Quote Unquote

Get legal protection

Legal documents and contracts can help save small businesses - Giles Dixon

As businesses tighten their belt in a recession, the need for properly documented contracts is even more important than usual– it is well known that disputes increase when money is tight, and if you are doing business without proper contracts, you are at risk.

This presents a dilemma for a small company or start–up a business: how do you reconcile the need for quality legal agreements with the high fees lawyers charge?

The answer is – you can get quality legal documents without having to pay a lawyer for his time in writing them. In the past if you wanted a suit you went to a tailor, if you wanted some furniture you went to a cabinet maker. But things have changed over the years: ready-made suits began to appear in the 19th century in the United States and self- assembly furniture in the 20th – think of Habitat and Ikea.

Now, with the internet, in the 21st century you can buy ready-made contract templates for your business without going further than your home PC. At the most, you will have to pay for a standard contract template is £50 – which compares very favourably with an hourly rate of £150 or more charged by most solicitors. The documents can be downloaded on to your computer and they come in Word format so are easy to complete with the relevant details, or to adjust as necessary.

Whilst it is tempting to agree terms of a transaction on the basis of a handshake or an email, a canny buyer or supplier should always ensure that he has entered into robust, sound terms which cover the necessary terms. Contracts are the glue that seal the relationship between a business and its customers or clients and provide certainty.

Without that certainty, disputes can arise on the precise nature of what goods or services are being provided, their price or the terms of payment. None of these issues are in themselves particularly complicated, but they do need to be written down clearly and unambiguously if problems are to be avoided. And since there is a lot of similarity in the various types of business transactions, a standard form can be produced by a professional draftsman and sold as a template. And, just as with clothes bought off the peg that require a few alterations, if you need some adjustments, they can be done by a professional solicitor for much less than if you asked him to write the entire document.

There is plenty of advice on the web for small business but the need for proper contract terms gets inadequate coverage even on websites such as Business Link. Not only are standard terms needed to protect your business, they also give the business a more professional appearance. The document does not have to be lengthy – there are maybe a dozen clauses that a straightforward supplier of goods or services needs and these can be printed on a single page without being illegible.

In addition to price and payment, the terms can cover what happens if the client wants to change the scope of the supply or services; retaining ownership of goods until they have all been paid for; delivery dates and delay, termination for breach of contract; limitation of liability etc. And don’t be nervous about clauses that are designed to give you some reasonable protection and limit your liability in a reasonable way – the great majority of clients probably won’t read the terms in detail anyway! The important thing is to be sure they are given the terms and sign up to them.

It is also important to remember that in some circumstances you are required by law to have terms of business – for example if you are selling goods online you need to have terms that comply with the Distance Selling Regulations. In addition you will probably need a privacy policy as well as having certain company information displayed on your website. And if you are employing staff, they will need to have their contract terms provided in writing. Online document suppliers such as ContractStore offer quite a lot of free information on their websites and packs for new businesses containing a bundle of basic documents needed to get the business started.

So don’t leave things to chance by going into business without proper contract covering the vital issues: as Warren
Buffet said: “It is only when the tide goes out that you see who has been swimming naked! ●

 

---

---