemnity from you to the supplier for any possible loss;
• A total removal of liability of the supplier for its failures;
• A charge over business and personal assets; and
• A power to lodge a caveat over your home.

We often see business owners who get themselves into financial strife.  The separation of business affairs into a company is supposed to protect private assets if it all goes sour.  However, many times business people have fallen into a practice of signing terms of trade contracts without reading them despite the fact that they contained personal guarantees which put the family home on the line.

Reading terms of trade before signing and getting advice if you are unsure on what is meant can have substantial benefits if things go wrong.  After all, those pages of small print are not put there for your benefit nor to just fill up the page.  Ignore them at your peril.

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