Contract advice

Managing Business Risks with Contractor Contracts

Managing Business Risks with Contractor Contracts

The latest statistics from the Office for National Statistics reveal that self-employed people have increased to 15% of the workforce in the UK. Certain sectors such as construction, IT and technology are particularly affected by this trend, as working with contractors, freelancers and subcontractors are commonplace.

Benefits of Hiring Contractors or Subcontractors

Hiring a contractor or subcontractor to do a job can be very cost-effective as the company does not have to provide sick pay, holiday pay, maternity/paternity pay, pensions or other benefits.

Contractors and subcontractors also have a wealth of experience and knowledge that are often specific to a certain market or sector, so it’s often an ideal solution for expanding businesses to strengthen their position.

What are the Risks of Hiring Contractors or Subcontractors?

While contractors not being employees have certain financial advantages, companies must be aware that they also have to balance the risks that hiring freelancers can incur. One issue is that freelancers could be mistaken for employees by HMRC. Not being able to prove the opposite could lead to hefty fines and penalties.

Other main risks for businesses include:

  • Client ownership: Who owns the client: the contractor or subcontractor?
  • Notice periods: Having no notice period in the contract or agreement could help when determining your IR35 status, as employees usually get notice periods but not contractors.
  • Payment terms: Contractor contracts must clearly indicate any terms for payment that must be observed.
  • Responsibilities and liabilities: Contracts should outline what the contractor can and cannot be liable for.
  • Intellectual property ownership: For some sectors, it is key to consider ownership of intellectual property in contractor agreements in order to avoid further issues.

 

How Can I Manage the Risks of Hiring Contractors or Subcontractors?

By adopting a diligent approach to contractor management and making sure your contractor contracts are thoroughly reviewed, companies can easily manage the risks of hiring a freelancer/contractor, meaning that both parties can benefit from the agreement.

From an HMRC perspective, it’s important to make sure you can differentiate yourself from appearing as an employee by stating the contractor status clearly and have the correct documentation in order to keep HMRC off your back. To do so, it’s essential to cater for the IR35 issue within the contract itself.

Do you have all the correct documentation and contract terms in place? Take the first step towards better protection for your business by getting in touch today.

Small businesses, donations and working with charities.

In our experience, a lot of small business owners are very aware of social responsibilities and many have started businesses based upon a principle or an ethos.

It would seem that small businesses are the perfect target for a charity or ethical organisation that requires donations. It appears logical, that a principled small business owner would be very keen to have a transparent and open link with a charity, especially a charity that reflects their values and is compatible with their approach to business. As a small business making smaller more frequent donations works for us as opposed to large one off donations.

So with that in mind; here are two suggestions or challenges, that if overcome, would help us integrate a charity into my business.

The first issue is highlighting the destination of the donation and the positive impact it may have?
There is a certain cynicism with regards to how much of the donation goes to the cause itself, perhaps the charity can tackle that issue by providing a statement or a certificate with every donation, outlining where the money is going and what percentage will impact the grassroots, or make a difference?

The second issue is access to a branded dedicated link (continuously live) to make it easy for our clients and us to make a donation. For example, some of our services like ‘updating a contract’, may require minor tweaks and we may avoid charging our clients for the work, however attaching a value to the work is useful and may be an opportunity to integrate a charitable donation option into our service. Its means we complete minor work for a fixed value which results in a donation instead of a direct payment or not charging any fee.

The charities we’ve spoken with are not structured to provide a simple payment mechanism for us to use. You would think with all the technology out there that making a charitable donation that’s transparent, open and ethically acceptable would be a simple task.

Hope you find our thoughts on this subject of interest.

No Warranty No Clarity

This blog is part 2 of a series of 5 that is preoccupied with small business using contracts to avoid contractual disputes. Court is an expensive pursuit and building self-remedy or clauses into your contract, that are enforceable and offer solutions to problems that may arise is practically useful to small businesses. A considered contract can help you save money, time and effort.

