We've teamed up with Digimark Australia to present a webinar on the legal issues arising from the Covid-19 Epidemic. Watch now to discover tips on contract, privacy and other legal issues.
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Today, we’re talking to Ben from Xuveo.
He is a solicitor and is going to talk to us about contracts, privacy, the Spam Act and a number of other legal topics.
Hi, how are you going?
My name is Ben Thorn. I’m a commercial lawyer. I run my own firm, and today I’m going to be coving some of the legal issues that have come out of Covid-19, particularly for small business and a consumer law angle.
I think the first thing is a disclaimer, this is general information only and it’s not intended to be legal advice or professional advice, so you should seek your own specific advice for your circumstances and bear in mind that everything that we cover today potentially can change very rapidly.
Governments are pumping out information and there’s lots of legal changes that are happening at the moment. Lawyers are quite busy keeping on top of it, but definitely speak to your advisers, get professional advice just so you can be confident you’re covered as best you can.
Moving on from that, the first issue I was going to look at was some general consumer law issues around contracts and particularly how the current situation is impacting upon contract law.
With particular issues, the ACCC has put out a lot of information as well. I’d recommend checking out their website. They’ve got some really good information about basic consumer rights and for business what you can do in certain circumstances.
I’ve done up a PDF today of lots of these websites that I might refer to. That can be circulated at some point as well.
Generally, the ACCC’s position is that the consumer law does still apply. There’s no getting out of the consumer law just because it’s a pandemic; just because there’s an emergency doesn’t mean that consumer law suddenly stops applying.
Things like your statutory guarantees, which apply to all consumer goods and services transactions. If the customer buys some goods and the goods are faulty, the consumer is still entitled to a refund even though there’s a pandemic.
The same thing with services: if the customer buys a service from you, there’s an expectation that service will be delivered in a reasonable timeframe to a reasonable standard.
Those sort of things are things that you can’t contract out of even if there’s a disaster or a pandemic as we have.
The ACCC has come out with some specific information about cancellations particularly, so definitely check out their website if you’re in that category.
The general guidance is that if an event or a service – for example: travel, concerts, those kind of events – if your event is cancelled by the event provider, then generally the expectation is that a refund or a credit needs to be offered to the customer.
There are some specific industry codes around things like theatrical performance events, but the general expectation is that a refund should be provided if the provider cancels the event.
If the event is cancelled due to government restrictions, there can be some change to that general position, so again it’s probably worth checking your terms and conditions carefully about what might apply in that situation.
Going back to services for a second, I’ve heard of a couple of different providers who they’ve had clients come to them and they’ve said ‘look, we’re going out of business, can we cancel our service for now?’ and the service provider’s pretty much said, “well, you’re contractually bound, you can’t cancel that contract.” What can we do if we’re facing that situation?
That's the next point. If the customer is cancelling, then that can be in some situations that can be treated as what’s called a “change of mind”. In that situation, the customer is not necessarily entitled to a refund, because the customer is cancelling rather than the provider.
That’s where you’d look at what is the particular circumstance in which this cancellation has arise and basically who’s doing the cancelling. Is it the provider, or is it the customer?
For a change of mind, definitely, you have less rights generally than you do if it’s not a change of mind situation.
You’ll see of late most of the supermarkets now used to have satisfaction guarantees and change of mind policies around returning goods you’ve decided you don’t want anymore.
Most of the supermarkets and retailers are now stopping those policies to:
(1) counteract panic buying; and
(2) because they don’t want a run on having to refund things unless they absolutely have to.
In those situations, if it is a change of mind, the service provider can be within their rights to refuse a refund.
The ACCC is recommending that people be compassionate and understanding in these circumstances because there are a lot of things that are going everywhere.
In that situation: have the conversation, try to negotiate something. You may be able to negotiate a suspension or a deferment of payment or something like that, that can get you through the current period. That’s something that can be worked out.
I think people will remember that as well.
I think that’s a big takeaway there: that even though you don’t have to, you have the legal right to hold on to that contract, hold that person liable, if that’s the right terminology. But people will remember that.
Absolutely, and goodwill is a thing, and businesses in this situation need to be working to make sure they retain as much goodwill as possible. So burning off customers might not be the best approach commercially speaking.
