Running your business

Running your business

 

When you are running your business, you want to be focused on the things that make you money, and not worrying about non-core functions such as legal. That being said having an understanding is key. 

This section covers a number of different legal matters that might come up while you are running your business.

 

Hiring & Managing Employees

Joint Venture Agreement


What is it? This agreement is needed when two or more parties decide to engage in a business collaboration to deal with a particular project. There are two main types of joint ventures: i) A contractual joint venture is a contract between two parties who are looking to work together on a commercial project and pool their resources but do not want to create a separate legal entity such as a joint venture company or an LLP.(eg two businesses collaborating to bid for a contract or carry out research and development) . The collaboration will be generally be short term or for a defined period and will be of restricted scope with a well-defined purpose. ii)A corporate joint venture is a contract between two parties looking to work together on a commercial project where they will both set up a separate company (“a joint venture company”) separate from their current operations, own shares in it, have representatives from each of the companies sitting on its board and or want their company to have limited liability for the debts and obligations of the joint venture. This type of joint venture is usually suitable if you will be collaboration on a longer term project and or your collaboration will be more risky and complex and therefore justifies the time and effort of setting up a separate company.




Manufacturing Agreement


What is it? This agreement is needed if you want to employ the services of another company an individual to manufacture goods/products for you for your business. The agreement should cover a number of key areas including manufacture of the goods, materials, specification, quality control, packaging, storage, confidentiality, data protection, insurance, pricing, payment, delivery, title and risk, intellectual property, disputes, force majeure, service of notices, liability and indemnity clauses.




Memorandum of Understanding


What is it? An MOU is a pre-contract, non-binding document setting out the key terms agreed by parties who intend to enter into a binding contract. It is also known as Heads of Terms, a Letter of Intent or a Term Sheet. It is a useful tool when two or more parties intend to enter into a future contract and want to identify, describe and agree, without it being contractually binding, the terms to be further negotiated and then recorded in a contractually binding contract. There will occasionally be statements in a MOU which are exceptions to the general approach that a MOU is not binding : this will occur if the parties put in statements which the MOU expressly states are to be of legally binding effect until a definitive contract is signed. If that is the case those statements will generally be binding. Why is it important? An MOU is useful to set out the progress made during negotiations, reduce the potential for misunderstandings, indicate the major issues which still need to be resolved and make it clear what the parties intend when they enter into the contract. Risks The disadvantage of a MOU is that it can take up a considerable amount of time and may distract the parties from working on negotiating a full and detailed binding contract. There have been occasions when the parties to a proposed commercial arrangement never actually agree or sign a definite contract and have gone on to implement their deal based only on the MOU. This creates a very uncertain legal position which may lead to disputes and legal problems.




Agency Agreement


What is it? The term “agent” is often used as shorthand in a business or legal context to mean a person authorised to act for or on behalf of another who is sometimes called the “principal” As a business you need to be able to distinguish whether or not a particular arrangement amounts to a commercial agency rather than another kind of agency or relationship. This is vital if you are to understand the various legal obligations, duties and liabilities that you owe your contractors/ agents and vice versa. There are different types of individuals and companies which describe themselves as “agents”. These include for instance – commercial agents, sales agents. Employment agents, escrow agents etc. Why is it important? A commercial agent is a kind of sales agent whose relationship with their principal is largely governed by the Commercial Agents (Council Directive) Regulations 1993 whereas the relationship between any other type of sales and their principal is largely governed by the common law and not by the Regulations. A “commercial agent” is defined by the Regulations as a “…self-employed intermediary who has continuing authority to negotiate the sale or purchase of goods on behalf of their principal or to negotiate and conclude such transactions on behalf of and in the name of that principal”. Risks All commercial agency arrangements must comply with the Commercial Agents Regulations 1993. In accordance with the European Withdrawal Act 2018( ad subject to the terms of any final Brexit deal) the Regulations will remain in force post-Brexit.In contrast a sales agent is a freelance self-employed individual or contractor who may or may not work for numerous clients. You need an Agency Agreement if you want to appoint a third party to act on your behalf, marketing and selling your products and services – generally in exchange for commission on any sales. An agency agreement sets out the terms and conditions of the relationship, the commission or fees the notice period and any exclusivity rights. Other ways in which a business can expand without considerable outlay are via a distributorship and a franchise. In contrast to a distributorship, an agent earns commission on sales but does not pay for the goods, own the goods or set the sale price charged to the customer.




Referral Agreement


What is it? A referral agreement is used where, in order to obtain more customers and sales and widen Business A’s customer base or sell into a new market, a supplier of goods or services (Business A) wishes to engage another person or business (Individual B or Business B) to effect an introduction/referral of new customers to Business A in return for which the agent receives a fee for the introduction/referral itself or for the introduction/referral where it results in a sale within a stated period after the introduction/referral. It is also known as an Introduction agreement. Examples of referrers/introducers are agents who introduce a seller of a business to a potential buyer or who introduce a potential investor to a business. Why is it important? If a business colleague is referring work to you or you are the referrer you should get a referral agreement that sets out the terms of your agreement. This will help avoid problems. A referral agreement can also be used where an e-commerce website wishes to increase its sales by allowing other websites to refer customers to them in return for a commission on sales obtained through such referrals. The fees can be either a fixed fee or percentage basis with payment when the referral is made or upon the first transaction or both. The fees and payment clause can be drafted so that if the refer fails to introduce any new business they will not get a fee.There are specific referral agreements for the introduction of clients for financial services eg investment advice and insurance products.




Licensing Agreement


What is it? There are numerous types of licensing agreements eg IP licensing agreement eg a trademark licence agreement, a licence to occupy property, a software licence agreement etc.A software licence agreement is an agreement between a software licensor (generally a software developer and/or owner) and licensee who will be using the licensed software in the course of a business or personally. Why is it important? We always recommend that our clients get a licensing agreement if for example they want to give a person or another business the right to use their technology, software or any other type of intellectual property. A software licence will set out what the user may or may not do with a piece of software thereby helping developers ensure that they maximise returns on their investments, restrict others from free use of their creative and inventive work and product software that remains stable across a broad range of computer systems.




End User Licence Agreement


What is it? This is a licence agreement between a software provider and a user where software is distributed en-masse through retailers or electronically eg Microsoft and people who use its software. The different types of end-user licences include a Web Wrap software licence (designed for use with software that is distributed electronically via download ) Click Wrap Licence (designed for use with software that can be distributed electronically via download or on physical media such as a CD or DVD-Rom, Shrink Wrap Licence (designed for use in or on the packaging of software that is distributed on physical media such as a CD or DVD-Rom).




Service Level Agreement


What is it? Businesses often seek to obtain services from other businesses for various reasons. In some cases, a simple service agreement is all that is needed especially where the services in question are to be provided over a short term.However, in some cases a long-term relationship and the need for service consistency is essential. In such cases a business owner may prefer to enter into a Service Level Agreement with the service provider. Why is it important? Commonly used in the IT & Technology industries, but also applicable in other areas of business especially where large-scale or complex services are involved Service Level Agreements set out the services to be provided under a contract and also sets out the levels of performance to which those services must be provided. Detailed provisions govern the monitoring of the performance of the services and the agreement. Risks The service provider is thereby incentivised to consistently provide services in line with the agreed performance levels. If it fails to meet the agreed service levels it is subject to penalties. Service level agreements are preferable to standard service agreements as they contain much more detail, enhanced clarity and accountability over and above standard service agreements.




Partnership agreement


What is it? There are 2 main types of partnership agreements: An unlimited partnership – This is a relationship between two or more parties carrying on business together to make a profit. It is usually referred to as a “partnership” or a “general partnership” to distinguish it from other types of partnership such as a limited liability partnership. A partnership can arise by law even if there is no agreement in writing and even if the parties did not intend to create a partnership. An unlimited partnership is not a separate legal entity unlike a company or a limited liability partnership. Therefore, its partners have unlimited liability for the partnership’s debts. A limited liability partnership – Unlike an unlimited partnership a limited liability partnership (LLP) requires the establishment of a separate corporate body through which the collaboration will be conducted. The partners will have limited liability in the same way as shareholders in a company. The partners will usually sign a member’s agreement setting out how the LLP will be run.




LLP agreement


What is it? This agreement applies when you have a limited liability partnership. Unlike an unlimited partnership a limited liability partnership (LLP) requires the establishment of a separate corporate body through which the collaboration will be conducted. Why is it important? The partners will have limited liability in the same way as shareholders in a company. The partners will usually sign a member’s agreement (LLP Agreement) setting out how the LLP will be run.




Distribution agreement


What is it? A distributor buys goods from a supplier to sell on to customers. They can earn a profit margin based on the “mark-up” they add to the original sale price. A Distributorship agreement is an agreement whereby the manufacturer appoints the distributor on a “sole” or “non-exclusive” basis) to resell the manufacturer’s products in a particular territory/ies. In this case, the ownership of the goods is transferred to the distributor prior to the marketing and sale of the goods which means that the distributor may hold stocks of goods which they pay for and own – they therefore bear the risk as to whether they can resell the goods. There are different types of distribution agreements eg exclusive, sole and selective distribution agreements. Business relationships can sour if based on verbal agreements. Protect your rights by ensuring you have a written distribution agreement.




Model release letter


What is it? A signed Model Release Form protects your profit margin and your copyright. Whether you work in a marketing business graphic design or are a commercial vlogger or blogger you need to ensure that any photographs that you use in your business has a properly signed release form. Whilst you do not generally need written permission to take photos, if you take photos and wish to publish the photos on the internet or in any other way or if you are starting a photography business you can protect yourself from any liability or legal proceedings by using a Model Release Form or Letter. A Model Release Form is the contract between the photographer or User and the “model” (i.e. the subject or owner of the image or photograph). Designed to protect both parties it specifies the ways in which the images or models can or cannot be used (eg for advertising, to make prints, post on social media etc), the media formats, the use or not of the model’s name, the model’s rights (or not) to inspect the end product before publication and the expiry (or not) of the release. Why is it important? A Model Release Form is not about obtaining permission to take photographs – it is about obtaining signed consent to publish the photographs for commercial purposes. Whilst it is generally okay to take pictures of a person or people in a public place without written permission if you want to use that photo for specific commercial purposes eg to promote a product on the internet or elsewhere it is best to be safe and get a signed release form from the “model” or owner of the “model”. Risks But do get legal advice before you use a release form template as it may need adapting to fit your particular needs.And remember! If you want to use images for a purpose not originally agreed, you MUST get further signed consent.




Sales agency agreement


What is it? If you are a business selling products you may decide to employ the services of a sales agent. A sales agent is a freelance self-employed business or contractor who might or might not work for several clients. The term “sales agent” includes a “commercial agent” but it is usual to distinguish the two forms of agency by referring to someone as a sales agent only if they are not a “commercial agent” as the legal position of a “commercial agent” differs substantially from other forms of “sales agency”. The business that owns the products will be called the “Principal” and the sales agent will be called the “Agent”. The sales agent is paid commission only and so is motivated to make as many sales as possible to maximise their income.Central to the relationship between a business and their sales agent will be the “Agency Agreement”. The Sales Agency agreement will set out the product the agent will be selling, where the agent will be selling those products, how the sales are to take place, commission payable on all sales and the key rights and responsibilities of the parties. Why is it important? The use of sales agents as opposed to an employed sales team has a number of benefits for the business (i.e. the “Principal”) since commission is only payable on achieved sales, there are no fixed employment costs, and the agent will often already have a network of contacts ie established customer base, will know the market in their area and will have credibility with their customer base.




Sub-contracting agreement


What is it? Many business contracts allow one or both parties to sub-contract all or part of their obligations under a contract. This can be done via a letter termed a “Notice of Intention to Sub-contract” from the main contractor to the other party to the main contract or via a formal “Sub-contracting” agreement. Where a “Notice of intention to sub-contract” letter is used, the main contractor (ie sender of the letter) would inform the other party to the contract (ie the recipient of the letter) that the main contractor intends to subcontract certain of their obligations under a contract and will provide details of the subcontractor(s) to whom the obligations will be sub-contracted, a detailed description of the obligations to be sub-contracted with cross-references to the relevant parts of the Contract agreement between the main contractor and the other party to the contract agreement. The recipient will also be reminded that they are not a party to the sub-contract and that the main contractor will remain their primary contact person and will also remain liable for any acts of omissions of the subcontractors. As an option, the main contractor may also decide to enter into a formal “Sub-contracting” agreement with the sub-contractor and send a copy of this to




Franchise Agreement


What is it? Franchising your business lets you licence your business model to companies or individual in particular geographical areas and allows you to increase your profits while maintaining a significant degree of control over your brand. A Franchise agreement is an agreement under which the owner of a business grants a licence or licences to others (the “franchisees”) to operate that business in a particular area within the UK or internationally either on a “sole” or “non-exclusive” basis, for a fee therefore spreading their corporate identity and products or services without the expense of setting up new establishments. All franchisees will use a common identity including the name, trademarks, goodwill, other intellectual property and or products of the franchisor. The franchisor will also provide a “Quality Manual” which in effect is a rule book setting out all the relevant detail needed for the successful day-to-day running of the franchised business eg minimum standards and insurance requirements. The agreement will usually include a confidentiality clause protecting all commercially sensitive information and trade secrets from unauthorised disclosure thereby protecting the interests of the franchisor. Why is it important? Franchising has benefits for the franchisor and the franchisee. The franchisor can grow its business without having to open, staff and manage new premises or branches itself whilst the franchisee can manage his/her own business which has been already tested by the franchisor and has access to the franchisor’s experience and expertise. McDonalds and Kentucky Fried Chicken (KFC) operate their own restaurants and food outlets but also grant franchises to others to operate McDonalds and KFC businesses using their logos with McDonalds and Kentucky Fried Chicken exercising tight quality control over the restaurants, their location, food, health and safety etc.