Warranty in simple terms means performance. So outlining how the product or service will perform seems obvious but in many cases, the details provided are scant at best. In many cases, the contract generally fails to outline the key aspects of performance and in turn creates ambiguity. It’s this grey area that can lead to further issues, as during times of dispute, areas of uncertainty become points of discussion or argument.

This gets even more troublesome when there’s a returns policy or a maintenance/service agreement to support post installation or delivery. Stating what is covered by the contract with regards to the basic product’s functionality is one thing but when something breaks or fails to work, what then? Remember these products or service are manufactured and delivered by humans, so things happen, the important thing is outlining what happens next?

Going to the trouble of employing the right contract drafter to ask the right questions and create a contract that is designed to help both parties work together long-term, is worthwhile. Contracts are avoided by those who see no need for outlining the negatives…..but knowing what might happen in the event of….is arguably good customer service and is considerate to both you and your customers time and energy.

The next blog will focus on intellectual property…..

Credibility through good contracts – bespoke V DIY

Would you buy from a business that has clearly cut and pasted their contracts? Something that doesn’t have the buyers’ rights included and bias towards the business?

With buyers becoming more aware of their rights, they now understand a contract and what it means in relation to them. If they don’t see a contract that shows commitment to them, or their rights being reflected then they are less likely to do business. A set of bullet points or a basic contract that has no real protection or does not manage risk for the customer won’t attract custom.

A contract that is well drafted and legally enforceable will help to attract custom and differentiate a business from its competitors. Any business that has ambitions to build up a client base should consider having a bespoke contract rather than a self-drafted or DIY set of terms and conditions.

Yes, you’re contract should reflect the business operation and sales processes, be in line with the law and manage your liability. But a contract also serves as a communication to your clients. And because of this it is important to consider what a client thinks and feels about your business. If a client feels that they are being looked after then they will return.

A good contract will help to attract the right kind of client base – one that shows loyalty to a business. If a business shows through their contract that they are adhering to the law and go out of their way to protect their clients rights, this will encourage quality clients – who will pay their bills on time, and show loyalty.

If you’re contract is written in legalese and doesn’t make sense to your clients then it may be difficult for them to adhere to your terms and conditions. A bespoke contract, that is drafted specifically for your business should be written in accessible style.

Whether your business is traditional, online, or app based it is important to have a contract that reflects the quality of your business. A DIY or self-drafted contract can on many occasions could be a barrier to sale. A clear well drafted contract will encourage clients with its accessibility, care towards the client and efforts to protect both parties, is more likely to encourage the type of clients you want to have. As a business, can you afford to get this wrong and risk losing sales?

 

Bespoke vs DIY

 

Ts and Cs can help protect against screen scraping

Ts and Cs can help protect against screen scraping

 

When you see the word screen scraping, you would imagine it to mean de-icing the car on a winter morning.  But actually, screen scraping is the process of automatically copying data from a website.

Screen scraping is a controversial topic – some call it theft whilst others call it gathering information. Essentially scrapers will target their competitor’s website, taking information from it that they can use to their advantage. Information such as bookmakers odds, currency exchange rates, online grocery shopping prices or retail sale prices are all known to be copied by scrapers, and the information is then used by competitors. Time-sensitive information is most likely to be scraped. Competitors use the data to beat prices and often draw customers away from their competitor.

With the rise in price comparison websites, there has been a rise in screen scraping. With prices changing constantly and businesses fighting to give their clients the best deal, scraping has become a real issue.

Whilst it is good to know what the competition is doing, scraping can be seen in a bad light. It is important to get a balance between letting your clients know your price and keeping it away from the competitor.

The internet is full of blogs that discuss whether scraping is ethical. Copying information from a website is a lot more complex than from a word document and there are now many computer programmes available. But is it right to scrape, and how can you protect your business from it?

If someone is scraping your website, they can slow your server and use a bigger allowance of bandwidth – meaning that your genuine visitors aren’t getting the best experience on your website. To combat this issue businesses may impellent new security measures, but this is costly and many businesses simply don’t have the money to do this. So essentially you are losing money from clients and security costs.

