Video – 5 Tips when negotiating with a larger organisation – having Ts and Cs helps!
Jun 28th
What are your experiences?
Blog – SME’s dealing with Larger Organisations – having Terms and Conditions of Business helps!
Jun 7th
According to Earl Nightingale, famous author and broadcaster “You can measure opportunity with the same yardstick that measures the risk involved. They go together”. He continues, “Wherever there is danger, there lurks opportunity; whenever there is opportunity, there lurks danger. The two are inseparable”.
In many cases, especially with smaller business, (start-up or SME) negotiating with larger organisations, there lives both an opportunity and danger. There is of course an ‘inequality’ in bargaining power. This equality is generally apparent during negotiations. Most large organisations have legal departments and it’s not uncommon for a small company to be pitched into a negotiation involving a corporate legal department.
It’s during these situations that larger organisations may question or request your Terms and Conditions and subsequently changes to your contract or certain clauses omitted. In certain circumstances company contracts are compared and each clause examined individually; this is commonly known as the ‘battle of forms’. Experienced businesses use Terms and Conditions to position themselves professionally with potential clients and outline how they want to do business; for example getting paid, liability, protecting their IP etc. A well drafted contract will also help the business manage risk and ultimately save money by avoiding unnecessary disputes.
The following 5 points are worth remembering before you enter into negotiations;
1/ If you don’t have a set of Terms and Condition, then its leads to the smaller company inevitably following the only contract available, that’s the contract of the larger organisation.
2/ Smaller businesses can readdress the balance when negotiating with a larger player; its how you ask that counts and having Terms and Conditions gives the SME an advantage.
3/ Such negotiations can be tense and feel overwhelming, a company with a niche product or service can be in a powerful bargaining position and not realise it, distracted by events or potential size of the opportunity.
4/ Don’t feel flattered; you will end up working harder for less and obtain less appreciation for doing so, vanity costs money!
5/ Be confident, it’s ok to feel pressured by a larger company’s demands. However the same rules apply when doing business with smaller businesses, if you have the capability to deliver services, it’s profitable for you and the risk and scope can be managed then its worth negotiating or perhaps in certain cases worth walking away.
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Tougher Partnership Rules Could Increase Liability Risk
May 16th
Legal experts are calling for a change in the law to make it easier to prosecute partnerships and individuals for criminal offences, even after the business has been dissolved and no longer officially exists.
Under current legislation a partnership which has been dissolved no longer has any legal existence and cannot be called to account to for any allegations of wrong doing.
The High Court has recently produced a Discussion Paper on Criminal Liability of Partnerships in which the Scottish Law Commission considers ways of preventing the prosecution of a partnership from being frustrated by its dissolution. It also examines the circumstances in which individual partners may be held criminally liable for offences committed by a partnership and asks whether legislation should be introduced to make it easier to prosecute partners as individuals.
“Where there is evidence that a partnership has committed an offence, it should be possible to prosecute that partnership, and make the partners liable for any fines,” said Patrick Layden QC TD, the lead Commissioner on the project.
“A partnership and its partners should not be able to avoid liability just by being dissolved. Our Discussion Paper explores ways to prevent this. We also consider whether it should be made easier to prosecute individual partners for offences committed by the partnership, providing an added incentive for partners to ensure that their partnerships comply with the law.”
However, even under existing legislation many partners can find themselves embroiled in problems long after their business has ceased to exist unless the proper procedures have been followed, warns David Reilly, commercial director of Create Ts and Cs, which specialises in tailor made commercial contracts for SMEs.
“Dissolving a partnership can already appear complicated to businesses and any new changes to the legislation must be communicated with this in mind,” said Mr Reilly.
“It not uncommon for some companies to move from being limited companies to partnerships, then back to limited company or a sole trader.
“Some business people have a tendency to go on a journey which leaves a complex legal legacy behind them especially if they don’t dissolve partnerships as they move.”
“Failing to dissolve partnership is a bit like business bigamy. Most people entering a second marriage will make sure they have been divorced first, but not all companies operate so tidily,” said Mr Reilly.
“If a partnership is not resolved it can cause problems with a lot of issues including liability, intellectual property and the relationship with suppliers.
“If there is any intellectual property created within the partnership it will require the partnership being dissolved and the intellectual property being transferred to the next business entity in order for people to use that IP in the next business venture.”
The Commission has called for the views of interested organisations and members of the public by to be submitted for consultation before 12 August so that it’s final report can be published later in the year.
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The curse of the Verbal agreement…….getting it in writing matters!
Apr 4th
So what’s the problem with verbal contracts, it seems sensible on the surface, why can’t people just get on with doing business based on a rational conversation?
The problem with verbal agreements as per the famous quote by Sam Goldwyn (film boss from 1930′s)” is that they are not worth the paper they are written on”.
Of course it’s legal in certain circumstances, (depending on the type of law) also a budget to argue the issue will help, without money to contest the issue in court, how else can you prove the contract exists?
As demonstrated by the England bid to host the world cup in 2018, verbal contracts when they go wrong, generally lead to post event denial, bad feeling and an overall shambolic situation. Listening to the commentary you would think the parties were describing two different situations rather than the same event.
