Tute 2 (Tara) Flashcards
(41 cards)
What does it mean when your employer indemnifies you as their employee in your employee contract?
Indemnity Definition: security or protection against a loss or other financial burden.
Protection from being sued essentially.
What is the only situation that you can be sued after you have died?
If you are famous and have an estate in perpetuity.
Perpetuity means ‘the state or quality of lasting forever.’
Why does Torts Law not apply to project managers?
Tort is the law of duty of care and duty of care is about reasonable competence to those with licenses or to a ‘benchmark’. Therefore as project managers don’t have licenses, they do not have a duty of care. This seems to be slowing changing however, starting in QLD.
What is the level of measurement held accountable in Tort
The level of Reasonable Competence
Two big ways to void your insurance…
- Not notifying your insurer immediately once you are made aware of an issue.
- Trying to solve it yourself can admit guilt.
the building legislation has a clause now that state the lawsuit from construction must be brought forward within a certain time period. How long is this time period and when does it start?
It starts at occupancy certificate and goes for 10 years - Legislatively barred from suing you. However, this is different for each state and Nicole advises not to use this information in the exam. The legislation can, however, be changed therefore you can end up being liable forever if the legislation changes down the track. E.g. the legislation for child abuse changed so that the victims can sue at any time now.
Insurance contracts usually include exclusions now. What are common insurance exclusions?
Cladding insurance.
In what way should you involve your insurance provider in signing contracts?
Get them to look over it to check for any unnecessary liability or ‘catches’.
What is the type of insurance you would have during retirement?
‘Run-off’ cover. Your insurer assumes your risk of liability is lower.
When don’t architects need insurance?
When you are an employee and have never built any independent projects. As soon as you have acted as an architect under your own registration, you are liable for the life of that project (your life probably) and need insurance. If you have done your own projects and then become an employee, you need runoff cover whilst being an employee.
What is the insurance situation when you are the only design professional/architect working for a construction company?
It is very difficult for construction companies to get professional indemnity insurance because they are not providing a ‘professional’ service but are classified as a commercial service. Therefore the liability all falls to the sole architect. Make sure the company you work for has some sort of PI insurance for the design services to indemnify you - often this will be in the form of a separate entity alongside the construction company that’s a ‘professional service’.
What are the other parties that could also be sued alongside with you referred to as? I.e. the engineer, building surveyor etc
Concurrent Wrongdoers.
What is the Tort of Negligence?
Fallen below the standard of reasonably competent.
What is the expiry timeframe from an event that someone can sue under Tort?
6 years from the date of the event/incident.
Ways to separate your company liability from your personal liability and personal assets…
The company signs the contracts, has its own ABN, has an assets register (separate to personal register), has its own bank account, has an ACN and has a separate TFN.
What classifies as a sole practitioner?
only one individual. he or she is the sole business partner.
What are Proprietary Companies?
is a legal entity in itself and in law considered to be a ‘person’ and can enter into contracts, own property etc, just like an individual.
The enterprise has a continuous existence and cannot be dissolved by the death, ill health or withdrawal of an owner.
Who manages a proprietary Company?
The management of the company (and therefore the practice) can be centralised in a board of directors, thereby permitting selection of experts as managers of the business, whether or not they are shareholders.
A director may be an employee of the company, as well as a shareholder.
A director may be entitled to a director’s fee, and/or a salary as an employee,
and if a shareholder, a share of the profits in proportion to the shareholding.
Who funds a proprietary Company?
Shareholders (who might not be directors or employees) can invest in the company which owns and operates the practice and be entitled to a share of the profits in proportion to their shareholding.
Capital can usually be raised more readily, than for a sole proprietor or a partnership, by the issuing or selling of shares.
Who owns a proprietary Company?
The shareolders own the company.
Companies have owners (shareholders) and officeholders (directors and
secretaries) who are not necessarily shareholders.
A director may be an employee of the company, as well as a shareholder.
What are a few of the overhead liable costs of a proprietary company?
liable for payment of superannuation guarantee, payroll tax, workers compensation etc.
What are the benifits to a proprietary company as opposed to a sole trader or partnership?
The company structure can provide protection to directors or shareholders against many of the ‘ordinary’ liabilities to which partnerships and sole proprietors are exposed. Directors are generally not personally (jointly) liable for the debts of the company unless they themselves breach their duties as a director – but this is separate to and of no assistance in the common scenario of personal liability of architect directors if jointly sued with the company over a particular project – independent legal and insurance advice is essential on such liability.
Shareholders (who are only shareholders) are only liable to the extent of the paid-up value of the shares they own.
What are the negatives to a Proprietary Company?
Companies require a more complex management regime with greater responsibilities and accountability to government regulators and shareholders, and disclosure of financial and other affairs. These legal requirements impose higher accountancy and compliance costs on the practice, and heavy legal and corporate responsibilities on directors.
What is a Proprietary Limited Company?
A Pty Ltd company is relatively easy to set up and not difficult to maintain. A Pty Ltd company is still a private company therefore cannot raise capital by offering shares to the general public. Their director(s) are commonly well protected from any liability to the company’s debts. For these reasons, Pty Ltd companies are the most common type in Australia and generally suited for small to medium sized companies.
