What Security?

The recent District Court decision of Versace Timbers Pty Ltd v Stojanovic offers a timely reminder to make sure your standard contracts are drafted to your best advantage. Most contracts for the supply of goods or services now contain a charge over the assets of the customer and its directors. The benefit of a charge is that, if your customer fails to pay its debts, you are entitled to seek the sale of its assets, or the directors' assets, to recover those debts.

In this case, the director signed a guarantee containing a charge over his residence, but the charge was not specifically drafted to include future property. The Court found that the charge could not be applied to the house the director purchased after signing the contract. Where the property that existed at the time of the contract had been disposed of, the supplier was left with a valueless charge.

It is imperative that your standard charge expressly includes after-acquired property and property that is held as trustee or you might be left with no security at all.

If you would like to discuss your standard terms, including charges and efficient dispute resolution processes, please give me a call, obligation-free, at Anderssen Lawyers on (07) 3234 3130.