Managing licenses


Running an online business


Protecting your IP


Business Relationships


Writing a business plan


HR Policies

Terms and conditions for supply of services to business customers


What is it? Terms and conditions set out the rules and specifications which apply in every supply of services that a seller makes and helps to make everyone aware of their rights and obligations from the outset. Why is it important? Make sure you protect your business interests with professionally prepared terms and conditions. When supplying services to a business your terms and conditions should cover issues such as timing and termination of supply, orders, specifications, obligations, pricing, payment, intellectual property, confidentiality, warranties, liability and termination.




Terms and conditions for sale of goods to business customers


What is it? Terms and conditions set out the rules and specifications which apply in every sale of goods that a seller makes and helps to make everyone aware of their rights and obligations from the outset. Why is it important? When selling goods to a business your terms and conditions should cover the nature of products to be sold, orders, delivery, pricing, payment, risk, warranties, defects, liability and confidentiality.




Terms and conditions for supply of services to consumers/businesses


What is it?

There are different terms and conditions for the supply of services to businesses (B2B contracts) and the supply of services to consumers(B2C contracts). When a business deals with a consumer (ie someone who buys goods or services for personal use, as opposed to buying the goods or services on behalf of a business) the consumer is given more legal protection than a business.

Why is it important?

Any business that is entering into a contract with a consumer must abide by a wide range of consumer law requirements such as the Consumer Rights Act 2015, the Sale of Goods Act and Supply of Goods and Services Act , the Consumer Contracts Regulations , the Misrepresentation Act and the Data Protection Act.

Risks

The T&Cs for supply of services to consumers should be used when

  • You are supplying services with or without goods to customers not acting in the course of a business (i.e. consumers).

The T&Cs for supply of services to businesses should be used when

  • You are supplying services with or without goods to customers acting in the course of a business (i.e. Businesses).




Consent Notices


What is it? The law provides that if your website is based in the EU or if you are targeting customers in the EU and your site uses one or more cookies you need to display a cookie consent notice. To comply with the law your need to do three things Let users to your website know that you are using cookies. Provide a link where they can learn more about how you use the data you gather. Provide a way for your website users to consent to the use of cookies. Consent can be explicit opt-in consent and implied consent. For explicit consent, users have to click a button, select a checkbox or complete some other specific activity to opt in to the use of cookies. The most common way to do this is to display a banner at the top or bottom of your website with a link to your Privacy policy and a button to consent to the use of cookies and hide the banner. For implied consent a clear notice must be provided, and the user must be made aware that a specific action will be understood to be implied consent to the use of cookies. One way that implied consent is obtained is by displaying a prominent cookie notice that ends with a statement like “By continuing to use this site you agree to the use of cookies”. The law applies whether a user is on a smartphone, tablet, a laptop, computer or other device. So when you set up your cookie notice you must ensure that the notice appears and functions well on all devices. There are also plugins for Cookie consent notices.




Terms and conditions for sale of goods to consumers/businesses


What is it?

There are different terms and conditions for the sale of goods to businesses (B2B) and the sale of goods to consumers(B2C).

Why is it important?

The T&Cs for sale of goods to consumers should be used when

  • You are supplying goods with or without services to customers not acting in the course of a business (i.e. consumers)

The T&Cs for sale of goods to businesses should be used when

  • You are supplying goods with or without services to customers acting in the course of a business (i.e. businesses)




Terms and conditions for sale of goods to consumers via a website





Terms and conditions for supply of services to consumers via a website





Heads of terms


What is it? This is similar to a Memorandum of Understanding (MOU)s, Term sheet or Letter of intent. The heads of terms set out the key terms agreed by the parties before entering a business transaction. It is not contractually binding. Heads of Terms are usually set out in a letter or document setting out the key terms agreed by parties who intend to enter a binding contract. It is also known as Letter of Intent, a Memorandum of Understanding (MOU) or a Term Sheet. It is a useful tool when two or more parties intend to enter a future contract and want to identify, describe and agree, without it being contractually binding, the terms to be further negotiated and then recorded in a contractually binding contract. There will occasionally be statements in heads of terms which are exceptions to the general approach that heads of terms are not binding: this will occur if the parties put in statements which heads of terms expressly state are to be of legally binding effect until a definitive contract is signed. If that is the case those statements will generally be binding. Why is it important? Heads of terms are useful to set out the progress made during negotiations, reduce the potential for misunderstandings, indicate the major issues which still need to be resolved and make it clear what the parties intend when they enter into the contract. The disadvantage of Heads of terms is that it can take up a considerable amount of time and may distract the parties from working on negotiating a full and detailed binding contract. Risks There have been occasions when the parties to a proposed commercial arrangement never actually agree or sign a definite contract and have gone on to implement their deal based only on the Heads of terms. This creates a very uncertain legal position which may lead to disputes and legal problems.




Letter of intent (LOI)


What is it? A Letter of Intent is a pre-contract, non-binding document setting out the key terms agreed by parties who intend to enter into a binding contract. It is also known as Heads of Terms, a Memorandum of Understanding (MOU) or a Term Sheet. It is a useful tool when two or more parties intend to enter into a future contract and want to identify, describe and agree, without it being contractually binding, the terms to be further negotiated and then recorded in a contractually binding contract. There will occasionally be statements in a letter of intent which are exceptions to the general approach that a letter of intent is not binding: this will occur if the parties put in statements which the letter of intent expressly states are to be of legally binding effect until a definitive contract is signed. If that is the case those statements will generally be binding. Why is it important? A letter of intent is useful to set out the progress made during negotiations, reduce the potential for misunderstandings, indicate the major issues which still need to be resolved and make it clear what the parties intend when they enter into the contract. The disadvantage of a letter of intent is that it can take up a considerable amount of time and may distract the parties from working on negotiating a full and detailed binding contract. Risks There have been occasions when the parties to a proposed commercial arrangement never actually agree or sign a definite contract and have gone on to implement their deal based only on the letter of intent. This creates a very uncertain legal position which may result in disputes and legal problems.




Invoice


What is it? An invoice is a statement setting out the goods and or services that have been supplied by a seller to a buyer and the money owed for those goods and or services. It is created by a seller or supplier to request payment for goods sold and or services provided. It is also called a bill. Why is it important? It identifies the trading partners, specifies the terms of the deal and provides information on the payment figure, the available methods of payment and the payment terms i.e. the maximum amount of time that a buyer had to pay for the goods and or services that they have purchased from the seller.




Sales of goods agreements


What is it?

A Sale of Goods Agreement (sometimes called a Sales Agreement or Sales Contract) is a contract entered into between a buyer and a seller of goods for the sale and purchase of specific goods by the buyer. When you sell goods, you create a sale of goods contract.

Why is it important?

The terms in a sale of goods contract may vary depending on whether it is a sale to a consumer (i.e. a B2C contract ) or a sale to a business (i.e. a “commercial” sale or B2B contract.) A consumer is someone who buys goods or services for personal use, as opposed to buying the goods or services on behalf of a business. Consumers who act as the buyer in a contract for a sale of goods are given more legal protection than businesses. The legal protection is given to help the party considered to be the more vulnerable party to the contract ie the consumer as opposed to the business.

The sale of goods agreement will set out the seller and buyer’s obligations, the terms on which the seller is willing to sell and transfer the goods to the buyer, the nature of the goods to be sold, the price, payment terms, shipping and collection details, delivery time and what happens at the end of the contract.

Risks

A Sale of Goods Agreement can be made orally or in writing. However, having a well-written Sale of Goods Agreement can help protect one or both of the parties if there is a problem with the sale eg goods are late in arriving or the goods have been damaged or destroyed.




Purchase order


What is it? A purchase order is prepared by a buyer when the buyer orders goods or services from a seller. The purchase order will indicate the type of goods, quantity of goods and the price the buyer is willing to pay for the products and or services. Once the seller accepts the purchase order it becomes a legally binding contract as the seller has agreed to sell the goods and or services at the prices put forward by the buyer. The seller will then issue an invoice to the buyer based on the purchase order. Why is it important? Purchase orders are important for businesses as it is instrumental in tracking expenditure, makes orders easier to track, helps avoid audit problems and provides contractual legal protection for the buyer and the supplier. Alongside a purchase order system, it is vital that a company has strong credit management practices to safeguard cash flow from bad debts and late payment. A strong debt collection process is vital to ensure payment is made when the goods or services have been delivered. Invoice promptly and accurately and chase up with reminders. If a customer will not pay or ignores payment requests take action – Appoint a debt collection agency, take debt recovery action through the courts or pass the debt to a solicitor. Pure Business Law has experienced debt collection lawyers who can assist you with debt recovery.




Services agreement


What is it? A Service agreement also known as a Service contract or Contract for Services is a written agreement between a service provider and a customer setting out agreed terms for the supply of services. The terms should include details of the services to be provided, location of provision of the services, payment. Limitation of liability clause, tools or materials to be used, termination of the agreement, ownership of intellectual property clause and dispute resolution clauses. Why is it important? A services agreement is required when a business wants to engage another business to supply services. If your business is the service provider, you should use a service contract whenever you are hired by a customer to complete a service. If you are the customer and the service provider does not supply the contract, you can use a Service agreement to ensure that the terms of the service relationship are clear.





Managing licenses


Running an online business


Protecting your IP


Business Relationships


Writing a business plan


Protecting your IP

Share Purchase Agreement


What is it?

A Share purchase agreement (SPA) is an agreement setting out the terms and conditions relating to the sale and purchase of shares in a company. Share purchase agreements are often complex documents which can become lengthy and create significant delay, friction and cost if not dealt with by experienced, business minded lawyers.

Why is it important?

There is often a choice and negotiation over whether it’s best for either or both parties to buy/sell assets rather than shares. This would depend on whether the current owner (seller) is a limited company. If not, there can be no share sale! Further, where a buyer wants to preserve as many customer relations as possible, they may elect to buy the shares as opposed to assets.

The seller’s solicitor usually draws up the draft share purchase agreement.

Risks

While the buyer’s solicitor will try to protect the buyer the interest of the seller’s solicitor is to minimise this protection, in particular by limiting the seller’s liability for misrepresentation. However, in practice, where there is fraudulent misrepresentation the seller will still be liable so the buyer may accept such clauses since they are not valid if the seller can prove fraudulent misrepresentation.

Please contact us if you require specialist commercial lawyers to review, draft, negotiate, amend or generally advise on a share purchase agreement.




Asset Purchase Agreement


What is it?

An asset purchase agreement is an agreement setting out the terms and conditions relating to the sale and purchase of assets of a business. In an asset purchase, the company itself will be selling the assets, whilst in a share sale, the individual shareholders will be the sellers.

Occasionally a buyer will prefer to acquire certain assets of a business rather than acquire all of the shares in a company and therefore, both its assets and liabilities.

A buyer will normally prefer to buy the assets of a business, while the seller will prefer to sell the shares. The main benefit of an asset purchase is that a buyer may selectively pick the assets and liabilities they want to acquire and there is generally less risk of hidden liabilities than with a share purchase.

Risks

The main disadvantage of an asset sale, as opposed to a share purchase agreement is that each item must be transferred in accordance with its proper rules and made enforceable against third parties (eg through consents and approvals). This is especially the case for customer contracts, as a third party may view the transaction as an opportunity to renegotiate their contract thereby adding delay and additional costs to the transaction.

In addition, there may be other important contracts that are non-transferrable, or licences and consents unique to the seller which may not be transferrable.

In an asset sale it is vital to identify what exactly is being purchased. Assets transferred as part of an Asset purchase agreement may include:

  • Plant and machinery.
  • Premises;
  • Stock;
  • Contracts;
  • Know-how; and
  • Goodwill.

Please contact us if you require specialist commercial lawyers to review, draft, negotiate, amend or generally advise on a share purchase agreement.




Disclosure Letter


What is it?

A Non-Disclosure letter or Non-Disclosure Agreement, also called a Confidentiality Agreement, is a legal contract between two or more parties by which the parties agree not to disclose information (which is intended to be kept secret) that they have shared with each other during a business relationship to third parties.

Why is it important?

This Agreement may either be one-way (unilateral) or two-way (mutual), depending on whether both parties will be providing the secret information. If one party will be providing the secret information to the other, it is called a Unilateral Non-Disclosure Agreement.

For example, where an inventor of an idea is sharing the idea with another person, the inventor is the disclosing party and the other party is the receiving party. If the two parties will share the secret information between themselves, it is called a Mutual Non-Disclosure Agreement.

This Agreement can be used to share intellectual property, share commercial trading information or formalize a business relationship, for example, between an employer and an employee





Business Relationships

Joint Venture Agreement


What is it? This agreement is needed when two or more parties decide to engage in a business collaboration to deal with a particular project. There are two main types of joint ventures: i) A contractual joint venture is a contract between two parties who are looking to work together on a commercial project and pool their resources but do not want to create a separate legal entity such as a joint venture company or an LLP.(eg two businesses collaborating to bid for a contract or carry out research and development) . The collaboration will be generally be short term or for a defined period and will be of restricted scope with a well-defined purpose. ii)A corporate joint venture is a contract between two parties looking to work together on a commercial project where they will both set up a separate company (“a joint venture company”) separate from their current operations, own shares in it, have representatives from each of the companies sitting on its board and or want their company to have limited liability for the debts and obligations of the joint venture. This type of joint venture is usually suitable if you will be collaboration on a longer term project and or your collaboration will be more risky and complex and therefore justifies the time and effort of setting up a separate company.




Manufacturing Agreement


What is it? This agreement is needed if you want to employ the services of another company an individual to manufacture goods/products for you for your business. The agreement should cover a number of key areas including manufacture of the goods, materials, specification, quality control, packaging, storage, confidentiality, data protection, insurance, pricing, payment, delivery, title and risk, intellectual property, disputes, force majeure, service of notices, liability and indemnity clauses.