However a recent court case between Ryanair and PR Aviation has brought the issue of screen scraping to business owners attention, and action is being taken. The Court of Justice of the EU (CJEU) preliminary ruled in January 2015 that websites can now use contractual restrictions to prohibit businesses scraping information from competitor’s websites.

Understandably when you are running a small business, you don’t have the funds to fight big battles, like Ryan Air and Ladbrokes do. But it is not just the big companies that have their websites scraped – small businesses do too. If you are in competition with another business who has the ability to screen scrape then it is most likely that they will do it to you too. Whilst it is not illegal, if a competitor holds information about your products and services then they can use it for their own gain – which could lead to you losing custom and money.

So what does all the mean for a small business? The CEJU ruling means that the business can have more control over who uses their products and services information.  The court ruled that website owners can prohibit screen scraping of their unprotected data via their terms and conditions.

Some of the information posted on your website may not be protected by intellectual property rights or the Database Directive – an official instruction that provides protection in relation to databases. The ruling means that if the information is not covered under this, then it can be covered by your terms and conditions.

Industry experts have stated that if a competitor was to scrape your website and it was in your terms and conditions that you limit/prohibit this activity, the ts and cs could offer protection and may strengthen a case of breach of contract. To do this it has been suggested that terms and conditions would have to be easily accessible.

Industry experts have recommended that businesses should consider amending their terms and conditions to include a screen scraping clause. It has also been suggested that should all businesses begin to protect themselves against screen scraping, it would help to discourage the activity.

Whilst having a set of terms and conditions that cover the issue of screen scraping might not stop the issue completely if you were forced to take legal action the contract would help you. With laws changing and new rulings being passed it is always important to stay up to date with the law. Adapting a set of terms and conditions to reflect new changes will help to sustain and grow your business.

 

 

 

 

Is an unsigned contract enforceable?

Is an unsigned contract enforceable?

Many clients don’t come to us until they have a problem. A contract helps a businesses to manage risks but what if it is found to be unenforceable? We have been asked all the common questions – ‘Is an email a binding contract?’, ‘We have a verbal agreement, is this enforceable?’, ‘My client never signed the contract but is it still binding?’ etc.

But there is so much conflicting information available that it can often be difficult to determine an answer to these questions. If your contract is unenforceable then it means the business can end up losing out.

Looking on the internet business forums, there are thousands of questions relating to this topic. People are worried that their contract is not binding and they will not get paid or be left open to client disputes. And they have every right to be worried.

Email or a verbal agreements still count as a contract, but there can be a number of problems like proving what the terms of the contract are if it has been agreed verbally, or what terms are enforceable if it is through email. If there has been no signature it can prove difficult to determine whether the terms were actually agreed.

It’s understandable that businesses feel they may not always need a contract. If it is a repeat client, friend or known associate there can be a mutual feeling of trust, so it appears like there would be no need for anything to be put in writing formally. However, this can jeopardise and even ruin relationships; so, why risk these friendships?  A changes of client contact or peoples personal circumstances can lead to them reacting differently.  Without a contract existing relationship run the risk of turning sour.  A contract outlines what has been agreed and helps the business and client to stay protected. It allows both parties to understand what to do in any given situation, and helps to remedy any problems – therefore protecting the relationship.

It is certain that some agreements will lead to problems and by not having a signed contract it can lead to expensive legal battles.

Lord Justice Clarke has previously been quoted saying; “The perils of beginning work without agreeing the precise basis upon which it is to be done. The moral of the story is to agree first and to start work later.”

We would always recommend having a contract and ensuring that it is signed by every client. It is far safer to wait until the ink is dry before starting work.

Have you got the right contract?

Have you got the right contract?

Any good business owner will take steps to protect both their business and their clients – it helps to safeguard the company’s future and gives clients peace of mind. But how do you know that you have a legal framework in place that is suitable for your business?

It’s not as simple as you might think. Whilst you can get a DIY template for under £20, the chances of it covering your business liability if anything happens are very low. Every business is different so a DIY template or a self-drafted contract will not cover the complexities of your business and therefore may not stand up in court. And most importantly, it may not even be the correct contract that you actually need.

