GET IT IN WRITING - THE IMPORTANCE OF USING
WRITTEN AGREEMENTS TO PROTECT YOUR BUSINESS Oral or written? Commercial agreements do not need to be in writing. A verbal agreement can be legally binding and, in certain circumstances, enforceable. Which is fine. You can run your business without having to think too hard about having properly drafted contracts and you will have saved yourself time and money. Or so you think. During the lifetime of your business you will need to enter into agreements with customers, suppliers, employees and business partners and it should not be taken for granted that the strength of your business or personal relationships will stand up during a disagreement. It only takes one misunderstanding to cause you a problem, a problem that leads to a dispute which will inevitably take your focus away from running your business and cost more than the time and money you thought you had saved. By using written agreements you can set out a clear framework for how you will deal with each other, what your rights and responsibilities are and even how you will negotiate and deal with potential future problems. This will avoid misunderstandings and lengthy and expensive conflicts. Considerations for your business Whatever the nature of your business you will at some stage need to consider entering into agreements which relate to some or all of the following: Structure of your business Many businesses start as sole traders but eventually become either partnerships, limited liability partnerships or private limited companies. If you are running your business with at least one other person it is important that you record the terms you have agreed between you. This can take the form of a partnership agreement, shareholders agreement or even a directors service contract for senior members of your team. Also, what if anything happens to you? Do you have in place a will or agreement with your business partners so that both the business and your family are protected? Terms and Conditions Do you supply goods or services? What are your terms of business? Standard terms of business act as your protection when dealing with customers. They also record what your obligations and liabilities to your customer are, set out payment and delivery terms and state how you will settle a dispute. Premises If you require premises from which to run your business this will be one of your major costs. A minority of businesses have sufficient capital to buy the freehold of the premises into which they wish to move and so renting the premises is a common way in which to proceed. The rent, repairs and rates may be a significant percentage of your overheads and it is therefore important that you agree and record the right terms for you including how you will be able to get out of the lease or pass it on if times are hard. Employees Employment law is arguably the most complex and rapidly changing area of law. As an employer you have duties to both potential and present employees. Your employees also have duties to you. You have a right to take steps to prevent your business suffering as a result of the actions of your employees such as an act of gross misconduct or leaving their employment to go and work for a competitor. A well drafted employment contract which is tailored to the particular role of the employee is extremely important in protecting your business and reducing the risk of a dispute. Written agreements are not a magic wand but they are easier to enforce should you end up in a dispute. You can also have peace of mind in the knowledge that you have done all you can to protect your business and your willingness to have and use written agreements shows your customers, potential investors and business partners that you are serious about doing business in the right way.
If you have any questions in relation to the above or any other aspect of corporate and commercial law, please contact Rishi Ladwa at rishi.ladwa@wansbroughs.com or on 01380 733300. | 