Memorandum of Understanding


What is it? An MOU is a pre-contract, non-binding document setting out the key terms agreed by parties who intend to enter into a binding contract. It is also known as Heads of Terms, a Letter of Intent or a Term Sheet. It is a useful tool when two or more parties intend to enter into a future contract and want to identify, describe and agree, without it being contractually binding, the terms to be further negotiated and then recorded in a contractually binding contract. There will occasionally be statements in a MOU which are exceptions to the general approach that a MOU is not binding : this will occur if the parties put in statements which the MOU expressly states are to be of legally binding effect until a definitive contract is signed. If that is the case those statements will generally be binding. Why is it important? An MOU is useful to set out the progress made during negotiations, reduce the potential for misunderstandings, indicate the major issues which still need to be resolved and make it clear what the parties intend when they enter into the contract. Risks The disadvantage of a MOU is that it can take up a considerable amount of time and may distract the parties from working on negotiating a full and detailed binding contract. There have been occasions when the parties to a proposed commercial arrangement never actually agree or sign a definite contract and have gone on to implement their deal based only on the MOU. This creates a very uncertain legal position which may lead to disputes and legal problems.




Agency Agreement


What is it? The term “agent” is often used as shorthand in a business or legal context to mean a person authorised to act for or on behalf of another who is sometimes called the “principal” As a business you need to be able to distinguish whether or not a particular arrangement amounts to a commercial agency rather than another kind of agency or relationship. This is vital if you are to understand the various legal obligations, duties and liabilities that you owe your contractors/ agents and vice versa. There are different types of individuals and companies which describe themselves as “agents”. These include for instance – commercial agents, sales agents. Employment agents, escrow agents etc. Why is it important? A commercial agent is a kind of sales agent whose relationship with their principal is largely governed by the Commercial Agents (Council Directive) Regulations 1993 whereas the relationship between any other type of sales and their principal is largely governed by the common law and not by the Regulations. A “commercial agent” is defined by the Regulations as a “…self-employed intermediary who has continuing authority to negotiate the sale or purchase of goods on behalf of their principal or to negotiate and conclude such transactions on behalf of and in the name of that principal”. Risks All commercial agency arrangements must comply with the Commercial Agents Regulations 1993. In accordance with the European Withdrawal Act 2018( ad subject to the terms of any final Brexit deal) the Regulations will remain in force post-Brexit.In contrast a sales agent is a freelance self-employed individual or contractor who may or may not work for numerous clients. You need an Agency Agreement if you want to appoint a third party to act on your behalf, marketing and selling your products and services – generally in exchange for commission on any sales. An agency agreement sets out the terms and conditions of the relationship, the commission or fees the notice period and any exclusivity rights. Other ways in which a business can expand without considerable outlay are via a distributorship and a franchise. In contrast to a distributorship, an agent earns commission on sales but does not pay for the goods, own the goods or set the sale price charged to the customer.




Referral Agreement


What is it? A referral agreement is used where, in order to obtain more customers and sales and widen Business A’s customer base or sell into a new market, a supplier of goods or services (Business A) wishes to engage another person or business (Individual B or Business B) to effect an introduction/referral of new customers to Business A in return for which the agent receives a fee for the introduction/referral itself or for the introduction/referral where it results in a sale within a stated period after the introduction/referral. It is also known as an Introduction agreement. Examples of referrers/introducers are agents who introduce a seller of a business to a potential buyer or who introduce a potential investor to a business. Why is it important? If a business colleague is referring work to you or you are the referrer you should get a referral agreement that sets out the terms of your agreement. This will help avoid problems. A referral agreement can also be used where an e-commerce website wishes to increase its sales by allowing other websites to refer customers to them in return for a commission on sales obtained through such referrals. The fees can be either a fixed fee or percentage basis with payment when the referral is made or upon the first transaction or both. The fees and payment clause can be drafted so that if the refer fails to introduce any new business they will not get a fee.There are specific referral agreements for the introduction of clients for financial services eg investment advice and insurance products.




Licensing Agreement


What is it? There are numerous types of licensing agreements eg IP licensing agreement eg a trademark licence agreement, a licence to occupy property, a software licence agreement etc.A software licence agreement is an agreement between a software licensor (generally a software developer and/or owner) and licensee who will be using the licensed software in the course of a business or personally. Why is it important? We always recommend that our clients get a licensing agreement if for example they want to give a person or another business the right to use their technology, software or any other type of intellectual property. A software licence will set out what the user may or may not do with a piece of software thereby helping developers ensure that they maximise returns on their investments, restrict others from free use of their creative and inventive work and product software that remains stable across a broad range of computer systems.




End User Licence Agreement


What is it? This is a licence agreement between a software provider and a user where software is distributed en-masse through retailers or electronically eg Microsoft and people who use its software. The different types of end-user licences include a Web Wrap software licence (designed for use with software that is distributed electronically via download ) Click Wrap Licence (designed for use with software that can be distributed electronically via download or on physical media such as a CD or DVD-Rom, Shrink Wrap Licence (designed for use in or on the packaging of software that is distributed on physical media such as a CD or DVD-Rom).




Service Level Agreement


What is it? Businesses often seek to obtain services from other businesses for various reasons. In some cases, a simple service agreement is all that is needed especially where the services in question are to be provided over a short term.However, in some cases a long-term relationship and the need for service consistency is essential. In such cases a business owner may prefer to enter into a Service Level Agreement with the service provider. Why is it important? Commonly used in the IT & Technology industries, but also applicable in other areas of business especially where large-scale or complex services are involved Service Level Agreements set out the services to be provided under a contract and also sets out the levels of performance to which those services must be provided. Detailed provisions govern the monitoring of the performance of the services and the agreement. Risks The service provider is thereby incentivised to consistently provide services in line with the agreed performance levels. If it fails to meet the agreed service levels it is subject to penalties. Service level agreements are preferable to standard service agreements as they contain much more detail, enhanced clarity and accountability over and above standard service agreements.




Partnership agreement


What is it? There are 2 main types of partnership agreements: An unlimited partnership – This is a relationship between two or more parties carrying on business together to make a profit. It is usually referred to as a “partnership” or a “general partnership” to distinguish it from other types of partnership such as a limited liability partnership. A partnership can arise by law even if there is no agreement in writing and even if the parties did not intend to create a partnership. An unlimited partnership is not a separate legal entity unlike a company or a limited liability partnership. Therefore, its partners have unlimited liability for the partnership’s debts. A limited liability partnership – Unlike an unlimited partnership a limited liability partnership (LLP) requires the establishment of a separate corporate body through which the collaboration will be conducted. The partners will have limited liability in the same way as shareholders in a company. The partners will usually sign a member’s agreement setting out how the LLP will be run.




LLP agreement


What is it? This agreement applies when you have a limited liability partnership. Unlike an unlimited partnership a limited liability partnership (LLP) requires the establishment of a separate corporate body through which the collaboration will be conducted. Why is it important? The partners will have limited liability in the same way as shareholders in a company. The partners will usually sign a member’s agreement (LLP Agreement) setting out how the LLP will be run.




Distribution agreement


What is it? A distributor buys goods from a supplier to sell on to customers. They can earn a profit margin based on the “mark-up” they add to the original sale price. A Distributorship agreement is an agreement whereby the manufacturer appoints the distributor on a “sole” or “non-exclusive” basis) to resell the manufacturer’s products in a particular territory/ies. In this case, the ownership of the goods is transferred to the distributor prior to the marketing and sale of the goods which means that the distributor may hold stocks of goods which they pay for and own – they therefore bear the risk as to whether they can resell the goods. There are different types of distribution agreements eg exclusive, sole and selective distribution agreements. Business relationships can sour if based on verbal agreements. Protect your rights by ensuring you have a written distribution agreement.




Model release letter


What is it? A signed Model Release Form protects your profit margin and your copyright. Whether you work in a marketing business graphic design or are a commercial vlogger or blogger you need to ensure that any photographs that you use in your business has a properly signed release form. Whilst you do not generally need written permission to take photos, if you take photos and wish to publish the photos on the internet or in any other way or if you are starting a photography business you can protect yourself from any liability or legal proceedings by using a Model Release Form or Letter. A Model Release Form is the contract between the photographer or User and the “model” (i.e. the subject or owner of the image or photograph). Designed to protect both parties it specifies the ways in which the images or models can or cannot be used (eg for advertising, to make prints, post on social media etc), the media formats, the use or not of the model’s name, the model’s rights (or not) to inspect the end product before publication and the expiry (or not) of the release. Why is it important? A Model Release Form is not about obtaining permission to take photographs – it is about obtaining signed consent to publish the photographs for commercial purposes. Whilst it is generally okay to take pictures of a person or people in a public place without written permission if you want to use that photo for specific commercial purposes eg to promote a product on the internet or elsewhere it is best to be safe and get a signed release form from the “model” or owner of the “model”. Risks But do get legal advice before you use a release form template as it may need adapting to fit your particular needs.And remember! If you want to use images for a purpose not originally agreed, you MUST get further signed consent.




Sales agency agreement


What is it? If you are a business selling products you may decide to employ the services of a sales agent. A sales agent is a freelance self-employed business or contractor who might or might not work for several clients. The term “sales agent” includes a “commercial agent” but it is usual to distinguish the two forms of agency by referring to someone as a sales agent only if they are not a “commercial agent” as the legal position of a “commercial agent” differs substantially from other forms of “sales agency”. The business that owns the products will be called the “Principal” and the sales agent will be called the “Agent”. The sales agent is paid commission only and so is motivated to make as many sales as possible to maximise their income.Central to the relationship between a business and their sales agent will be the “Agency Agreement”. The Sales Agency agreement will set out the product the agent will be selling, where the agent will be selling those products, how the sales are to take place, commission payable on all sales and the key rights and responsibilities of the parties. Why is it important? The use of sales agents as opposed to an employed sales team has a number of benefits for the business (i.e. the “Principal”) since commission is only payable on achieved sales, there are no fixed employment costs, and the agent will often already have a network of contacts ie established customer base, will know the market in their area and will have credibility with their customer base.




Sub-contracting agreement


What is it? Many business contracts allow one or both parties to sub-contract all or part of their obligations under a contract. This can be done via a letter termed a “Notice of Intention to Sub-contract” from the main contractor to the other party to the main contract or via a formal “Sub-contracting” agreement. Where a “Notice of intention to sub-contract” letter is used, the main contractor (ie sender of the letter) would inform the other party to the contract (ie the recipient of the letter) that the main contractor intends to subcontract certain of their obligations under a contract and will provide details of the subcontractor(s) to whom the obligations will be sub-contracted, a detailed description of the obligations to be sub-contracted with cross-references to the relevant parts of the Contract agreement between the main contractor and the other party to the contract agreement. The recipient will also be reminded that they are not a party to the sub-contract and that the main contractor will remain their primary contact person and will also remain liable for any acts of omissions of the subcontractors. As an option, the main contractor may also decide to enter into a formal “Sub-contracting” agreement with the sub-contractor and send a copy of this to




Franchise Agreement


What is it? Franchising your business lets you licence your business model to companies or individual in particular geographical areas and allows you to increase your profits while maintaining a significant degree of control over your brand. A Franchise agreement is an agreement under which the owner of a business grants a licence or licences to others (the “franchisees”) to operate that business in a particular area within the UK or internationally either on a “sole” or “non-exclusive” basis, for a fee therefore spreading their corporate identity and products or services without the expense of setting up new establishments. All franchisees will use a common identity including the name, trademarks, goodwill, other intellectual property and or products of the franchisor. The franchisor will also provide a “Quality Manual” which in effect is a rule book setting out all the relevant detail needed for the successful day-to-day running of the franchised business eg minimum standards and insurance requirements. The agreement will usually include a confidentiality clause protecting all commercially sensitive information and trade secrets from unauthorised disclosure thereby protecting the interests of the franchisor. Why is it important? Franchising has benefits for the franchisor and the franchisee. The franchisor can grow its business without having to open, staff and manage new premises or branches itself whilst the franchisee can manage his/her own business which has been already tested by the franchisor and has access to the franchisor’s experience and expertise. McDonalds and Kentucky Fried Chicken (KFC) operate their own restaurants and food outlets but also grant franchises to others to operate McDonalds and KFC businesses using their logos with McDonalds and Kentucky Fried Chicken exercising tight quality control over the restaurants, their location, food, health and safety etc.





Managing licenses


Running an online business


Protecting your IP


Business Relationships


Writing a business plan


Running an online business

Cookie Policy


What is it? A cookie is a small text file that that is stored on a website user’s computer to collect information. Why is it important? If you have cookies on your website you should have a cookie policy that informs users to your website what the cookies do, why you are collecting the information and how they can turn off cookies within their computer browser. Risks You must also get their consent and the consent must be clearly given.




Terms of Business


What is it? Your Terms of Business set out the terms and conditions on which you conduct your business and is the contract between you and your customer. Why is it important? Written terms and conditions of business are important especially when there is a dispute between your business and a customer or supplier. Written terms of business will clarify the scope of your services or the goods you agreed to sell or supply and certainty as to the agreed price, payment method, guarantees, warranties, remedies of the buyer if there is a dispute. Risks When selling goods and services online you must comply with certain legal requirements including the distance selling regulations.




Commission Linking Agreement


What is it? If you are linking your website to another website in order to share commission with the other website owner or to benefit from extra sales you need a Website Commission Linking Agreement.




Consent Notices


What is it? The law provides that if your website is based in the EU or if you are targeting customers in the EU and your site uses one or more cookies you need to display a cookie consent notice. To comply with the law your need to do three things:

  1. Let users to your website know that you are using cookies.
  2. Provide a link where they can learn more about how you use the data you gather.
  3. Provide a way for your website users to consent to the use of cookies.
Consent can be explicit opt-in consent and implied consent. For explicit consent, users have to click a button, select a checkbox or complete some other specific activity to opt in to the use of cookies. The most common way to do this is to display a banner at the top or bottom of your website with a link to your Privacy policy and a button to consent to the use of cookies and hide the banner. For implied consent a clear notice must be provided, and the user must be made aware that a specific action will be understood to be implied consent to the use of cookies. One way that implied consent is obtained is by displaying a prominent cookie notice that ends with a statement like “By continuing to use this site you agree to the use of cookies”. The law applies whether a user is on a smartphone, tablet, a laptop, computer or other device. So when you set up your cookie notice you must ensure that the notice appears and functions well on all devices. There are also plugins for Cookie consent notices.




