The recent Federal Court decision of Rafferty v Madgwicks
highlights the need to take care when drafting heads of agreement
and agreements relating to the licence of trademarks or
distribution of goods or services and consider whether the
agreement could be construed as a franchise agreement. Getting it
wrong can be very expensive.
Facts
This case involved a business venture between companies
associated with two parties, Stephen Donovan (Donovan
Parties) and Patrick Rafferty (Rafferty
Parties).
The Donovan Parties were the owners of certain intellectual
property in relation to Modular Accommodation Units
(MAUs). The Rafferty Parties paid moneys to the
Donovan Parties for certain rights to manufacture and distribute
the MAUs. The agreement between the parties was governed by various
agreements prepared by Madgwicks on behalf of the Donovan Parties
including a Heads of Agreement (HOA) and Rights
Agreement (RA). The rights related only to a
single territory,
