web designers

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…..

The UK economy benefits from those who can code…its the time of the techie.

The techie is playing a large part in the UK economic growth.  In the past engineering and electronics were the innovators and they helped grow both the UK and Global economy.  Now the Internet and technology sectors both in the UK and globally are set for huge growth, with more and more small businesses getting to market providing high-quality web-based solutions or online retail including Apps and software for both businesses and consumers.  An article from the Guardian reported on a Boston Consulting Group report stating figures that showed the internet economy in the UK accounting for 8.3% of GDP. The UK’s closest rivals are South Korea on 7.3% and China on 5.5%, followed by Japan and the US on 4.7% each.  By 2016, the internet economy is forecasted to grow to 12.4% in the UK, contributing some £225bn to the overall UK economy.

With regards online software itself, an article on Forbes.com from last year states some staggering statistics on projected global sales of online software, Software as a Service (SaaS) and cloud-based business application services will grow from $13.4 billion in 2011 to $32.2 billion in 2016, also an IDC report comments that enterprise cloud application revenues reached $22.9B in 2011 and is projected global sales to reach $67.3B by 2016.  IDC also predicts that by 2106, $1 of every $5 will be spent online is spent on cloud-based software and infrastructure.

According to the BBC website the “internet economy” was worth more than the healthcare, construction or education sectors.  The UK also carries out far more retail online than any other major economy.  Some 13.5% of all purchases were done over the internet in 2010, according to BCG, and this is projected to rise to 23% by 2016.

David Reilly, Director at Create Ts and Cs commented, “the techie is a huge focus for us.  Our aim is to communicate with future developers; assisting them to put in place a web-based or developer based contract so these important people in our economy are protected when trading. We want the buyers to have confidence and this will come from a sense of protection.  A solid sensible set of terms and conditions that adheres to the law and extends the buyer their rights is one way of increasing that confidence”.

He continues, “We are delivering numerous talks at the University of the West of Scotland, New Start Scotland and a variety of business and university events.  These future businesses require a practical approach to manage contractual risk, so they can contract with both consumers and businesses while adhering to the law and offering the correct protection/rights, (avoiding unfair terms) to both consumers and businesses”.

Evelyn Fitzpatrick a Teaching Fellow at the University of The West of Scotland commented “Create Ts and Cs, David Reilly, has given a number of talks on contractual terms and conditions to our UWS Creative Technology students. His talks have been interesting and very well received by students.  David manages to present what is a highly technical subject in a relaxed and engaging style.  He combines content demonstrating legal principles with examples from case studies based on his own experience to give students a real insight into the contemporary business world.”

With ICO and trading standards ever vigilant it’s important to protect your business by deploying the correct terms and conditions, offering consumers and business the correct legal rights when trading over the net.   Technologists tend to require a lot of contracts as they generally using freelancers and trade online, offering multiple services.  If techies take the time to deploy the right contracts, it builds the right rapport with the future client whether a consumer or a business and helps the net to expand while offering the correct rights to the purchaser.  The net, arguably will grow and mature (without further regulation) with the correct protection in mind for all concerned.

Creatives can neglect contracts at their peril.

The subject of terms and conditions traditionally for Creatives is usually the last issue on their mind. It’s also common for Creatives to acquire someone else’s terms and conditions or write their own contracts. Unfortunately the credibility of these contracts is only tested in times of dispute; so contracts drafted in bullet points format or acquired from an unreliable source generally don’t contain the correct enforceable clauses to assist the business to resolve issues that arise.

Similarly, those many companies who choose to do business on a handshake, as honourable as that sounds, find the frailty of the contract is exposed when a dispute arises, as there is no real legal detail or proper fall back position to solve disputes. Writing down the details of how you’d like to do business is a simple idea and best captured in a contract that is tailored to the relevant business sector and business type.

There seems to be a natural resistance to formality and detail, yet during times of disagreement it’s often the details that will protect a business.

Terms and conditions can be for many Creative businesses a way for outlining ‘how they want their customer to engage with their services, from quotation to completion of the work.

Colin Hardie, Director at Ubisan a web commercialisation business commented, ” Create Ts and Cs listened and managed to distill the more specific elements of my business into a coherent and highly professional set of bespoke terms and conditions…. something that would have been impossible to achieve with an“off the shelf” alternative”.

This also means, outlining your payment terms, the IP ownership and managing scope creep through effective ‘sign off’ processes captured in the Terms and Conditions. All these issues are central to ensuring you get the work done on time and in-line with your Creative business strategy while getting paid, which can assist cashflow and promote sustainablity within the business.

David Atkinson, Director at design agency CO2 Design, said,” Before we got a bespoke set of Ts and Cs, we like many others got a set from the web or looked at others, now we have a ratified contract that communicates clearly with our clients.  Also, we’ve managed to reduce the amount of debt within our business to a level we can manage, which has helped the business”.

Its also common for some potential clients to request a set of Terms and Conditions prior to doing business, if you don’t have a relevant set of Ts and Cs, then you’ll simply accept the terms offered by the client or in some cases run the risk of signing up to a contract which is packed with clauses no one knows the consequences of signing up to! Meaning you get paid and agree to the terms according to the clients terms and conditions.