GDPR Compliance


What is it? The Data Protection Act 2018 and the General Data Protection Regulation (GDPR) regulates the processing of personal data by companies in the UK, specifying, for example, that data must be kept accurate and secure. A data protection policy is a statement of how you handle personal information given to you by your customers. The Privacy and Electronic Communications Regulations set out a variety of rules which apply to the use of email marketing campaigns and regulates the use of cookies. Pure Business Law can assist you with all your data compliance matters.




Terms and conditions for sale of goods to consumers via a website


What is it? Your Terms of Business or Terms and Conditions sets out the rights and obligations of the buyer and the seller in any sale of goods. Standard terms and conditions for the sale of goods help to make each party to the contract (whether a business or consumer) aware of their rights and obligations from the start. Why is it important? If you are dealing with a consumer there is a considerable amount of legislation eg the Consumer Rights Act 2015 aimed at protecting consumers which must be taken into account when preparing your terms and conditions. Make sure you do things right when creating your terms and conditions.




Terms and conditions for supply of services to consumers via a website


What is it? Your Terms of Business or Terms and Conditions sets out the rights and obligations of the buyer and the seller in any supply of services. Standard terms and conditions for the supply of services help to make each party to the contract (whether a business or consumer) aware of their rights and obligations from the start. Why is it important? If you are dealing with a consumer there is a considerable amount of legislation eg the Consumer Rights Act 2015 aimed at protecting consumers which must be taken into account when preparing your terms and conditions. Make sure you do things right when creating your terms and conditions.




Email footer and disclaimer


What is it? An email footer sets out information required by law about limited companies and limited liability partnerships. The Companies Act 1985 requires all business emails from a private or public limited company to include the company’s registered name, registered number, place of registration and its registered office address. Why is it important? An email disclaimer is a notice or warning added to an email designed to protect the email sender from breaches of confidentiality, contractual claims. Virus propagation and employee liability. An email disclaimer is optional.




Website terms and conditions


What is it? If you have a website it is a good idea to create website terms and conditions as it helps to ensure that customers and users know how a website can and cannot be used. They set out the legal rights and obligations between you and users of your website. They cover the acceptable uses of the website, prohibited use of the website, registration, password and security, linked websites, disclaimers and limitation of liability.




Privacy policy


What is it? A website privacy policy is a statement of how you handle personal information given to you by your customers. When you trade on the internet you will most likely be handling personal information because you keep records of your customers or website users. Why is it important? A website privacy policy helps build trust in your website and informs your visitors how their personal data is protected. In the UK the main legislation governing the collection, processing and distribution of personal data is the Data Protection Act 2018 and the General Data Protection Regulation (GDPR).




Website Terms of Use or Online Terms of Use


What is it? Your Website terms of use set out the legal rights and obligations between you and users of your website. Even if you do not sell goods on your website, you should have a written set of terms and conditions to cover all permitted and prohibited uses of your website, including any registration requirements, linked websites, disclaimers, limitation of liability and associated subscription fees.





Managing licenses


Running an online business


Protecting your IP


Business Relationships


Writing a business plan


Buying & Selling Goods & Services

Terms and conditions for supply of services to business customers


What is it? Terms and conditions set out the rules and specifications which apply in every supply of services that a seller makes and helps to make everyone aware of their rights and obligations from the outset. Why is it important? Make sure you protect your business interests with professionally prepared terms and conditions. When supplying services to a business your terms and conditions should cover issues such as timing and termination of supply, orders, specifications, obligations, pricing, payment, intellectual property, confidentiality, warranties, liability and termination.




Terms and conditions for sale of goods to business customers


What is it? Terms and conditions set out the rules and specifications which apply in every sale of goods that a seller makes and helps to make everyone aware of their rights and obligations from the outset. Why is it important? When selling goods to a business your terms and conditions should cover the nature of products to be sold, orders, delivery, pricing, payment, risk, warranties, defects, liability and confidentiality.




Terms and conditions for supply of services to consumers/businesses


What is it?

There are different terms and conditions for the supply of services to businesses (B2B contracts) and the supply of services to consumers(B2C contracts). When a business deals with a consumer (ie someone who buys goods or services for personal use, as opposed to buying the goods or services on behalf of a business) the consumer is given more legal protection than a business.

Why is it important?

Any business that is entering into a contract with a consumer must abide by a wide range of consumer law requirements such as the Consumer Rights Act 2015, the Sale of Goods Act and Supply of Goods and Services Act , the Consumer Contracts Regulations , the Misrepresentation Act and the Data Protection Act.

Risks

The T&Cs for supply of services to consumers should be used when

  • You are supplying services with or without goods to customers not acting in the course of a business (i.e. consumers).

The T&Cs for supply of services to businesses should be used when

  • You are supplying services with or without goods to customers acting in the course of a business (i.e. Businesses).




Consent Notices


What is it? The law provides that if your website is based in the EU or if you are targeting customers in the EU and your site uses one or more cookies you need to display a cookie consent notice. To comply with the law your need to do three things Let users to your website know that you are using cookies. Provide a link where they can learn more about how you use the data you gather. Provide a way for your website users to consent to the use of cookies. Consent can be explicit opt-in consent and implied consent. For explicit consent, users have to click a button, select a checkbox or complete some other specific activity to opt in to the use of cookies. The most common way to do this is to display a banner at the top or bottom of your website with a link to your Privacy policy and a button to consent to the use of cookies and hide the banner. For implied consent a clear notice must be provided, and the user must be made aware that a specific action will be understood to be implied consent to the use of cookies. One way that implied consent is obtained is by displaying a prominent cookie notice that ends with a statement like “By continuing to use this site you agree to the use of cookies”. The law applies whether a user is on a smartphone, tablet, a laptop, computer or other device. So when you set up your cookie notice you must ensure that the notice appears and functions well on all devices. There are also plugins for Cookie consent notices.




Terms and conditions for sale of goods to consumers/businesses


What is it?

There are different terms and conditions for the sale of goods to businesses (B2B) and the sale of goods to consumers(B2C).

Why is it important?

The T&Cs for sale of goods to consumers should be used when

  • You are supplying goods with or without services to customers not acting in the course of a business (i.e. consumers)

The T&Cs for sale of goods to businesses should be used when

  • You are supplying goods with or without services to customers acting in the course of a business (i.e. businesses)




Terms and conditions for sale of goods to consumers via a website





Terms and conditions for supply of services to consumers via a website





Heads of terms


What is it? This is similar to a Memorandum of Understanding (MOU)s, Term sheet or Letter of intent. The heads of terms set out the key terms agreed by the parties before entering a business transaction. It is not contractually binding. Heads of Terms are usually set out in a letter or document setting out the key terms agreed by parties who intend to enter a binding contract. It is also known as Letter of Intent, a Memorandum of Understanding (MOU) or a Term Sheet. It is a useful tool when two or more parties intend to enter a future contract and want to identify, describe and agree, without it being contractually binding, the terms to be further negotiated and then recorded in a contractually binding contract. There will occasionally be statements in heads of terms which are exceptions to the general approach that heads of terms are not binding: this will occur if the parties put in statements which heads of terms expressly state are to be of legally binding effect until a definitive contract is signed. If that is the case those statements will generally be binding. Why is it important? Heads of terms are useful to set out the progress made during negotiations, reduce the potential for misunderstandings, indicate the major issues which still need to be resolved and make it clear what the parties intend when they enter into the contract. The disadvantage of Heads of terms is that it can take up a considerable amount of time and may distract the parties from working on negotiating a full and detailed binding contract. Risks There have been occasions when the parties to a proposed commercial arrangement never actually agree or sign a definite contract and have gone on to implement their deal based only on the Heads of terms. This creates a very uncertain legal position which may lead to disputes and legal problems.




Letter of intent (LOI)


What is it? A Letter of Intent is a pre-contract, non-binding document setting out the key terms agreed by parties who intend to enter into a binding contract. It is also known as Heads of Terms, a Memorandum of Understanding (MOU) or a Term Sheet. It is a useful tool when two or more parties intend to enter into a future contract and want to identify, describe and agree, without it being contractually binding, the terms to be further negotiated and then recorded in a contractually binding contract. There will occasionally be statements in a letter of intent which are exceptions to the general approach that a letter of intent is not binding: this will occur if the parties put in statements which the letter of intent expressly states are to be of legally binding effect until a definitive contract is signed. If that is the case those statements will generally be binding. Why is it important? A letter of intent is useful to set out the progress made during negotiations, reduce the potential for misunderstandings, indicate the major issues which still need to be resolved and make it clear what the parties intend when they enter into the contract. The disadvantage of a letter of intent is that it can take up a considerable amount of time and may distract the parties from working on negotiating a full and detailed binding contract. Risks There have been occasions when the parties to a proposed commercial arrangement never actually agree or sign a definite contract and have gone on to implement their deal based only on the letter of intent. This creates a very uncertain legal position which may result in disputes and legal problems.




Invoice


What is it? An invoice is a statement setting out the goods and or services that have been supplied by a seller to a buyer and the money owed for those goods and or services. It is created by a seller or supplier to request payment for goods sold and or services provided. It is also called a bill. Why is it important? It identifies the trading partners, specifies the terms of the deal and provides information on the payment figure, the available methods of payment and the payment terms i.e. the maximum amount of time that a buyer had to pay for the goods and or services that they have purchased from the seller.




Sales of goods agreements


What is it?

A Sale of Goods Agreement (sometimes called a Sales Agreement or Sales Contract) is a contract entered into between a buyer and a seller of goods for the sale and purchase of specific goods by the buyer. When you sell goods, you create a sale of goods contract.

Why is it important?

The terms in a sale of goods contract may vary depending on whether it is a sale to a consumer (i.e. a B2C contract ) or a sale to a business (i.e. a “commercial” sale or B2B contract.) A consumer is someone who buys goods or services for personal use, as opposed to buying the goods or services on behalf of a business. Consumers who act as the buyer in a contract for a sale of goods are given more legal protection than businesses. The legal protection is given to help the party considered to be the more vulnerable party to the contract ie the consumer as opposed to the business.

The sale of goods agreement will set out the seller and buyer’s obligations, the terms on which the seller is willing to sell and transfer the goods to the buyer, the nature of the goods to be sold, the price, payment terms, shipping and collection details, delivery time and what happens at the end of the contract.

Risks

A Sale of Goods Agreement can be made orally or in writing. However, having a well-written Sale of Goods Agreement can help protect one or both of the parties if there is a problem with the sale eg goods are late in arriving or the goods have been damaged or destroyed.




Purchase order


What is it? A purchase order is prepared by a buyer when the buyer orders goods or services from a seller. The purchase order will indicate the type of goods, quantity of goods and the price the buyer is willing to pay for the products and or services. Once the seller accepts the purchase order it becomes a legally binding contract as the seller has agreed to sell the goods and or services at the prices put forward by the buyer. The seller will then issue an invoice to the buyer based on the purchase order. Why is it important? Purchase orders are important for businesses as it is instrumental in tracking expenditure, makes orders easier to track, helps avoid audit problems and provides contractual legal protection for the buyer and the supplier. Alongside a purchase order system, it is vital that a company has strong credit management practices to safeguard cash flow from bad debts and late payment. A strong debt collection process is vital to ensure payment is made when the goods or services have been delivered. Invoice promptly and accurately and chase up with reminders. If a customer will not pay or ignores payment requests take action – Appoint a debt collection agency, take debt recovery action through the courts or pass the debt to a solicitor. Pure Business Law has experienced debt collection lawyers who can assist you with debt recovery.




Services agreement


What is it? A Service agreement also known as a Service contract or Contract for Services is a written agreement between a service provider and a customer setting out agreed terms for the supply of services. The terms should include details of the services to be provided, location of provision of the services, payment. Limitation of liability clause, tools or materials to be used, termination of the agreement, ownership of intellectual property clause and dispute resolution clauses. Why is it important? A services agreement is required when a business wants to engage another business to supply services. If your business is the service provider, you should use a service contract whenever you are hired by a customer to complete a service. If you are the customer and the service provider does not supply the contract, you can use a Service agreement to ensure that the terms of the service relationship are clear.





Managing licenses


Running an online business


Protecting your IP


Business Relationships


Writing a business plan


Managing a company

Terms and conditions for supply of services to business customers


What is it? Terms and conditions set out the rules and specifications which apply in every supply of services that a seller makes and helps to make everyone aware of their rights and obligations from the outset. Why is it important? Make sure you protect your business interests with professionally prepared terms and conditions. When supplying services to a business your terms and conditions should cover issues such as timing and termination of supply, orders, specifications, obligations, pricing, payment, intellectual property, confidentiality, warranties, liability and termination.




Terms and conditions for sale of goods to business customers


What is it? Terms and conditions set out the rules and specifications which apply in every sale of goods that a seller makes and helps to make everyone aware of their rights and obligations from the outset. Why is it important? When selling goods to a business your terms and conditions should cover the nature of products to be sold, orders, delivery, pricing, payment, risk, warranties, defects, liability and confidentiality.




Terms and conditions for supply of services to consumers/businesses


What is it?

There are different terms and conditions for the supply of services to businesses (B2B contracts) and the supply of services to consumers(B2C contracts). When a business deals with a consumer (ie someone who buys goods or services for personal use, as opposed to buying the goods or services on behalf of a business) the consumer is given more legal protection than a business.

Why is it important?

Any business that is entering into a contract with a consumer must abide by a wide range of consumer law requirements such as the Consumer Rights Act 2015, the Sale of Goods Act and Supply of Goods and Services Act , the Consumer Contracts Regulations , the Misrepresentation Act and the Data Protection Act.

