2009 may be a difficult year but businesses can improve their legal position by making a few timely New Year resolutions.
Losing weight and getting fit may be the most popular New Year resolution but local businesses would be advised to make a few resolutions themselves to protect their legal position with potentially a difficult year ahead. Here are five good resolutions that should pay dividends for most business people:
- Issue some standard terms of sale and purchase if you do not already have such documents and make sure they stick. They hugely improve your legal position. Sit down and consider which are the most important business relationships and whether there are adequate contracts protecting the business. When a business has problems these days, directors may be a target if it goes under and others have lost out. Watch out for what subsidiary companies are doing too. Always check and be slow to trust without due diligence. Many companies in the UK operate with contracts written on the back of an envelope or a handshake which is fine when times are good, but a problem when difficulties arise as there may be no legal protection.
- Check your employment contracts and procedures are up-to-date. Sadly, many companies have to make staff redundant in the current climate but many make basic mistakes and do not follow the correct procedures, which can lead to employment tribunal claims. Be alert to changes in employment law too.
- If in business with a partner or fellow shareholder, have a written agreement or contract with them and ensure that both partners have made a will, otherwise the intestacy rules will mean your estate will be divided between parents and children and spouse in a way you may not like and your partner’s business interests might be jeopardised.
- Do not start work under a proposed contract until a written agreement is in place.If you are the supplier of goods or services, at the very least have a written binding “heads of agreement” firmly committing that you will be paid for the work.
- Enforce and protect your rights. Do not let late payments build up. Be assiduous with credit control. Do not let breaches of contract go by without some formal action or letter. Register any intellectual property rights that are vital to the business.