David McCullough, MD of Urban Niche, a social media marketing business based in Edinburgh commented, “Urban Niche contracted Create Ts and Cs to draft a bespoke set of Terms and Conditions to support our bid for NHS business, I am delighted to say we won the business and believe Create Ts and Cs contributed greatly to our bid and ensured we had the correct commercial contract; helping us to present our business professionally and prepare appropriately for our negotiations”

Having a relevant, sector focused contract in-line with the Creative business is one way of avoiding unnecessary disputes and allows the Creative business owner to concentrate on doing the work they enjoy doing .

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Keeping HMRC off your back when employing contractors.

If you are self employed, then you’re part of a significant growing trend, the latest statistics from the Office for National Statistics show that a record 4.1 million or 14.2% of the entire workforce are self employed.

As your business develops, it’s not uncommon to consider expanding the headcount.  With a variety of pressures on business owners and the perception that employment law is complicated and employing a staff member costly, more and more companies are deciding to hire contractors instead of taking the option to employ staff.

However, a recent number of cases has flagged up the need for both parties to differentiate and protect themselves, not only for the company to manage their own liabilities but to clearly define the relationship between both parties regard HMRC IR35 regulations.

A recent 7 year dispute that concluded in 2011 involving Airbus UK and reported in lexology.com, demonstrates how HMRC challenged the relationship between Airbus UK and their contractors (self employed persons). HMRC deemed the relationship to be that of an employer to employee.  A negative outcome for either party would result in back dated tax, national insurance and employee related costs to be paid to HMRC.

The Tribunal found in favour of Airbus due to contractual clauses signed by both parties. What is scary is the length of the dispute and resources required to engage in such a dispute, once again demonstrates the complexities of IR35, but also highlights the importance that the courts place on the factual reality of the relationship between the parties. Whilst both contractor and company can strengthen their case by ensuring that their relationship is documented within a contract, it is essential that a contract reflects the ‘reality of the relationship’.

David Reilly, Director at Create Ts and Cs, who provides the service of bespoke contracts to companies who intend to work with contractors commented “It’s critical to protect the business by deploying the right contract when working with contractors, after all from a company perspective, it’s your end client and the work carried out must be of a standard that reflects your business.

He continues “From a HMRC perspective its critical both parties differentiate themselves by catering for the IR35 issue within the contract.  Also, both parties should enter into a contract that reflects their capacity to deliver, skill set and capabilities; it’s about achieving a balance.  This is best reflected in a purpose drafted contract specific to the companies involved”.

Dave Telling, Accountant and Director at Accys also commented “The problems with employment status begin when HMRC start asking questions, which is generally several years after the contracting commences.  If you don’t get it right at the beginning, the Revenue may well succeed in proving you’re an employee and you will have years of tax and national insurance to pay at once – an expensive mistake.”

Another important way of differentiating both parties is through each party acquiring their own public liability and indemnity insurance, which is also reflected in the contract between the companies. Chris Knight of Business Protect, an Insurance Brokerage says “If either party is working away from home, possibly within a client’s premises they should consider Public Liability Insurance of at least £2,000,000. If they are providing advice or their work may be subject to Errors and/or Omissions, then Professional Indemnity Insurance will be required”.

Chris continues, “It is becoming more common for the company to insist the contractor acquires their own insurances, after all they are a separate company or sole trader with their own requirement to protect themselves and cover their liability”.

It’s clear there are a number of precautions to be taken when hiring a contractor.  The steps you take to protect both companies will help ensure the experience is both a positive and profitable one.

 

Websites Suffering Under-Investment as Designers Face Tough Competition

 

by EasyEditor Newswire                                                                                                                                                             16/12/2010

Web designers across the UK are routinely over servicing and under charging clients in a bid to keep the e-commerce revolution on track, claim experts.
While 72% of website designers have seen a rise in expectations from their SME clients the majority are struggling to maintain increasingly sophisticated sites on lower budgets and against cut-price competitors.
According to web hosting provider Fasthosts at least a third of web professionals have provided clients with out-of-hours overtime and half have performed work free of charge in a bid to demonstrate the benefits of a properly designed and maintained website.
In the last two years at least 60% of web design firms have been forced to slash their hourly rates while 56% admit to losing clients to cut-price competitors. Many have also had to deal with projects being changed half-way through or work added because client’s under-estimate the maintenance required for a good website.
“For many small firms, using external web professionals is a very sensible and rewarding option,” said Steve Holford, marketing director of Fasthosts Internet Ltd which conducted the research and found low technical understanding from clients was hindering the success of many web projects.
“It’s clear that in recent years, web designers have worked hard to adapt to the needs of clients and demonstrate the value they can deliver. With the right approach from both small businesses and the web design community, online revenues can be successfully built and so help the UK economy in its return to growth.”
However, with many web design firms feeling the pinch as a result of over servicing and under payment leading business experts have urged a review of how client expectations are managed at the outset.
“Having a bespoke set of Terms and Conditions can help manage customer expectations and encourage smooth client cooperation to ensure projects stay on track and web companies to manage cashflow,” said David Reilly, Managing Director of Create Ts &Cs. “A lack of relevant terms and conditions often leads to longer projects, lack of payment and scope creep resulting in the client taking advantage and in some cases retrospective price discounting.
“A set of properly written terms and conditions places the supplier in a position of strength allowing negotiations to start from a sensible position and reach a conclusion both parties can be happy with.
“E-commerce is now big business, worth billions of pounds a year to the UK economy. If British businesses are to compete on the world wide web they have to be prepared to invest in the technology to attract consumers. For their part, web designers have to set out the value and benefits of what they can do in unambiguous terms.”

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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