Risks

The T&Cs for supply of services to consumers should be used when

  • You are supplying services with or without goods to customers not acting in the course of a business (i.e. consumers).

The T&Cs for supply of services to businesses should be used when

  • You are supplying services with or without goods to customers acting in the course of a business (i.e. Businesses).




Consent Notices


What is it? The law provides that if your website is based in the EU or if you are targeting customers in the EU and your site uses one or more cookies you need to display a cookie consent notice. To comply with the law your need to do three things Let users to your website know that you are using cookies. Provide a link where they can learn more about how you use the data you gather. Provide a way for your website users to consent to the use of cookies. Consent can be explicit opt-in consent and implied consent. For explicit consent, users have to click a button, select a checkbox or complete some other specific activity to opt in to the use of cookies. The most common way to do this is to display a banner at the top or bottom of your website with a link to your Privacy policy and a button to consent to the use of cookies and hide the banner. For implied consent a clear notice must be provided, and the user must be made aware that a specific action will be understood to be implied consent to the use of cookies. One way that implied consent is obtained is by displaying a prominent cookie notice that ends with a statement like “By continuing to use this site you agree to the use of cookies”. The law applies whether a user is on a smartphone, tablet, a laptop, computer or other device. So when you set up your cookie notice you must ensure that the notice appears and functions well on all devices. There are also plugins for Cookie consent notices.




Terms and conditions for sale of goods to consumers/businesses


What is it?

There are different terms and conditions for the sale of goods to businesses (B2B) and the sale of goods to consumers(B2C).

Why is it important?

The T&Cs for sale of goods to consumers should be used when

  • You are supplying goods with or without services to customers not acting in the course of a business (i.e. consumers)

The T&Cs for sale of goods to businesses should be used when

  • You are supplying goods with or without services to customers acting in the course of a business (i.e. businesses)




Terms and conditions for sale of goods to consumers via a website





Terms and conditions for supply of services to consumers via a website





Heads of terms


What is it? This is similar to a Memorandum of Understanding (MOU)s, Term sheet or Letter of intent. The heads of terms set out the key terms agreed by the parties before entering a business transaction. It is not contractually binding. Heads of Terms are usually set out in a letter or document setting out the key terms agreed by parties who intend to enter a binding contract. It is also known as Letter of Intent, a Memorandum of Understanding (MOU) or a Term Sheet. It is a useful tool when two or more parties intend to enter a future contract and want to identify, describe and agree, without it being contractually binding, the terms to be further negotiated and then recorded in a contractually binding contract. There will occasionally be statements in heads of terms which are exceptions to the general approach that heads of terms are not binding: this will occur if the parties put in statements which heads of terms expressly state are to be of legally binding effect until a definitive contract is signed. If that is the case those statements will generally be binding. Why is it important? Heads of terms are useful to set out the progress made during negotiations, reduce the potential for misunderstandings, indicate the major issues which still need to be resolved and make it clear what the parties intend when they enter into the contract. The disadvantage of Heads of terms is that it can take up a considerable amount of time and may distract the parties from working on negotiating a full and detailed binding contract. Risks There have been occasions when the parties to a proposed commercial arrangement never actually agree or sign a definite contract and have gone on to implement their deal based only on the Heads of terms. This creates a very uncertain legal position which may lead to disputes and legal problems.




Letter of intent (LOI)


What is it? A Letter of Intent is a pre-contract, non-binding document setting out the key terms agreed by parties who intend to enter into a binding contract. It is also known as Heads of Terms, a Memorandum of Understanding (MOU) or a Term Sheet. It is a useful tool when two or more parties intend to enter into a future contract and want to identify, describe and agree, without it being contractually binding, the terms to be further negotiated and then recorded in a contractually binding contract. There will occasionally be statements in a letter of intent which are exceptions to the general approach that a letter of intent is not binding: this will occur if the parties put in statements which the letter of intent expressly states are to be of legally binding effect until a definitive contract is signed. If that is the case those statements will generally be binding. Why is it important? A letter of intent is useful to set out the progress made during negotiations, reduce the potential for misunderstandings, indicate the major issues which still need to be resolved and make it clear what the parties intend when they enter into the contract. The disadvantage of a letter of intent is that it can take up a considerable amount of time and may distract the parties from working on negotiating a full and detailed binding contract. Risks There have been occasions when the parties to a proposed commercial arrangement never actually agree or sign a definite contract and have gone on to implement their deal based only on the letter of intent. This creates a very uncertain legal position which may result in disputes and legal problems.




Invoice


What is it? An invoice is a statement setting out the goods and or services that have been supplied by a seller to a buyer and the money owed for those goods and or services. It is created by a seller or supplier to request payment for goods sold and or services provided. It is also called a bill. Why is it important? It identifies the trading partners, specifies the terms of the deal and provides information on the payment figure, the available methods of payment and the payment terms i.e. the maximum amount of time that a buyer had to pay for the goods and or services that they have purchased from the seller.




Sales of goods agreements


What is it?

A Sale of Goods Agreement (sometimes called a Sales Agreement or Sales Contract) is a contract entered into between a buyer and a seller of goods for the sale and purchase of specific goods by the buyer. When you sell goods, you create a sale of goods contract.

Why is it important?

The terms in a sale of goods contract may vary depending on whether it is a sale to a consumer (i.e. a B2C contract ) or a sale to a business (i.e. a “commercial” sale or B2B contract.) A consumer is someone who buys goods or services for personal use, as opposed to buying the goods or services on behalf of a business. Consumers who act as the buyer in a contract for a sale of goods are given more legal protection than businesses. The legal protection is given to help the party considered to be the more vulnerable party to the contract ie the consumer as opposed to the business.

The sale of goods agreement will set out the seller and buyer’s obligations, the terms on which the seller is willing to sell and transfer the goods to the buyer, the nature of the goods to be sold, the price, payment terms, shipping and collection details, delivery time and what happens at the end of the contract.

Risks

A Sale of Goods Agreement can be made orally or in writing. However, having a well-written Sale of Goods Agreement can help protect one or both of the parties if there is a problem with the sale eg goods are late in arriving or the goods have been damaged or destroyed.




Purchase order


What is it? A purchase order is prepared by a buyer when the buyer orders goods or services from a seller. The purchase order will indicate the type of goods, quantity of goods and the price the buyer is willing to pay for the products and or services. Once the seller accepts the purchase order it becomes a legally binding contract as the seller has agreed to sell the goods and or services at the prices put forward by the buyer. The seller will then issue an invoice to the buyer based on the purchase order. Why is it important? Purchase orders are important for businesses as it is instrumental in tracking expenditure, makes orders easier to track, helps avoid audit problems and provides contractual legal protection for the buyer and the supplier. Alongside a purchase order system, it is vital that a company has strong credit management practices to safeguard cash flow from bad debts and late payment. A strong debt collection process is vital to ensure payment is made when the goods or services have been delivered. Invoice promptly and accurately and chase up with reminders. If a customer will not pay or ignores payment requests take action – Appoint a debt collection agency, take debt recovery action through the courts or pass the debt to a solicitor. Pure Business Law has experienced debt collection lawyers who can assist you with debt recovery.




Services agreement


What is it? A Service agreement also known as a Service contract or Contract for Services is a written agreement between a service provider and a customer setting out agreed terms for the supply of services. The terms should include details of the services to be provided, location of provision of the services, payment. Limitation of liability clause, tools or materials to be used, termination of the agreement, ownership of intellectual property clause and dispute resolution clauses. Why is it important? A services agreement is required when a business wants to engage another business to supply services. If your business is the service provider, you should use a service contract whenever you are hired by a customer to complete a service. If you are the customer and the service provider does not supply the contract, you can use a Service agreement to ensure that the terms of the service relationship are clear.





Managing licenses


Running an online business


Protecting your IP


Business Relationships


Writing a business plan


Settlement agreements & Ref

Letter ending a contract


What is it? A letter terminating a contract also known as a Notice of Contract Termination, Notice of Cancellation of Contract or a Contract Termination Letter is a formal declaration indicating your intention to terminate a contract with the other party to the contract. When writing a letter terminating a contract ensure that you have the legal right to terminate the contract in the particular circumstances and keep your tone formal,straightforward, courteous and professional. Risks You should also ensure that :

  • The letter contains a clear description of the reasons for the termination of the contract.
  • The date of termination is mentioned.
  • The letter thanks the other party for their services.

Our contract solicitors can provide you with a bespoke letter for a reasonable fixed fee that you can use to cancel a contract or agreement.




Letter assigning a contract


What is it?

Transferring a contract from one party to another is known as ‘assigning’ a contract or ‘an assignment’ of the contract. An assignment ends one party’s involvement in the contract and transfers their contractual rights, benefits and interests to a new party.

Risks

Some contracts may contain a clause prohibiting assignment; other contracts may require the other party to consent to the assignment. Unless assignment is prohibited in a contract, a party may assign their rights to third party without the consent of the other party to the agreement. A letter of assignment is used to effect the assignment and will be signed by the outgoing party and the incoming party.





Commercial notices

Terms and conditions for supply of services to business customers


What is it? Terms and conditions set out the rules and specifications which apply in every supply of services that a seller makes and helps to make everyone aware of their rights and obligations from the outset. Why is it important? Make sure you protect your business interests with professionally prepared terms and conditions. When supplying services to a business your terms and conditions should cover issues such as timing and termination of supply, orders, specifications, obligations, pricing, payment, intellectual property, confidentiality, warranties, liability and termination.




Terms and conditions for sale of goods to business customers


What is it? Terms and conditions set out the rules and specifications which apply in every sale of goods that a seller makes and helps to make everyone aware of their rights and obligations from the outset. Why is it important? When selling goods to a business your terms and conditions should cover the nature of products to be sold, orders, delivery, pricing, payment, risk, warranties, defects, liability and confidentiality.




Terms and conditions for supply of services to consumers/businesses


What is it?

There are different terms and conditions for the supply of services to businesses (B2B contracts) and the supply of services to consumers(B2C contracts). When a business deals with a consumer (ie someone who buys goods or services for personal use, as opposed to buying the goods or services on behalf of a business) the consumer is given more legal protection than a business.

Why is it important?

Any business that is entering into a contract with a consumer must abide by a wide range of consumer law requirements such as the Consumer Rights Act 2015, the Sale of Goods Act and Supply of Goods and Services Act , the Consumer Contracts Regulations , the Misrepresentation Act and the Data Protection Act.

Risks

The T&Cs for supply of services to consumers should be used when

  • You are supplying services with or without goods to customers not acting in the course of a business (i.e. consumers).

The T&Cs for supply of services to businesses should be used when

  • You are supplying services with or without goods to customers acting in the course of a business (i.e. Businesses).




Consent Notices


What is it? The law provides that if your website is based in the EU or if you are targeting customers in the EU and your site uses one or more cookies you need to display a cookie consent notice. To comply with the law your need to do three things Let users to your website know that you are using cookies. Provide a link where they can learn more about how you use the data you gather. Provide a way for your website users to consent to the use of cookies. Consent can be explicit opt-in consent and implied consent. For explicit consent, users have to click a button, select a checkbox or complete some other specific activity to opt in to the use of cookies. The most common way to do this is to display a banner at the top or bottom of your website with a link to your Privacy policy and a button to consent to the use of cookies and hide the banner. For implied consent a clear notice must be provided, and the user must be made aware that a specific action will be understood to be implied consent to the use of cookies. One way that implied consent is obtained is by displaying a prominent cookie notice that ends with a statement like “By continuing to use this site you agree to the use of cookies”. The law applies whether a user is on a smartphone, tablet, a laptop, computer or other device. So when you set up your cookie notice you must ensure that the notice appears and functions well on all devices. There are also plugins for Cookie consent notices.




Terms and conditions for sale of goods to consumers/businesses


What is it?

There are different terms and conditions for the sale of goods to businesses (B2B) and the sale of goods to consumers(B2C).

Why is it important?

The T&Cs for sale of goods to consumers should be used when

  • You are supplying goods with or without services to customers not acting in the course of a business (i.e. consumers)

The T&Cs for sale of goods to businesses should be used when

  • You are supplying goods with or without services to customers acting in the course of a business (i.e. businesses)




Terms and conditions for sale of goods to consumers via a website





Terms and conditions for supply of services to consumers via a website





Heads of terms


What is it? This is similar to a Memorandum of Understanding (MOU)s, Term sheet or Letter of intent. The heads of terms set out the key terms agreed by the parties before entering a business transaction. It is not contractually binding. Heads of Terms are usually set out in a letter or document setting out the key terms agreed by parties who intend to enter a binding contract. It is also known as Letter of Intent, a Memorandum of Understanding (MOU) or a Term Sheet. It is a useful tool when two or more parties intend to enter a future contract and want to identify, describe and agree, without it being contractually binding, the terms to be further negotiated and then recorded in a contractually binding contract. There will occasionally be statements in heads of terms which are exceptions to the general approach that heads of terms are not binding: this will occur if the parties put in statements which heads of terms expressly state are to be of legally binding effect until a definitive contract is signed. If that is the case those statements will generally be binding. Why is it important? Heads of terms are useful to set out the progress made during negotiations, reduce the potential for misunderstandings, indicate the major issues which still need to be resolved and make it clear what the parties intend when they enter into the contract. The disadvantage of Heads of terms is that it can take up a considerable amount of time and may distract the parties from working on negotiating a full and detailed binding contract. Risks There have been occasions when the parties to a proposed commercial arrangement never actually agree or sign a definite contract and have gone on to implement their deal based only on the Heads of terms. This creates a very uncertain legal position which may lead to disputes and legal problems.