The other thing on that point is that with subscription services, if you’re providing a subscription service - the common thing is like a gym membership, for example – that’s paid on a monthly basis ongoing or a periodic basis, the ACCC has specific information on gyms, for example.
If you’re providing that kind of subscription service and you get to a point where you cannot actually provide the service that the customer is paying for – in that situation, the ACCC expects that you either defer the term of the service, so extend the length of the contract, or offer a refund for the period they can’t use the service.
Again, that’s an important thing if people are out there providing subscription type services in that situation.
Generally, with contracts, a lot of contracts have a “force majeure” clause, or an “uncontrolled events” clause written into them.
Read those carefully. In some situations that will allow the parties to suspend the contract for the period by which the flow of the contract is disrupted.
You’d have to read the specific clause to work out when it’s triggered, what happens, who’s got the rights, payments, what happens with the relationship.
The other thing to look at is the doctrine of frustration, which means that if a party is completely prevented from performing a contract, that can give rise to the ability to terminate on that basis. That’s with things like where you’ve booked an event, you’ve got tickets to a concert and the concert’s not going ahead anymore. That sort of depends, but again it’s down to negotiating the circumstances, but if the solution provided can’t be reasonably agreed then that may give rise to a termination.
I’ve noticed that Eventbrite is not offering refunds. They’re offering credits. That’s one way event providers can get around that.
And lots of travel providers are doing the same thing. Qantas and Virgin have decided to say: “Look, if you’ve cancelled a flight, we’ll give you a credit voucher that you can use within 6 months” or 12 months or however long it is.
At the same time, though, it’s important to recognise that if the solution you’re offering is not reasonable – it doesn’t necessarily have to be convenient for the customer - but if it’s something that doesn’t fit the customer then they may still have the right to claim a refund, even though you’re offering a voucher. That’s something to be careful of as well.
The other thing to check with contracts is insurance. Travel insurance is a big one for any travel-related stuff. But for businesses as well, check your business insurance policies – both if you’re the customer and if you’re the supplier – because you may be covered under insurance if you have to give a refund or a cancellation. That may cover you. Of course, check your terms and talk to your brokers.
That’s probably all the contract law things.
There have been some changes to insolvency law at the moment, particularly around creditors’ statutory demands and bankruptcy notices, so the federal government is moving – it’s been announced they’re going to lift the statutory threshold for a creditors’ statutory demand up to $20,000 and give the debtor 6 months to respond, whereas it’s about 21 days. That’s something to bear in mind if you’re seeking to enforce a debt against someone. It’s now much harder to bankrupt someone in the current situations.
Also, there is for contacts entered after 1 July 2018 with a company, if the company goes into voluntary administration then it might not be possible to terminate or exercise a right under the contract as well, due to the changes to the Corporations Act from July 2018.
Can you explain that?
There’s different forms of insolvency.
One is called voluntary administration, and that is where an external administrator is appointed by the company and they attempt to continue running the business or running it so it can be sold to a creditor. That’s usually a preliminary stage of insolvency.
In that situation, a contractual right under a contract – say, a lot of contracts have the right to terminate for insolvency – that right is suspended while it’s in that VA period unless you go and get court leave, and there’s processes around that.
Just because someone has announced they’re going in to voluntary administration doesn’t automatically give you the right to terminate a contact if it’s entered after 1 July 2018.
If they go into liquidation, which is the stage where the voluntary administrator’s decided: "No, this not going to work; can’t sell it; too many debts" they can put it into liquidation, which is more serious.
That’s the winding-up stage of calling all the credits, get rid of all the assets and deregister the organisation. Once it’s in that stage you may have more rights there.
If you’re thinking of terminating a contract, it’s best to get legal advice on that before you do to make sure you’re covered in your situation.
You certainly don’t want to go through these situations, but it’s important to know what your legal rights are around – and what’s changed.
The other thing at the moment in discussion – it’s a state government issue, but the federal government’s making noise about it as well – is the whole tenancy arrangement both for residential and commercial tenancies. There’s talk about a 6 month moratorium on evictions. Stay tuned on that space if that’s your situation because the details are still being worked out at the moment around who’s going to have rights and how that’s all going to work. That’s something that’s still evolving at the moment.
Moving on from contract law issues, I was going to look at privacy as well. If your business is bound by the Privacy Act.