With technology and the way we can do business constantly changing, it is important to have the correct contracts in place. One in four websites don’t offer their customers the correct options when trading, and this could lead to problems with Trading Standards – who have the power to issue a hefty fine. Cookie policies, privacy policies and web/app terms and conditions are all contracts that you need to have in place when you are doing business on the internet. And if you do business over the telephone then a different contract is needed to ensure that you are in line with distance trading regulations.

73% of the British public have admitted that they don’t read the terms and conditions when making a purchase, but this shouldn’t be used as an excuse for businesses not to have them. If a customer has a problem then the first place they will look is your contract to try and resolve it. But the question is, which contract is needed for YOUR business?

This answer cannot be found or bought on the internet unfortunately. Every business is different and using a basic template or someone else’s contract won’t offer you the protection you need – it may be completely useless if it is the wrong contract. If you don’t have the correct contract then you are leaving the business open to problems and disputes. By taking the time to ensure that you have the correct contracts then you can save time and money.

It isn’t possible to determine what contracts you need by just looking on the internet. Yes, a DIY template or using someone else’s Ts and Cs might seem like a quick and easy option, but if you run into problems it is important to remember that this decision might cost you.

At Create Ts and Cs we take the time to understand your business so that we can help you to protect your business. We will get to know your operational and sales processes, assess what contracts your business requires, and draft a bespoke contract that will help to protect you and allow you to grow.

If you are unsure of what contracts your business needs, or are worried that you don’t have the correct legal framework in place, call us on 0141 585 6384 or email hello@createtsandcs.com .

 

 

 

 

Ten Reasons Why You Need a Contract

We understand that the law can appear boring and confusing, but would you use this as a reason not to protect your business? Legally, you don’t need to have a set of terms and conditions for your business, but it would be foolish not to – you should never do business without them.  We have put together a list of the top ten reasons why your business should have a legal framework in place.

 

  1. A contract will help you to navigate the law

Many people find the law complex and confusing. A contract will help to make the law more accessible and allow you to navigate it correctly. It’s extremely common for businesses to fall foul of the law because they don’t understand it, so a contract drafted by a specialist will ensure that you always stay on the right side of the law. Of course there are DIY contract templates available online, but these will not reflect your business and offer you full protection.

 

  1. A contract helps you to get paid

In your list of business priorities, getting paid will be one of the top, so if your clients don’t pay then you lose out.  A contract can communicate to clients when they can expect an invoice and when they need to pay their bills. Should they decide not to cooperate, the legally enforceable contract will support any legal action you take to recover the debt.

 

  1. A contract helps to minimise disputes or problems

Whilst a contract won’t completely stop disputes or problems, a contract can help to minimise them. Should you have a dispute on your hands a contract can help to protect you in many different ways. It encourages your client to cooperate, but if this doesn’t happen a contract allows you to mediate to try and resolve the problem, rather than paying expensive legal fees. Of course if mediation fails then the contract is a legally enforceable document so it will support you with any legal action or debt recovery.

 

  1. A contract protects your intellectual property

Protecting your business and its assets is extremely important. Intellectual property can often confuse clients because they believe they have full ownership once they have paid for a service. This is incorrect so a contract will communicate how the intellectual property is to be used. It’s a valuable part of your business and you need to ensure that it cannot be stolen or misused.

 

  1. A contract limits liability

A legal framework helps you to manage your business and limit liability. It helps to resolve disputes, helps you to get paid and protects valuable business assets.

 

  1. A contract creates certainty

Yes things can be agreed verbally, or by email, but how much legal standing do they have? The answer is very little. A contract will outline the operational and sale processes of a business and explain how the customer or client can use the services. By communicating this information you are creating certainty – all parties know how to act and what is expected from them.

 

  1. A contract provide in-depth coverage of your business

A contract will help your clients to understand your business, how it works and how they can use the services. It will provide an understanding of your operational and sales processes so that clients can manage their expectations. It’s good business practice to communicate with your clients.