Letter of intent (LOI)


What is it? A Letter of Intent is a pre-contract, non-binding document setting out the key terms agreed by parties who intend to enter into a binding contract. It is also known as Heads of Terms, a Memorandum of Understanding (MOU) or a Term Sheet. It is a useful tool when two or more parties intend to enter into a future contract and want to identify, describe and agree, without it being contractually binding, the terms to be further negotiated and then recorded in a contractually binding contract. There will occasionally be statements in a letter of intent which are exceptions to the general approach that a letter of intent is not binding: this will occur if the parties put in statements which the letter of intent expressly states are to be of legally binding effect until a definitive contract is signed. If that is the case those statements will generally be binding. Why is it important? A letter of intent is useful to set out the progress made during negotiations, reduce the potential for misunderstandings, indicate the major issues which still need to be resolved and make it clear what the parties intend when they enter into the contract. The disadvantage of a letter of intent is that it can take up a considerable amount of time and may distract the parties from working on negotiating a full and detailed binding contract. Risks There have been occasions when the parties to a proposed commercial arrangement never actually agree or sign a definite contract and have gone on to implement their deal based only on the letter of intent. This creates a very uncertain legal position which may result in disputes and legal problems.




Invoice


What is it? An invoice is a statement setting out the goods and or services that have been supplied by a seller to a buyer and the money owed for those goods and or services. It is created by a seller or supplier to request payment for goods sold and or services provided. It is also called a bill. Why is it important? It identifies the trading partners, specifies the terms of the deal and provides information on the payment figure, the available methods of payment and the payment terms i.e. the maximum amount of time that a buyer had to pay for the goods and or services that they have purchased from the seller.




Sales of goods agreements


What is it?

A Sale of Goods Agreement (sometimes called a Sales Agreement or Sales Contract) is a contract entered into between a buyer and a seller of goods for the sale and purchase of specific goods by the buyer. When you sell goods, you create a sale of goods contract.

Why is it important?

The terms in a sale of goods contract may vary depending on whether it is a sale to a consumer (i.e. a B2C contract ) or a sale to a business (i.e. a “commercial” sale or B2B contract.) A consumer is someone who buys goods or services for personal use, as opposed to buying the goods or services on behalf of a business. Consumers who act as the buyer in a contract for a sale of goods are given more legal protection than businesses. The legal protection is given to help the party considered to be the more vulnerable party to the contract ie the consumer as opposed to the business.

The sale of goods agreement will set out the seller and buyer’s obligations, the terms on which the seller is willing to sell and transfer the goods to the buyer, the nature of the goods to be sold, the price, payment terms, shipping and collection details, delivery time and what happens at the end of the contract.

Risks

A Sale of Goods Agreement can be made orally or in writing. However, having a well-written Sale of Goods Agreement can help protect one or both of the parties if there is a problem with the sale eg goods are late in arriving or the goods have been damaged or destroyed.




Purchase order


What is it? A purchase order is prepared by a buyer when the buyer orders goods or services from a seller. The purchase order will indicate the type of goods, quantity of goods and the price the buyer is willing to pay for the products and or services. Once the seller accepts the purchase order it becomes a legally binding contract as the seller has agreed to sell the goods and or services at the prices put forward by the buyer. The seller will then issue an invoice to the buyer based on the purchase order. Why is it important? Purchase orders are important for businesses as it is instrumental in tracking expenditure, makes orders easier to track, helps avoid audit problems and provides contractual legal protection for the buyer and the supplier. Alongside a purchase order system, it is vital that a company has strong credit management practices to safeguard cash flow from bad debts and late payment. A strong debt collection process is vital to ensure payment is made when the goods or services have been delivered. Invoice promptly and accurately and chase up with reminders. If a customer will not pay or ignores payment requests take action – Appoint a debt collection agency, take debt recovery action through the courts or pass the debt to a solicitor. Pure Business Law has experienced debt collection lawyers who can assist you with debt recovery.




Services agreement


What is it? A Service agreement also known as a Service contract or Contract for Services is a written agreement between a service provider and a customer setting out agreed terms for the supply of services. The terms should include details of the services to be provided, location of provision of the services, payment. Limitation of liability clause, tools or materials to be used, termination of the agreement, ownership of intellectual property clause and dispute resolution clauses. Why is it important? A services agreement is required when a business wants to engage another business to supply services. If your business is the service provider, you should use a service contract whenever you are hired by a customer to complete a service. If you are the customer and the service provider does not supply the contract, you can use a Service agreement to ensure that the terms of the service relationship are clear.





Managing licenses


Running an online business


Protecting your IP


Business Relationships


Writing a business plan


Letting a commercial property

Joint Venture Agreement


What is it? This agreement is needed when two or more parties decide to engage in a business collaboration to deal with a particular project. There are two main types of joint ventures: i) A contractual joint venture is a contract between two parties who are looking to work together on a commercial project and pool their resources but do not want to create a separate legal entity such as a joint venture company or an LLP.(eg two businesses collaborating to bid for a contract or carry out research and development) . The collaboration will be generally be short term or for a defined period and will be of restricted scope with a well-defined purpose. ii)A corporate joint venture is a contract between two parties looking to work together on a commercial project where they will both set up a separate company (“a joint venture company”) separate from their current operations, own shares in it, have representatives from each of the companies sitting on its board and or want their company to have limited liability for the debts and obligations of the joint venture. This type of joint venture is usually suitable if you will be collaboration on a longer term project and or your collaboration will be more risky and complex and therefore justifies the time and effort of setting up a separate company.




Manufacturing Agreement


What is it? This agreement is needed if you want to employ the services of another company an individual to manufacture goods/products for you for your business. The agreement should cover a number of key areas including manufacture of the goods, materials, specification, quality control, packaging, storage, confidentiality, data protection, insurance, pricing, payment, delivery, title and risk, intellectual property, disputes, force majeure, service of notices, liability and indemnity clauses.




Memorandum of Understanding


What is it? An MOU is a pre-contract, non-binding document setting out the key terms agreed by parties who intend to enter into a binding contract. It is also known as Heads of Terms, a Letter of Intent or a Term Sheet. It is a useful tool when two or more parties intend to enter into a future contract and want to identify, describe and agree, without it being contractually binding, the terms to be further negotiated and then recorded in a contractually binding contract. There will occasionally be statements in a MOU which are exceptions to the general approach that a MOU is not binding : this will occur if the parties put in statements which the MOU expressly states are to be of legally binding effect until a definitive contract is signed. If that is the case those statements will generally be binding. Why is it important? An MOU is useful to set out the progress made during negotiations, reduce the potential for misunderstandings, indicate the major issues which still need to be resolved and make it clear what the parties intend when they enter into the contract. Risks The disadvantage of a MOU is that it can take up a considerable amount of time and may distract the parties from working on negotiating a full and detailed binding contract. There have been occasions when the parties to a proposed commercial arrangement never actually agree or sign a definite contract and have gone on to implement their deal based only on the MOU. This creates a very uncertain legal position which may lead to disputes and legal problems.




Agency Agreement


What is it? The term “agent” is often used as shorthand in a business or legal context to mean a person authorised to act for or on behalf of another who is sometimes called the “principal” As a business you need to be able to distinguish whether or not a particular arrangement amounts to a commercial agency rather than another kind of agency or relationship. This is vital if you are to understand the various legal obligations, duties and liabilities that you owe your contractors/ agents and vice versa. There are different types of individuals and companies which describe themselves as “agents”. These include for instance – commercial agents, sales agents. Employment agents, escrow agents etc. Why is it important? A commercial agent is a kind of sales agent whose relationship with their principal is largely governed by the Commercial Agents (Council Directive) Regulations 1993 whereas the relationship between any other type of sales and their principal is largely governed by the common law and not by the Regulations. A “commercial agent” is defined by the Regulations as a “…self-employed intermediary who has continuing authority to negotiate the sale or purchase of goods on behalf of their principal or to negotiate and conclude such transactions on behalf of and in the name of that principal”. Risks All commercial agency arrangements must comply with the Commercial Agents Regulations 1993. In accordance with the European Withdrawal Act 2018( ad subject to the terms of any final Brexit deal) the Regulations will remain in force post-Brexit.In contrast a sales agent is a freelance self-employed individual or contractor who may or may not work for numerous clients. You need an Agency Agreement if you want to appoint a third party to act on your behalf, marketing and selling your products and services – generally in exchange for commission on any sales. An agency agreement sets out the terms and conditions of the relationship, the commission or fees the notice period and any exclusivity rights. Other ways in which a business can expand without considerable outlay are via a distributorship and a franchise. In contrast to a distributorship, an agent earns commission on sales but does not pay for the goods, own the goods or set the sale price charged to the customer.




Referral Agreement


What is it? A referral agreement is used where, in order to obtain more customers and sales and widen Business A’s customer base or sell into a new market, a supplier of goods or services (Business A) wishes to engage another person or business (Individual B or Business B) to effect an introduction/referral of new customers to Business A in return for which the agent receives a fee for the introduction/referral itself or for the introduction/referral where it results in a sale within a stated period after the introduction/referral. It is also known as an Introduction agreement. Examples of referrers/introducers are agents who introduce a seller of a business to a potential buyer or who introduce a potential investor to a business. Why is it important? If a business colleague is referring work to you or you are the referrer you should get a referral agreement that sets out the terms of your agreement. This will help avoid problems. A referral agreement can also be used where an e-commerce website wishes to increase its sales by allowing other websites to refer customers to them in return for a commission on sales obtained through such referrals. The fees can be either a fixed fee or percentage basis with payment when the referral is made or upon the first transaction or both. The fees and payment clause can be drafted so that if the refer fails to introduce any new business they will not get a fee.There are specific referral agreements for the introduction of clients for financial services eg investment advice and insurance products.




Licensing Agreement


What is it? There are numerous types of licensing agreements eg IP licensing agreement eg a trademark licence agreement, a licence to occupy property, a software licence agreement etc.A software licence agreement is an agreement between a software licensor (generally a software developer and/or owner) and licensee who will be using the licensed software in the course of a business or personally. Why is it important? We always recommend that our clients get a licensing agreement if for example they want to give a person or another business the right to use their technology, software or any other type of intellectual property. A software licence will set out what the user may or may not do with a piece of software thereby helping developers ensure that they maximise returns on their investments, restrict others from free use of their creative and inventive work and product software that remains stable across a broad range of computer systems.




End User Licence Agreement


What is it? This is a licence agreement between a software provider and a user where software is distributed en-masse through retailers or electronically eg Microsoft and people who use its software. The different types of end-user licences include a Web Wrap software licence (designed for use with software that is distributed electronically via download ) Click Wrap Licence (designed for use with software that can be distributed electronically via download or on physical media such as a CD or DVD-Rom, Shrink Wrap Licence (designed for use in or on the packaging of software that is distributed on physical media such as a CD or DVD-Rom).




Service Level Agreement


What is it? Businesses often seek to obtain services from other businesses for various reasons. In some cases, a simple service agreement is all that is needed especially where the services in question are to be provided over a short term.However, in some cases a long-term relationship and the need for service consistency is essential. In such cases a business owner may prefer to enter into a Service Level Agreement with the service provider. Why is it important? Commonly used in the IT & Technology industries, but also applicable in other areas of business especially where large-scale or complex services are involved Service Level Agreements set out the services to be provided under a contract and also sets out the levels of performance to which those services must be provided. Detailed provisions govern the monitoring of the performance of the services and the agreement. Risks The service provider is thereby incentivised to consistently provide services in line with the agreed performance levels. If it fails to meet the agreed service levels it is subject to penalties. Service level agreements are preferable to standard service agreements as they contain much more detail, enhanced clarity and accountability over and above standard service agreements.




Partnership agreement


What is it? There are 2 main types of partnership agreements: An unlimited partnership – This is a relationship between two or more parties carrying on business together to make a profit. It is usually referred to as a “partnership” or a “general partnership” to distinguish it from other types of partnership such as a limited liability partnership. A partnership can arise by law even if there is no agreement in writing and even if the parties did not intend to create a partnership. An unlimited partnership is not a separate legal entity unlike a company or a limited liability partnership. Therefore, its partners have unlimited liability for the partnership’s debts. A limited liability partnership – Unlike an unlimited partnership a limited liability partnership (LLP) requires the establishment of a separate corporate body through which the collaboration will be conducted. The partners will have limited liability in the same way as shareholders in a company. The partners will usually sign a member’s agreement setting out how the LLP will be run.




LLP agreement


What is it? This agreement applies when you have a limited liability partnership. Unlike an unlimited partnership a limited liability partnership (LLP) requires the establishment of a separate corporate body through which the collaboration will be conducted. Why is it important? The partners will have limited liability in the same way as shareholders in a company. The partners will usually sign a member’s agreement (LLP Agreement) setting out how the LLP will be run.




Distribution agreement


What is it? A distributor buys goods from a supplier to sell on to customers. They can earn a profit margin based on the “mark-up” they add to the original sale price. A Distributorship agreement is an agreement whereby the manufacturer appoints the distributor on a “sole” or “non-exclusive” basis) to resell the manufacturer’s products in a particular territory/ies. In this case, the ownership of the goods is transferred to the distributor prior to the marketing and sale of the goods which means that the distributor may hold stocks of goods which they pay for and own – they therefore bear the risk as to whether they can resell the goods. There are different types of distribution agreements eg exclusive, sole and selective distribution agreements. Business relationships can sour if based on verbal agreements. Protect your rights by ensuring you have a written distribution agreement.




