Dotting your Legal “I’s”

Is your basic business documentation fit for purpose?  Do you even have any? When starting a business it’s easy to overlook your basic business documentation.  This article focuses on 2 areas that you might want to get into shape. Shareholders/Partnership Agreements If your business will be owned by more than 1 person, consider putting in place a simple shareholders agreement (if it’s a company) or a partnership agreement (if it’s a partnership). This agreement will set out how the business will be run; list the things that can only be carried out if each party agrees; set out what will happen if one of the parties wants to leave, or dies, or if one wants to sell, but the other doesn’t, and so on. It’s always far better to discuss these issues and put them into a properly drafted agreement, before starting up, rather than discovering a few months down the line that the parties have completely different expectations. Standard Terms of Sale Whatever your business does, it’s likely to sell a product or provide some kind of service.  How much thought have you given to your standard terms which will form the basis of each sale to your customers? Given that these will be rolled out time and time again (in fact, each time there is sale) they’re a key document. Are your standard terms uptodate and properly worded? Among other things, do they make it clear that they will prevail over any terms that a customer says apply instead?  Do they protect the business sufficiently, by, for instance, containing appropriate limitations or exclusions on the business’ liability?  If you’re selling goods, do they state that title in the goods won’t pass to the customer until they’ve been properly paid for? Spending a little bit of time dotting your legal “I’s” at the outset will reduce the chances of dispute and may end up saving you time and money in the long term! Hugh Mulley is a business law specialist for Setfords Solicitors. Click here to contact Hugh.