 

  1. A contract helps you to give good customer service

Should a client have a problem, they can refer to the contract and it will give them all the information they need to try and resolve it. It will explain returns, refund and repair policies, warranties, intellectual property, and complaints procedure – all the things a client needs to know! By providing this information in a document that can be referred to, the client will feel they are getting a good service.

 

  1. A contract helps to build trust and give peace of mind

By putting a legal framework in place you are showing clients that you care about them, as well as your business. A contract gives you and the client peace of mind because you know any transactions and work are protected. By providing this to clients you are allowing them to have trust in the business.

 

  1. A contract allows you to manage expectations

When you communicate the terms and conditions of sale to a client you then have the ability to manage their expectations. A contract will communicate all the information they need to do business with you, so they understand what to expect. Managing your client’s expectations allows you to give them good service and encourage them to use your business again.

 

If you don’t have a legal framework in place for your business, why not? It will allow you to grow your business, keep clients happy and protect the future of the business.

 

 

 

Worrying About Late Payments

Do you worry about getting paid for the work you have done? If you do, then you aren’t alone. Nearly a third of small business have reported in seeing an increase of late payments, and to tackle the issue the government is introducing tougher laws.

The new laws will encourage businesses to pay their bills on time and crack down on unfair terms when it comes to settling a bill.

Typically, smaller business are more approachable and would rather solve a problem than add to it. Small businesses won’t have a legal, or debt recovery department that can chase outstanding bills so when a bill hasn’t been paid it is usually a director or key employee that has the responsibility of chasing money. This takes up time and effort, and when there is a small workforce this can have a detrimental effect on business.

A new report from the Association of Chartered Certified Accountants revealed that businesses with less than 50 employees are twice as likely to have problems with late payments, compared to larger organisations. SMEs are also less likely to increase their workforce if they are faced with late payment.

Outstanding bills or non-payment can endanger a small business and it is important to try and overcome this problem. The government is introducing these new laws to show that the UK is a safe place to do business, and encourage economic growth.

The following measures will be introduced to tackle the problem:

  • Consulting on ways to tackle poor payment practices
  • New laws to increase transparency on the payment practices of large and listed companies and help change corporate payment culture
  • Strengthen the Prompt Payment Code
  • Leading by example on public sector procurement

Whilst these laws will help to solve the bigger problem, it is important for you as a business owner to take action for your own business as well.

You can’t always ensure you will get paid on time, but you can ensure that your business has protection that will help when it comes to recovering outstanding bills. A correctly drafted contract will outline your sales and operational processes, and can communicate to clients when you expect payment. Because it is legally enforceable it can also help you with any legal action that may follow.

In 2014 small firms accounted for 99.7% of all private sector businesses in the UK. Whilst they may not have the same financial status as larger businesses, they still need protection, and the best way is by having a good contract in place that will reflect your business intentions and put the company in a position of strength come a dispute.

 

Protecting Your Business Against Bad Weather

Want to give your business a more professional appearance? Give your clients peace of mind? Protect your business?

Two words. Bespoke contracts.

It’s prudent to consider what type of contract will best serve your business – why acquire a contract that is unenforceable and doesn’t represent your business.

And with the business world constantly changing it’s vital to have a contract that will withstand change.

Tailored to your business, bespoke contracts can allow you to grow whilst protecting everything you have built.

Planned and considered contracts become relevant during times of dispute; why take the chance and use a contract where you are unaware of the legal and commercial impact on you and your business.

DIY templates are readily available on the internet with prices starting at just £17, which are easily to download and use.

However unlike DIY templates, your business is not mass produced. Every business is unique and therefore needs a set of terms and conditions to match.

A bespoke contract is way of communicating with clients and allows both parties to understand their duties, rights and responsibilities.

 

Create Ts and Cs provide a bespoke set of Terms and Conditions for your business at a fixed price, this unique approach to individualising commercial Terms and Conditions allow Start up and SME sized businesses the opportunity to protect themselves, manage risk and guard against future unnecessary disputes at an affordable price. Download: terms & conditions | privacy policy