Verbal agreements represent an unnecessary business risk and create ambiguity from the beginning of the client or supplier meeting. Clear communication with clients is a difficult thing to achieve at the best of times, so omitting a written contract and relying on what everyone remembers to be the truth appears ludicrous.
The physiology of a verbal contract seems to suggest a keenness to be flexibility as a service provider or accommodating as a client. An immediate willingness to trust without knowledge of the people involved or the full extent of the circumstances is an interesting way of exposing your business to uncertainty and all to avoid some paperwork or explore the client or supplier’s service offering or business intentions. This isn’t to say doing business with friends is a walk in the park, sometimes familiarity can lead to you being last to be paid or expected to deliver a lot more because of the friendship. So, arguably formality tests the strength of commitment. Trust is a very important part of business and perhaps should be earned over time.
It only takes two minutes to type “problem with verbal contracts” into Google to find out how problematic it is to embark on a non-written agreement. Perhaps a written contract is our way as humans, to get to know each other under the banner of legal protection, so post contract we can demonstrate those charming traits of over delivery and flexible customer service. Impressing a company under contract is more likely to lead to both parties being satisfied rather than one disgruntled party.
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Crackdown on Unfair Terms & Conditions
Feb 28th
by EasyEditor Newswire
Firms have been warned to make sure their terms and conditions are clearly defined after the Office of Fair Trading announced a crackdown on contracts which are detrimental to customers or breach consumer protection laws.
Currently around 70 per cent of enforcement cases handled by the OFT relate to terms and conditions with at least a fifth of consumers claiming to have had a problem with the small print in contracts over the last 12 months.
Research carried out by the OFT found many contracts contained small print terms that altered the deal consumers believed it to be, or had made it difficult to understand by hiding unfair terms in plain view. At least 80 per cent of cases investigated found people who had experienced a problem said that they had been caught out by a surprise.
Examples of unfair conditions were a football club selling season tickets without guaranteeing seats, extended warranties offering limited cover and an increasing number of sale and rentback deals where the tenancy offered was much less secure than many people realised.
The OFT has also raised concerns about complex, deferred or contingent charges that exceed costs such as businesses which include small print charges that don’t correspond to any service provided or which include obstructions to consumer switching such as imposing onerous cancellation terms.
“The recent economic difficulties have resulted in a lot of companies trying to tighten up on their terms and conditions but great care needs to be taken that any small print cannot be deemed unfair to customers,”
said David Reilly, Commercial Director of Create Ts and Cs, a company specialising in creating tailor made terms and conditions. “A set of Terms and Conditions drafted in plain English, can help a company to differentiate themselves by communicating clearly and openly with their client in mind”
“The OFT will take a dim view of any firm which deliberately or not tries to tie down consumers to unfair contracts.
“Every business needs to review their contracts to make sure their customers are treated properly. Creating fair and transparent terms and conditions is good business sense as it not only offers protection for both parties but builds trust with customers and encourages repeat business.”
However, the use of small print clauses are not automatically unlawful as it depends on the specifics of each contract and a number of other factors.
“On the one hand, we all know that people don’t read the small print of contracts. On the other, small print is a necessary fact of life and consumer law isn’t there to protect the careless or the over-hasty,”
said Heather Clayton, Senior Director of the OFT’s Consumer Group which is calling for the need for small print to be reconciled with the real life behaviour of consumers.
“Consumers should be free to focus on the main elements of the deal, confident that there will be no unwelcome surprises in the small print.”
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Freelance Contracts Help Firms Reduce Employment Risks and Costs.
Feb 14th
In a desperate attempt to get employers hiring again the UK Government is preparing to shake up the employment tribunal system with a raft of radical measures.
Controversial moves such as increasing the qualifying period for unfair dismissal claims from one to two years, scrapping the payment of expenses in hearings and introducing a fee to lodge a claim are being considered.
The raft of actions are designed to curb the number of tribunal claims which rose to a record 236,000 last year, a rise of 56 per cent on 2009.
The Government proposals come after businesses raised concerns that the current system has become too costly. Takes too much time, places unnecessary strains on small businesses and that it is too easy to make unmerited or vexatious claims.
Last year actions cost firms an average of £4,000 each to defend leading an Commercial Contract expert to argue that hiring a freelance is the best way to get the work done and avoid being stung.
“Whether the government makes the qualifying period for claims one or two years makes little difference, getting the right person, reducing cost and managing risk are what matters,” said David Reilly, commercial director of Create Ts and Cs, a company specialising in creating tailor made business contracts.
“A ‘contract for service’ is the answer, and with over four million people now self employed, why not share the risk and hire a skilled person on a contract basis?
“An effective contract for services can also include performance related mile stones, review periods, notice periods for both parties and protection for your customer database, outline customer ownership and where possible anti-competitive clauses.”
With top lawyers warning that employers who treat the qualifying period extension as a ‘licence to sack’ could unwittingly sow the seeds of future costly and complicated discrimination claims it’s never been more important to look at the fine print.
“Getting the right person on a contract basis will save money both in the short and long term,” said Mr Reilly. “We can help by drafting bespoke contract for services in line with your business and client requirements.”
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