Model release letter


What is it? A signed Model Release Form protects your profit margin and your copyright. Whether you work in a marketing business graphic design or are a commercial vlogger or blogger you need to ensure that any photographs that you use in your business has a properly signed release form. Whilst you do not generally need written permission to take photos, if you take photos and wish to publish the photos on the internet or in any other way or if you are starting a photography business you can protect yourself from any liability or legal proceedings by using a Model Release Form or Letter. A Model Release Form is the contract between the photographer or User and the “model” (i.e. the subject or owner of the image or photograph). Designed to protect both parties it specifies the ways in which the images or models can or cannot be used (eg for advertising, to make prints, post on social media etc), the media formats, the use or not of the model’s name, the model’s rights (or not) to inspect the end product before publication and the expiry (or not) of the release. Why is it important? A Model Release Form is not about obtaining permission to take photographs – it is about obtaining signed consent to publish the photographs for commercial purposes. Whilst it is generally okay to take pictures of a person or people in a public place without written permission if you want to use that photo for specific commercial purposes eg to promote a product on the internet or elsewhere it is best to be safe and get a signed release form from the “model” or owner of the “model”. Risks But do get legal advice before you use a release form template as it may need adapting to fit your particular needs.And remember! If you want to use images for a purpose not originally agreed, you MUST get further signed consent.




Sales agency agreement


What is it? If you are a business selling products you may decide to employ the services of a sales agent. A sales agent is a freelance self-employed business or contractor who might or might not work for several clients. The term “sales agent” includes a “commercial agent” but it is usual to distinguish the two forms of agency by referring to someone as a sales agent only if they are not a “commercial agent” as the legal position of a “commercial agent” differs substantially from other forms of “sales agency”. The business that owns the products will be called the “Principal” and the sales agent will be called the “Agent”. The sales agent is paid commission only and so is motivated to make as many sales as possible to maximise their income.Central to the relationship between a business and their sales agent will be the “Agency Agreement”. The Sales Agency agreement will set out the product the agent will be selling, where the agent will be selling those products, how the sales are to take place, commission payable on all sales and the key rights and responsibilities of the parties. Why is it important? The use of sales agents as opposed to an employed sales team has a number of benefits for the business (i.e. the “Principal”) since commission is only payable on achieved sales, there are no fixed employment costs, and the agent will often already have a network of contacts ie established customer base, will know the market in their area and will have credibility with their customer base.




Sub-contracting agreement


What is it? Many business contracts allow one or both parties to sub-contract all or part of their obligations under a contract. This can be done via a letter termed a “Notice of Intention to Sub-contract” from the main contractor to the other party to the main contract or via a formal “Sub-contracting” agreement. Where a “Notice of intention to sub-contract” letter is used, the main contractor (ie sender of the letter) would inform the other party to the contract (ie the recipient of the letter) that the main contractor intends to subcontract certain of their obligations under a contract and will provide details of the subcontractor(s) to whom the obligations will be sub-contracted, a detailed description of the obligations to be sub-contracted with cross-references to the relevant parts of the Contract agreement between the main contractor and the other party to the contract agreement. The recipient will also be reminded that they are not a party to the sub-contract and that the main contractor will remain their primary contact person and will also remain liable for any acts of omissions of the subcontractors. As an option, the main contractor may also decide to enter into a formal “Sub-contracting” agreement with the sub-contractor and send a copy of this to




Franchise Agreement


What is it? Franchising your business lets you licence your business model to companies or individual in particular geographical areas and allows you to increase your profits while maintaining a significant degree of control over your brand. A Franchise agreement is an agreement under which the owner of a business grants a licence or licences to others (the “franchisees”) to operate that business in a particular area within the UK or internationally either on a “sole” or “non-exclusive” basis, for a fee therefore spreading their corporate identity and products or services without the expense of setting up new establishments. All franchisees will use a common identity including the name, trademarks, goodwill, other intellectual property and or products of the franchisor. The franchisor will also provide a “Quality Manual” which in effect is a rule book setting out all the relevant detail needed for the successful day-to-day running of the franchised business eg minimum standards and insurance requirements. The agreement will usually include a confidentiality clause protecting all commercially sensitive information and trade secrets from unauthorised disclosure thereby protecting the interests of the franchisor. Why is it important? Franchising has benefits for the franchisor and the franchisee. The franchisor can grow its business without having to open, staff and manage new premises or branches itself whilst the franchisee can manage his/her own business which has been already tested by the franchisor and has access to the franchisor’s experience and expertise. McDonalds and Kentucky Fried Chicken (KFC) operate their own restaurants and food outlets but also grant franchises to others to operate McDonalds and KFC businesses using their logos with McDonalds and Kentucky Fried Chicken exercising tight quality control over the restaurants, their location, food, health and safety etc.





Managing licenses


Running an online business


Protecting your IP


Business Relationships


Writing a business plan


Sale and Purchase of Commerial Property

Terms and conditions for supply of services to business customers


What is it? Terms and conditions set out the rules and specifications which apply in every supply of services that a seller makes and helps to make everyone aware of their rights and obligations from the outset. Why is it important? Make sure you protect your business interests with professionally prepared terms and conditions. When supplying services to a business your terms and conditions should cover issues such as timing and termination of supply, orders, specifications, obligations, pricing, payment, intellectual property, confidentiality, warranties, liability and termination.




Terms and conditions for sale of goods to business customers


What is it? Terms and conditions set out the rules and specifications which apply in every sale of goods that a seller makes and helps to make everyone aware of their rights and obligations from the outset. Why is it important? When selling goods to a business your terms and conditions should cover the nature of products to be sold, orders, delivery, pricing, payment, risk, warranties, defects, liability and confidentiality.




Terms and conditions for supply of services to consumers/businesses


What is it?

There are different terms and conditions for the supply of services to businesses (B2B contracts) and the supply of services to consumers(B2C contracts). When a business deals with a consumer (ie someone who buys goods or services for personal use, as opposed to buying the goods or services on behalf of a business) the consumer is given more legal protection than a business.

Why is it important?

Any business that is entering into a contract with a consumer must abide by a wide range of consumer law requirements such as the Consumer Rights Act 2015, the Sale of Goods Act and Supply of Goods and Services Act , the Consumer Contracts Regulations , the Misrepresentation Act and the Data Protection Act.

Risks

The T&Cs for supply of services to consumers should be used when

  • You are supplying services with or without goods to customers not acting in the course of a business (i.e. consumers).

The T&Cs for supply of services to businesses should be used when

  • You are supplying services with or without goods to customers acting in the course of a business (i.e. Businesses).




Consent Notices


What is it? The law provides that if your website is based in the EU or if you are targeting customers in the EU and your site uses one or more cookies you need to display a cookie consent notice. To comply with the law your need to do three things Let users to your website know that you are using cookies. Provide a link where they can learn more about how you use the data you gather. Provide a way for your website users to consent to the use of cookies. Consent can be explicit opt-in consent and implied consent. For explicit consent, users have to click a button, select a checkbox or complete some other specific activity to opt in to the use of cookies. The most common way to do this is to display a banner at the top or bottom of your website with a link to your Privacy policy and a button to consent to the use of cookies and hide the banner. For implied consent a clear notice must be provided, and the user must be made aware that a specific action will be understood to be implied consent to the use of cookies. One way that implied consent is obtained is by displaying a prominent cookie notice that ends with a statement like “By continuing to use this site you agree to the use of cookies”. The law applies whether a user is on a smartphone, tablet, a laptop, computer or other device. So when you set up your cookie notice you must ensure that the notice appears and functions well on all devices. There are also plugins for Cookie consent notices.




Terms and conditions for sale of goods to consumers/businesses


What is it?

There are different terms and conditions for the sale of goods to businesses (B2B) and the sale of goods to consumers(B2C).

Why is it important?

The T&Cs for sale of goods to consumers should be used when

  • You are supplying goods with or without services to customers not acting in the course of a business (i.e. consumers)

The T&Cs for sale of goods to businesses should be used when

  • You are supplying goods with or without services to customers acting in the course of a business (i.e. businesses)




Terms and conditions for sale of goods to consumers via a website





Terms and conditions for supply of services to consumers via a website





Heads of terms


What is it? This is similar to a Memorandum of Understanding (MOU)s, Term sheet or Letter of intent. The heads of terms set out the key terms agreed by the parties before entering a business transaction. It is not contractually binding. Heads of Terms are usually set out in a letter or document setting out the key terms agreed by parties who intend to enter a binding contract. It is also known as Letter of Intent, a Memorandum of Understanding (MOU) or a Term Sheet. It is a useful tool when two or more parties intend to enter a future contract and want to identify, describe and agree, without it being contractually binding, the terms to be further negotiated and then recorded in a contractually binding contract. There will occasionally be statements in heads of terms which are exceptions to the general approach that heads of terms are not binding: this will occur if the parties put in statements which heads of terms expressly state are to be of legally binding effect until a definitive contract is signed. If that is the case those statements will generally be binding. Why is it important? Heads of terms are useful to set out the progress made during negotiations, reduce the potential for misunderstandings, indicate the major issues which still need to be resolved and make it clear what the parties intend when they enter into the contract. The disadvantage of Heads of terms is that it can take up a considerable amount of time and may distract the parties from working on negotiating a full and detailed binding contract. Risks There have been occasions when the parties to a proposed commercial arrangement never actually agree or sign a definite contract and have gone on to implement their deal based only on the Heads of terms. This creates a very uncertain legal position which may lead to disputes and legal problems.




Letter of intent (LOI)


What is it? A Letter of Intent is a pre-contract, non-binding document setting out the key terms agreed by parties who intend to enter into a binding contract. It is also known as Heads of Terms, a Memorandum of Understanding (MOU) or a Term Sheet. It is a useful tool when two or more parties intend to enter into a future contract and want to identify, describe and agree, without it being contractually binding, the terms to be further negotiated and then recorded in a contractually binding contract. There will occasionally be statements in a letter of intent which are exceptions to the general approach that a letter of intent is not binding: this will occur if the parties put in statements which the letter of intent expressly states are to be of legally binding effect until a definitive contract is signed. If that is the case those statements will generally be binding. Why is it important? A letter of intent is useful to set out the progress made during negotiations, reduce the potential for misunderstandings, indicate the major issues which still need to be resolved and make it clear what the parties intend when they enter into the contract. The disadvantage of a letter of intent is that it can take up a considerable amount of time and may distract the parties from working on negotiating a full and detailed binding contract. Risks There have been occasions when the parties to a proposed commercial arrangement never actually agree or sign a definite contract and have gone on to implement their deal based only on the letter of intent. This creates a very uncertain legal position which may result in disputes and legal problems.




Invoice


What is it? An invoice is a statement setting out the goods and or services that have been supplied by a seller to a buyer and the money owed for those goods and or services. It is created by a seller or supplier to request payment for goods sold and or services provided. It is also called a bill. Why is it important? It identifies the trading partners, specifies the terms of the deal and provides information on the payment figure, the available methods of payment and the payment terms i.e. the maximum amount of time that a buyer had to pay for the goods and or services that they have purchased from the seller.




Sales of goods agreements


What is it?

A Sale of Goods Agreement (sometimes called a Sales Agreement or Sales Contract) is a contract entered into between a buyer and a seller of goods for the sale and purchase of specific goods by the buyer. When you sell goods, you create a sale of goods contract.

Why is it important?

The terms in a sale of goods contract may vary depending on whether it is a sale to a consumer (i.e. a B2C contract ) or a sale to a business (i.e. a “commercial” sale or B2B contract.) A consumer is someone who buys goods or services for personal use, as opposed to buying the goods or services on behalf of a business. Consumers who act as the buyer in a contract for a sale of goods are given more legal protection than businesses. The legal protection is given to help the party considered to be the more vulnerable party to the contract ie the consumer as opposed to the business.

The sale of goods agreement will set out the seller and buyer’s obligations, the terms on which the seller is willing to sell and transfer the goods to the buyer, the nature of the goods to be sold, the price, payment terms, shipping and collection details, delivery time and what happens at the end of the contract.

Risks

A Sale of Goods Agreement can be made orally or in writing. However, having a well-written Sale of Goods Agreement can help protect one or both of the parties if there is a problem with the sale eg goods are late in arriving or the goods have been damaged or destroyed.




Purchase order


What is it? A purchase order is prepared by a buyer when the buyer orders goods or services from a seller. The purchase order will indicate the type of goods, quantity of goods and the price the buyer is willing to pay for the products and or services. Once the seller accepts the purchase order it becomes a legally binding contract as the seller has agreed to sell the goods and or services at the prices put forward by the buyer. The seller will then issue an invoice to the buyer based on the purchase order. Why is it important? Purchase orders are important for businesses as it is instrumental in tracking expenditure, makes orders easier to track, helps avoid audit problems and provides contractual legal protection for the buyer and the supplier. Alongside a purchase order system, it is vital that a company has strong credit management practices to safeguard cash flow from bad debts and late payment. A strong debt collection process is vital to ensure payment is made when the goods or services have been delivered. Invoice promptly and accurately and chase up with reminders. If a customer will not pay or ignores payment requests take action – Appoint a debt collection agency, take debt recovery action through the courts or pass the debt to a solicitor. Pure Business Law has experienced debt collection lawyers who can assist you with debt recovery.




Services agreement


What is it? A Service agreement also known as a Service contract or Contract for Services is a written agreement between a service provider and a customer setting out agreed terms for the supply of services. The terms should include details of the services to be provided, location of provision of the services, payment. Limitation of liability clause, tools or materials to be used, termination of the agreement, ownership of intellectual property clause and dispute resolution clauses. Why is it important? A services agreement is required when a business wants to engage another business to supply services. If your business is the service provider, you should use a service contract whenever you are hired by a customer to complete a service. If you are the customer and the service provider does not supply the contract, you can use a Service agreement to ensure that the terms of the service relationship are clear.





Managing licenses


Running an online business


Protecting your IP


Business Relationships


Writing a business plan


Buying & Selling a business

Share Purchase Agreement


What is it?

A Share purchase agreement (SPA) is an agreement setting out the terms and conditions relating to the sale and purchase of shares in a company. Share purchase agreements are often complex documents which can become lengthy and create significant delay, friction and cost if not dealt with by experienced, business minded lawyers.

Why is it important?

There is often a choice and negotiation over whether it’s best for either or both parties to buy/sell assets rather than shares. This would depend on whether the current owner (seller) is a limited company. If not, there can be no share sale! Further, where a buyer wants to preserve as many customer relations as possible, they may elect to buy the shares as opposed to assets.