If your turnover is over the $3 million threshold, you’ll be bound by the Privacy Act. If you deal with sensitive information - medical information is one of those categories of information – then you can be bound by the Privacy Act.
Generally, if the Privacy Act applies, there are the 13 Australian Privacy Principles that will apply to your business.
Check out the Privacy website: OAIC.gov.au. It has all of that in neat package form.
The basic principle is we’ve got to be careful of what information you’re collecting in your business, how you’re storing it, how you’re using it, and who you’re disclosing it to. That’s the basic principles of privacy law.
If you do collect information, make sure you do it carefully. Only collect what you need.
At the moment there’s some specific issues around medical information . If I have a staff member who contracts the virus, how do I handle that situation? Who do I tell? Do I have to tell my staff? Do I have to tell my customers – anyone who’s been in my work place? How do you handle that situation where you’ve got a staff member or someone who’s been in contact with your business and they’ve notified you that they’ve been diagnosed or suspected of diagnosis?
In that situation, that is medical information – the fact of the diagnosis. You do have to be careful about disclosing that information. You shouldn’t go out naming people unless it’s absolutely necessary that you do that.
In that situation, be careful and take advice on how to handle that. The Australian Privacy Commission has information on their website for that particular issue, so check their website for that.
It’s also important to keep in mind the Spam Act as well. I notice that usually I get a lot of emails from overseas, but since this has started, I’ve started getting emails from Australians who I know, but I’ve never really given them my email address, which does actually breach the Spam Act?
Yes, so again the law still applies. The law hasn’t been suspended here.
To backtrack a little bit, spam law regulates any form of electronic messaging – email, instant messaging, your Facebook Messenger type, SMS as well and telemarketing goes into phone calls, although that hasn’t really been a problem.
If you’re sending emails, text messages, instant messages, and they have a commercial content or promotional content in them – if you’re making advertising, promotions, offers, any sort of commercial marketing – if it’s of that nature, then the spam law still applies.
The point there is that 3 basic principles apply:
(1) Make sure you’ve got consent – so the customer’s said “Yes, I consent to receiving marketing messages from you.” That can either be express by signing a form or ticking a box on your website or signing up specifically for a newsletter or you can get consent through your terms and conditions of sale – be careful with that.
(2) All your marketing messages need to have a method of contacting you – your address, your email, your website, some way of contacting you.
(3) They must have an opt-out. For a text message you can text “STOP” to a certain number. For emails, it’s an unsubscribe link or you can reply to say you’d like to be off the list.
Recent cases, Optus was fined over $500,000 for breaches of this sort of thing where they sent out messages and didn’t have the right unsubscribe facility in place.
So, it is important. Consumers can complain to ACMA if they receive too many emails from you. You might get an angry phone call, again, it’s about maintaining goodwill with your customers as a fundamental thing.
People don’t like spam. I’ve got dozens and dozens of emails from businesses about Covid-19 that I’ve not really dealt with.
A general tip on that is if you’re going to send out a service message, that isn’t necessarily spam, unless it contains those sort of marketing elements.
If it’s about something that the customer is actually purchasing from you – you’re updating them to say: “Hey, delivery might be delayed because this is happening” – that can be a valid service message that isn’t classed as spam.
But again, try to target your customer there. Don’t just send out a blast email to every customer you’ve got. Do they actually have an order with you? Are they actually doing business with you right now? Those are the things to think about before you go sending out broadcast messages like that.
We all know that every business cares about Covid-19 and most businesses are taking steps to address it in the ways that they can, so I think generally say only as much as you need to. Think about if you’ve got your website sorted out, put something on your website and direct people there if they need all the volume of information rather than sending out hundreds of emails.
Other privacy concerns: As everyone’s moved into this remote working environment, there’s lots of people using Zoom and Skype and those sorts of platforms to have their meetings and general chit-chat with their office, there’s a few things you need to consider with that from a security perspective as well.
If you are discussing client information – I’m a lawyer, so I have heightened obligations with confidentiality and protecting client information, as do most other professionals like accountants and so forth. If you are discussing client information, remember that it’s confidential.
Second, be aware of it and try as best you can to ensure that the platform you’re using has appropriate privacy mechanisms to secure that information. Things like: Screen sharing can happen. People can take screenshots. People can record the session, so if you’re hosting you get the recording, but it’s possible to record it. Bear that in mind.
