Legal Obligations

[Guest]

Hi

Was wondering if anyone knew what sort of legal obligations I may be subject to if I were to freelance and provide some free consulting work.

Jason

[alee228]

Hi Jason,

In Australia, there are some basic obligations that you need to comply with under the Trade Practices Act 1974. For example, you should not:
1. engage in misleading or deceptive conduct
2. make false or misleading representations
3. accept payment without intending or being able to supply

As a freelancer you would need to obtain an ABN and comply with any relevant tax laws.

I am not aware of any specific legal obligations imposed on consultants, per se.

Have I missed anything? robocat? pparaman?

[Guest]

Hi Tom,

I wasn't entirely sure whether or not I needed an ABN but I would like to create one anyway as a building block for the future.

In terms of tax obligations, this will most likely be an issue which I will have to deal with in the future as the work I hope to provide will be completely free of charge so that I can grow my experience and begin developing my own portfolio and successful business model.

My main concern is with liability. I'm fairly familiar with TPA in terms of a profit taking business but I'm not quite sure how that applies to volunteer work. :|

[Guest]

Hi Jason,

If I can offer you a simplified answer. Whilst Tom may be correct to say that there is no specific legislation governing Consultants, there is still a legal principle known as the tort of "Negligence".

Much like a lawyer, where you hold yourself out to the world that you are an expert in something and someone has commissioned you to provide that advice (even if it is for free) and they have relied upon your advice to their detriment, then you may potentially be sued for negligence.

Without knowing exactly what type of consulting work you intend to provide for free or who it is that you are intending to provide your services to, if you offer your services as a consultant to a company, you may be held liable for any detriment sufferred by the company as a result of relying on your advice.

However, if the company were to employ you as an employee for a nominal fee to carry out some work, then there is less of a chance that the company can sue you for negligence if things go wrong. In this scenario, the most that the company can do is to fire you for doing a bad job.

I realise that this seems to defeat the purpose of being a consultant. But unless you have proper professional negligence insurance to protect you, you may be placing yourself and your assets in harms way.

I hope this clarifies things a little more.

[Guest]

Hi Mike,

Thank you for that post above as it seems to be confirming some of my fears which were that I would still be held liable under professional duty of care.

I'm currently contemplating a different approach which is to instead of providing advice, I will help in building a business snapshot, giving the business clear data to make informed decisions.

That being the case, I will still need to draft a disclaimer to explain that any service that I provide will only be for information purposes. I'll need to do a bit more research to see if this will limit my risk unless someone in the forum knows the answer.

[alee228]

It is possible to exclude liability in Australia by using a disclaimer or “exclusion clause” (I would be interested to hear from people based in the UK, USA or India).

Whether your "exclusion clause" is effective to exclude liability is a matter of construction. That is, it is a matter for the court to determine whether your "exclusion clause" applies in the circumstances of a particular case.

In order to exclude liability for negligence, you need to expressly state that liability for negligence is excluded. Using words such as "whatever its cause" or "howsoever caused" may also be enough to exclude liability for negligence.

There are a number of situations where an "exclusion clause" will not be effective, including:

1. Fraud - You are not able to exclude liability for fraud because this is against public policy
2. Public policy grounds - It may not be possible to exclude liability in situations where you have undue influence (that is, you have lots of bargaining power and the other party has very little) or where you have engaged in unconscionable conduct (that is, your conduct is unfair or unreasonable)
3. Statutory prohibition - For example, you are not able to exclude liability for misleading or deceptive conduct (s52 of the Trade Practices Act 1974 (Cth))

Disclaimer:

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[seek professional advice] The Comment is not a substitute for professional legal advice. Before using any information provided in the Comment you should obtain independent legal advice relevant to your particular circumstances.

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Tom Spencer © 2010

[Guest]

Thanks Guys,

These are the times I regret selling my law books from uni.

I will probably take this to construct a disclaimer and after it's done get it approved by a legal practioner of some sort.

Everythings up on the drawing board at the moment and right now I'm trying to build my team to get this project starting.

If there is anyone on this forum interested in volunteering some time to get some consulting experience under their belt while also possibly helping the community (depends on where this project heads legality wise) please feel free to PM me.

Jason

[Guest]

If anyone else is interested in this topic, found an article online that helped to clarify this issue a little.

Protect your consulting practice in more ways than one

After my disclaimer's and confidentiality agreements are drafted I'm good to go

First client meeting next month, wish me and my team luck

[alee228]

Good luck, Jason!