New South Wales Consolidated Regulations

PROPERTY, STOCK AND BUSINESS AGENTS REGULATION 2003 - SCHEDULE 4

SCHEDULE 4 – Rules specific to business agents and registered persons they employ

(Clause 11)

Note: Clause 11 provides that a reference in this Schedule to an agent includes a reference to a registered person to whom the Schedule applies.

1 Preliminary physical inspection of the business to be conducted by agent

An agent must not act on behalf of a principal in respect of the sale of a business unless the agent has conducted a preliminary physical inspection of the business or has the principal’s written instructions that such an inspection is not required by the principal.

2 Sales inspection report required for business

On completion of the inspection required by clause 1, an agent must prepare and give to the principal a sales inspection report for the business. The report must specify the following and be signed by the agent:

(a) the principal’s name and address,

(b) the date of preparation of the report,

(c) the agent’s name, business address and telephone number,

(d) a description of the business, including the address of the business and such other details as may be necessary to enable the business to be readily identified, the business name and its ABN,

(e) a description of inclusions to be included in the sale such as goodwill, plant, fittings and stock in inventory, together with details of any encumbrances affecting those inclusions,

(f) any terms and conditions of sale known to the agent,

(g) the agent’s recommendation as to the most suitable method of sale of the business,

(h) the agent’s estimate of the selling price (or price range) for the business,

(i) details of any defects, local government notices or orders affecting the business that are known to the agent.

3 Confirmation of specific instructions

(1) Before or at the time of entering into an agency agreement under which the agent will act for the seller on the sale of a business, the agent must prepare for inclusion in the agency agreement written confirmation of any specific instructions given to the agent by the principal before the agreement is entered into about any of the following:

(a) arrangements for the transfer to the purchaser of any liability for the leasing or hire purchase of goodwill, plant, fittings or stock in inventory included in the sale,

(b) the marketing of the business,

(c) the entitlement of prospective purchasers to inspect the premises of the business and the circumstances under which such an inspection can be made,

(d) the entitlement of prospective purchasers to inspect records, books of account and other documents concerning the business and the circumstances under which such an inspection can be made.

(2) The written confirmation may be prepared and be included as part of the agency agreement.

4 Principal to be informed of an offer

(1) The agent must, unless the principal has instructed to the contrary in writing, inform the principal of all offers of purchase as soon as practicable after receiving the offer up until exchange of contracts has taken place.

(2) If the agent is not going to inform the principal of an offer, the agent must inform the person who made the offer that the offer will not be submitted to the principal.

(3) The agent may inform the principal of an offer orally or in writing and must identify the party by whom the offer is made. If the principal is informed orally, the agent must confirm the information in writing.

(4) This clause does not apply to bids made in the course of an auction.

5 Information to be given when expression of interest deposit paid

(1) When an agent issues a receipt for an expression of interest deposit made prior to exchange of contracts, the agent must inform the person who paid the deposit that the principal has no obligation to sell the business or the purchaser to buy the business and the deposit is refundable if a contract for the sale of the business is not entered into. The information must be provided in writing and may be provided on the receipt.

(2) The agent must promptly inform the principal when an expression of interest deposit has been paid.

(3) The agent must promptly inform the person who paid the deposit when the agent becomes aware of any subsequent offers to purchase the business received from any other person. The agent must also advise the person who paid the deposit that they have the right to make further offers up until exchange of contracts has taken place.

6 Agent must not accept payment for a referral

An agent must not demand or accept a fee or other valuable consideration for referring the principal to a buyers agent.