There have been a few instances particularly with Zoom, where people have done what’s called “Zoom Bombing” – where they’ve managed to hack into the meeting and there’s some specific tips around how to protect your Zoom sessions against that – like having passwords on the meeting and so forth.
There was an article recently that I briefly looked at, where the CEO of Zoom wasn’t really expecting there to be this pandemic – I mean, no one really expected it. So there’s security issues that are coming up that they haven’t really considered?
I think the problem of Zoom at the moment is that they’ve suddenly had this massive influx of people starting to use the service and Zoom wasn’t necessarily designed for that. It’s great for consumers stuff, it’s great for chatting with your friends, but business-grade conversations where you’re handling client confidential information, where you’re handling sensitive business information, those kind of things are not necessarily what the platform was intended for.
I’m getting a bit into IT here, but from a legal perspective, if your client confidential information gets breached, that’s your problem.
If my client confidential information gets out on the internet somewhere that’s going to be me ringing the client saying: “Oops, your information is out there now”. So that’s a problem that any professional business that has clients that deal with that sort of information is going to need to be very careful about.
Because we’re working from home, and often using the family computer, the family laptop, the iPad that the kids use, it’s important to consider those security issues as well. Making sure that the device you’re using is secured properly and it has all the latest software updates and patches so it makes it harder for things to leak.
In general, the way I have my Zoom set up is that by default my webcam is off and my audio is off.
Learn how to set that up properly, so you’re not accidentally caught in a compromising position. I promise you I’m wearing pants. But I’ve seen plenty of videos on the internet where people have been using Zoom without their pants.
Be mindful of: What’s your background environment? Are you going to have kids racing through the background? It’s sometimes unavoidable, but basic things.
Be mindful if you’re screen sharing, watch your browser tabs. Close-off before you start your session. Close-off any documents or browser tabs you’re not going to be using for the session.
Obviously, there’s some questionable things people look at on the internet, but if you’ve got a document open that’s got client information in it and that somehow accidentally gets onto the screen share, that could be a data breach that you’d need to manage. Be careful with that stuff.
It’s funny if you do have an embarrassing moment, but it’s important to close down those browser tabs, because you may forget to close a client file.
Yes, exactly. And also, your workplace policies still apply while you’re at home, so be mindful of any policies or procedures that are in place with your employer. They still owe you a duty of care even though you’re at home, so they’re responsible to ensure that you’re doing the right thing.
The other thing with video is that people are new to this technology.
A lot of people are new and struggling with that – be mindful and help people out where you can.
Bear in mind that the conversation might be difficult if you’re taking advice or giving advice, or taking instructions from a client over a video link, maybe half their brain is going: “How do I make this thing work? How is it not going to crash on me?”
Those situations might need extra care especially if the information going across is important. Think about: Do I need to confirm this with an email? Do I need to send a summary at the end?
Otherwise, if you are recording the session, make sure you tell the guests on your session that it’s being recorded. Surreptitiously recording sessions is not a good idea, generally speaking.
Unless of course it’s being recorded for the specific purpose of sharing it on Facebook so everyone can see it.
Basically, be clear about the intention of the meeting how it’s going to be used.
There’s quite a few things to think about there.
I’d encourage people to go to the government websites. They’ve got a lot of information out there and it’s changing day-by-day or minute-by-minute in some cases.
Certainly, stick with the government websites because they do have a lot of good information, general principles and some specific information.
If you do get yourself into a specific situation make sure you seek out some advice. Lawyers are still open. Accountants are still open. Tax advisers are still open. Go seek out that professional advice for your specific situation.
Some of the government information can be a bit hard to comprehend. Lots of professionals are spending lots of hours reading though the finer details of these things so they can provide advice to their clients. Go get advice if you need it.
Yeah, at least sticking to those government sites, you get the facts rather than someone’s opinion.
Some of the media can be blown up a bit, but ABC’s generally a good source at the moment – they seem to be presenting things fairly neutrally. Sometimes that can help to simplify and break down things, but definitely government sources is the best information at the moment.
Anything else to add, Ben?
That’s probably everything on my list of things to cover. But if you do have a specific situation, go get advice on it.
That’s the best bet at the moment. Everything’s changing so quickly.
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