Whatever the size of your business, and whether it is a new start-up or long established, you will trade with third parties as part of your operations. These third parties will be your customers and clients. You will be entering into all manner of contracts on a day-to-day basis with them, as well as your suppliers.
A verbal agreement with your customers and clients is binding in law. However, if there were to be a breakdown in the relationship, having only a verbal agreement can make it difficult for you to enforce the terms of your agreement or to protect your business from unfair claims. Disputes with customers and clients can happen to all businesses regardless of their size and experience, and having to deal with a dispute can have a detrimental effect on your business in terms of lost management time, lost revenue and damage to reputation.
Because of this, we always advise our clients that it is better to have your important contracts documented in writing. This way you have your relationship with your customers and clients properly documented, so that your legal position is clearly protected in the event of a future dispute.
Our commercial contract solicitors at Jordans are experts in drawing up commercial agreements for our clients. We always recommend you seek specialist commercial contract advice from our expert solicitors to best protect your business.
What is a commercial contract?
A commercial contract is a document that sets out in writing what both parties involved in the contract will agree to do. It also explains what will happen in the event that the other party fails to keep to their end of the bargain.
There are many different types of commercial contracts, some of which may be suitable for your business. Jordans’ commercial contract solicitors are experts in drawing up bespoke contracts, which are tailored to suit the needs of your business to best protect your legal interests. Examples of commercial contracts include:
- Standard terms and conditions of trading
- Distribution agreements
- Commercial agent’s agreements
- Technical agreements (eg: long-term supply of services, such as I.T. or marketing services)
Because the terms of the agreement are set out clearly in the commercial contract, it avoids any disputes taking place in the future between the parties. With an otherwise verbal agreement, differing opinions can arise about what should or shouldn’t happen in certain circumstances, leading to disputes and events that weren’t considered before the contract started.
Having to deal with a dispute can be very expensive and a drain on management time. While having a commercial contract in place won’t give you complete protection against any future disputes, it will make it easier to resolve them. Pre-deciding what both parties will and will not do under the agreement makes it easier to decide who is in the right and wrong, and how a particular situation can be resolved.
Commercial contract disputes
As stated above, commercial contract disputes are commonplace and can take place in situations where payments for goods or services supplied are not happening quickly enough. This can be where there is a complaint that the goods or services supplied aren’t up to specification or the service isn’t being provided to a high enough standard.
The agreement could set out what will happen if there is a dispute. For example, if goods are not up to specification it can define how they will be replaced and refunded, with a clearly set out complaints process and rejection policy. In relation to services, it would set out how quickly a service has to be repeated to make sure that it is done to the correct standard.
It might be appropriate to have a minimum spending requirement from a customer written into an agreement, in order to secure preferential charges for bulk orders. In the case of distribution agreements, you might want to agree to be a distributor (or to have your goods distributed by another party) with exclusivity rights over a set period of time or a particular part of the UK or overseas region. If these are the types of terms you are regularly agreeing with your customers and clients, it is sensible to have these properly documented in a commercial contract to avoid any future problems.
If there is a dispute, then Jordans’ commercial litigation department can assist in getting your unpaid invoices paid quickly, having a contract re-done in the event of quality issues or helping you terminate an unprofitable or unworkable contract where the relationship has now broken down. Disputes can be resolved in many different ways, including court litigation, but also by negotiation and mediation.
Creating a commercial contract
We always advise our clients to have your contracts in writing, so that there is clear evidence about the terms that you have agreed with your customers and clients. All commercial contracts are drafted by our expert commercial contract solicitors at Jordans, to meet the needs of your business.
Some of these commercial contracts will have to be negotiated with your clients. Many of them, such as your terms and conditions, will be for you to determine, as they will be your standard terms of business. We can provide commercial contract advice about how to successfully incorporate your standard terms into your future dealings with your clients and customers.
How Jordans can help
Jordans’ expert team of commercial contract solicitors can help you draw up a bespoke contract that suits your business. This can help it thrive and prosper, protect you against foreseeable risks that can, unfortunately, arise in business from time to time.