The seller’s solicitor usually draws up the draft share purchase agreement.

Risks

While the buyer’s solicitor will try to protect the buyer the interest of the seller’s solicitor is to minimise this protection, in particular by limiting the seller’s liability for misrepresentation. However, in practice, where there is fraudulent misrepresentation the seller will still be liable so the buyer may accept such clauses since they are not valid if the seller can prove fraudulent misrepresentation.

Please contact us if you require specialist commercial lawyers to review, draft, negotiate, amend or generally advise on a share purchase agreement.




Asset Purchase Agreement


What is it?

An asset purchase agreement is an agreement setting out the terms and conditions relating to the sale and purchase of assets of a business. In an asset purchase, the company itself will be selling the assets, whilst in a share sale, the individual shareholders will be the sellers.

Occasionally a buyer will prefer to acquire certain assets of a business rather than acquire all of the shares in a company and therefore, both its assets and liabilities.

A buyer will normally prefer to buy the assets of a business, while the seller will prefer to sell the shares. The main benefit of an asset purchase is that a buyer may selectively pick the assets and liabilities they want to acquire and there is generally less risk of hidden liabilities than with a share purchase.

Risks

The main disadvantage of an asset sale, as opposed to a share purchase agreement is that each item must be transferred in accordance with its proper rules and made enforceable against third parties (eg through consents and approvals). This is especially the case for customer contracts, as a third party may view the transaction as an opportunity to renegotiate their contract thereby adding delay and additional costs to the transaction.

In addition, there may be other important contracts that are non-transferrable, or licences and consents unique to the seller which may not be transferrable.

In an asset sale it is vital to identify what exactly is being purchased. Assets transferred as part of an Asset purchase agreement may include:

  • Plant and machinery.
  • Premises;
  • Stock;
  • Contracts;
  • Know-how; and
  • Goodwill.

Please contact us if you require specialist commercial lawyers to review, draft, negotiate, amend or generally advise on a share purchase agreement.




Disclosure Letter


What is it?

A Non-Disclosure letter or Non-Disclosure Agreement, also called a Confidentiality Agreement, is a legal contract between two or more parties by which the parties agree not to disclose information (which is intended to be kept secret) that they have shared with each other during a business relationship to third parties.

Why is it important?

This Agreement may either be one-way (unilateral) or two-way (mutual), depending on whether both parties will be providing the secret information. If one party will be providing the secret information to the other, it is called a Unilateral Non-Disclosure Agreement.

For example, where an inventor of an idea is sharing the idea with another person, the inventor is the disclosing party and the other party is the receiving party. If the two parties will share the secret information between themselves, it is called a Mutual Non-Disclosure Agreement.

This Agreement can be used to share intellectual property, share commercial trading information or formalize a business relationship, for example, between an employer and an employee





Operating as a Sole Trader

Consultancy agreement


What is it?

A consultancy agreement is a contract between a self-employed person (Consultant) and a customer requiring the consultant’s services.

It is similar to the standard contract used to hire a freelancer. This agreement clarifies the basic terms of your relationship with the freelancer eg the work to be done, fees payable and other terms of the agreement eg a non-solicitation clause, confidentiality clause, data protection, ownership of any intellectual property created by the freelancer, indemnification clause for any losses you incur due to the freelancer’s breaches of third party intellectual property. Etc.

Why is it important?

More specialist freelancers may want you to sign up to their own bespoke terms and conditions when you instruct them. If that is the case you must ensure that you check all the clauses carefully to ensure that they do not conflict with your requirements and that you are happy with the terms eg consultant to be liable for breaches of your Intellectual property and third party intellectual property, confidentiality, fee payable, data protection, indemnification clause etc.

Risks

You should also ensure that you are aware of the IR35 tax rules. If a freelancer is providing services to you through a company your arrangement may be subject to the IR35 tax rules. This means that the freelancer may have to pay tax and national insurance as if they were employed by you. HMRC has a useful tool at www.gov.uk to enable businesses check employment status for tax purposes.

From April 2020 if you are a medium or large business the responsibility for determining whether the IR35 tax rules applies to the consultancy and for payment of the income tax and national insurance on behalf of the freelancer lies with the company to whom the freelancer provides the services. If you are a “small business” (i.e. a business which satisfies two or more of the following requirements – i) a turnover of £10.2 million or less, ii) no more than 50 staff and iii) a balance sheet f no more than £5.1million the responsibility for determining whether the IR35 tax rules apply and for payment of the tax and national insurance lies with the freelancer.




Home/Office rental agreement


What is it?

A home office rental agreement is an agreement between an owner or lessee of property to share their home office space with another person. These agreements are usually used by start-ups and home-based businesses and will be in the form of a licence agreement. The licensor will be the owner or tenant of the property and the licensee will be the sharer who may be an individual or a company. If more than one individual sharer it is essential that they be all named on the agreement so that they remain jointly and severally liable under the rental agreement. The licence fee should be inclusive of the service costs eg internet, utilities, etc.

Risks

If your business is a lessee, you must check your lease and check with your landlord to ensure that the grant of a licence to the sharers will not be a breach of your obligations as a tenant.




Purchase order


What is it?

A purchase order is prepared by a buyer when the buyer orders goods or A purchase order is prepared by a buyer when the buyer orders goods or services from a seller. The purchase order will indicate the type of goods, quantity of goods and the price the buyer is willing to pay for the products and or services.

Once the seller accepts the purchase order it becomes a legally binding contract as the seller has agreed to sell the goods and or services at the prices put forward by the buyer. The seller will then issue an invoice to the buyer based on the purchase order.

Why is it important?

Purchase orders are important for businesses as it is instrumental in tracking expenditure, makes orders easier to track, helps avoid audit problems and provides contractual legal protection for the buyer and the supplier.

Risks

Alongside a purchase order system, it is vital that a company has strong credit management practices to safeguard cash flow from bad debts and late payment.A strong debt collections process is vital to ensure payment is made when the goods or services have been delivered.

Invoice promptly and accurately and chase up with reminders. If a customer will not pay or ignores payment requests take action – Appoint a debt collection agency, take debt recovery action through the courts or pass the debt to a solicitor.

Pure Business Law has experienced debt collection lawyers who can assist you with debt recovery.





Ending or Assigning an Existing Agreement

Joint Venture Agreement


What is it? This agreement is needed when two or more parties decide to engage in a business collaboration to deal with a particular project. There are two main types of joint ventures: i) A contractual joint venture is a contract between two parties who are looking to work together on a commercial project and pool their resources but do not want to create a separate legal entity such as a joint venture company or an LLP.(eg two businesses collaborating to bid for a contract or carry out research and development) . The collaboration will be generally be short term or for a defined period and will be of restricted scope with a well-defined purpose. ii)A corporate joint venture is a contract between two parties looking to work together on a commercial project where they will both set up a separate company (“a joint venture company”) separate from their current operations, own shares in it, have representatives from each of the companies sitting on its board and or want their company to have limited liability for the debts and obligations of the joint venture. This type of joint venture is usually suitable if you will be collaboration on a longer term project and or your collaboration will be more risky and complex and therefore justifies the time and effort of setting up a separate company.




Manufacturing Agreement


What is it? This agreement is needed if you want to employ the services of another company an individual to manufacture goods/products for you for your business. The agreement should cover a number of key areas including manufacture of the goods, materials, specification, quality control, packaging, storage, confidentiality, data protection, insurance, pricing, payment, delivery, title and risk, intellectual property, disputes, force majeure, service of notices, liability and indemnity clauses.




Memorandum of Understanding


What is it? An MOU is a pre-contract, non-binding document setting out the key terms agreed by parties who intend to enter into a binding contract. It is also known as Heads of Terms, a Letter of Intent or a Term Sheet. It is a useful tool when two or more parties intend to enter into a future contract and want to identify, describe and agree, without it being contractually binding, the terms to be further negotiated and then recorded in a contractually binding contract. There will occasionally be statements in a MOU which are exceptions to the general approach that a MOU is not binding : this will occur if the parties put in statements which the MOU expressly states are to be of legally binding effect until a definitive contract is signed. If that is the case those statements will generally be binding. Why is it important? An MOU is useful to set out the progress made during negotiations, reduce the potential for misunderstandings, indicate the major issues which still need to be resolved and make it clear what the parties intend when they enter into the contract. Risks The disadvantage of a MOU is that it can take up a considerable amount of time and may distract the parties from working on negotiating a full and detailed binding contract. There have been occasions when the parties to a proposed commercial arrangement never actually agree or sign a definite contract and have gone on to implement their deal based only on the MOU. This creates a very uncertain legal position which may lead to disputes and legal problems.




Agency Agreement


What is it? The term “agent” is often used as shorthand in a business or legal context to mean a person authorised to act for or on behalf of another who is sometimes called the “principal” As a business you need to be able to distinguish whether or not a particular arrangement amounts to a commercial agency rather than another kind of agency or relationship. This is vital if you are to understand the various legal obligations, duties and liabilities that you owe your contractors/ agents and vice versa. There are different types of individuals and companies which describe themselves as “agents”. These include for instance – commercial agents, sales agents. Employment agents, escrow agents etc. Why is it important? A commercial agent is a kind of sales agent whose relationship with their principal is largely governed by the Commercial Agents (Council Directive) Regulations 1993 whereas the relationship between any other type of sales and their principal is largely governed by the common law and not by the Regulations. A “commercial agent” is defined by the Regulations as a “…self-employed intermediary who has continuing authority to negotiate the sale or purchase of goods on behalf of their principal or to negotiate and conclude such transactions on behalf of and in the name of that principal”. Risks All commercial agency arrangements must comply with the Commercial Agents Regulations 1993. In accordance with the European Withdrawal Act 2018( ad subject to the terms of any final Brexit deal) the Regulations will remain in force post-Brexit.In contrast a sales agent is a freelance self-employed individual or contractor who may or may not work for numerous clients. You need an Agency Agreement if you want to appoint a third party to act on your behalf, marketing and selling your products and services – generally in exchange for commission on any sales. An agency agreement sets out the terms and conditions of the relationship, the commission or fees the notice period and any exclusivity rights. Other ways in which a business can expand without considerable outlay are via a distributorship and a franchise. In contrast to a distributorship, an agent earns commission on sales but does not pay for the goods, own the goods or set the sale price charged to the customer.




Referral Agreement


What is it? A referral agreement is used where, in order to obtain more customers and sales and widen Business A’s customer base or sell into a new market, a supplier of goods or services (Business A) wishes to engage another person or business (Individual B or Business B) to effect an introduction/referral of new customers to Business A in return for which the agent receives a fee for the introduction/referral itself or for the introduction/referral where it results in a sale within a stated period after the introduction/referral. It is also known as an Introduction agreement. Examples of referrers/introducers are agents who introduce a seller of a business to a potential buyer or who introduce a potential investor to a business. Why is it important? If a business colleague is referring work to you or you are the referrer you should get a referral agreement that sets out the terms of your agreement. This will help avoid problems. A referral agreement can also be used where an e-commerce website wishes to increase its sales by allowing other websites to refer customers to them in return for a commission on sales obtained through such referrals. The fees can be either a fixed fee or percentage basis with payment when the referral is made or upon the first transaction or both. The fees and payment clause can be drafted so that if the refer fails to introduce any new business they will not get a fee.There are specific referral agreements for the introduction of clients for financial services eg investment advice and insurance products.




Licensing Agreement


What is it? There are numerous types of licensing agreements eg IP licensing agreement eg a trademark licence agreement, a licence to occupy property, a software licence agreement etc.A software licence agreement is an agreement between a software licensor (generally a software developer and/or owner) and licensee who will be using the licensed software in the course of a business or personally. Why is it important? We always recommend that our clients get a licensing agreement if for example they want to give a person or another business the right to use their technology, software or any other type of intellectual property. A software licence will set out what the user may or may not do with a piece of software thereby helping developers ensure that they maximise returns on their investments, restrict others from free use of their creative and inventive work and product software that remains stable across a broad range of computer systems.




End User Licence Agreement


What is it? This is a licence agreement between a software provider and a user where software is distributed en-masse through retailers or electronically eg Microsoft and people who use its software. The different types of end-user licences include a Web Wrap software licence (designed for use with software that is distributed electronically via download ) Click Wrap Licence (designed for use with software that can be distributed electronically via download or on physical media such as a CD or DVD-Rom, Shrink Wrap Licence (designed for use in or on the packaging of software that is distributed on physical media such as a CD or DVD-Rom).




Service Level Agreement


What is it? Businesses often seek to obtain services from other businesses for various reasons. In some cases, a simple service agreement is all that is needed especially where the services in question are to be provided over a short term.However, in some cases a long-term relationship and the need for service consistency is essential. In such cases a business owner may prefer to enter into a Service Level Agreement with the service provider. Why is it important? Commonly used in the IT & Technology industries, but also applicable in other areas of business especially where large-scale or complex services are involved Service Level Agreements set out the services to be provided under a contract and also sets out the levels of performance to which those services must be provided. Detailed provisions govern the monitoring of the performance of the services and the agreement. Risks The service provider is thereby incentivised to consistently provide services in line with the agreed performance levels. If it fails to meet the agreed service levels it is subject to penalties. Service level agreements are preferable to standard service agreements as they contain much more detail, enhanced clarity and accountability over and above standard service agreements.




Partnership agreement


What is it? There are 2 main types of partnership agreements: An unlimited partnership – This is a relationship between two or more parties carrying on business together to make a profit. It is usually referred to as a “partnership” or a “general partnership” to distinguish it from other types of partnership such as a limited liability partnership. A partnership can arise by law even if there is no agreement in writing and even if the parties did not intend to create a partnership. An unlimited partnership is not a separate legal entity unlike a company or a limited liability partnership. Therefore, its partners have unlimited liability for the partnership’s debts. A limited liability partnership – Unlike an unlimited partnership a limited liability partnership (LLP) requires the establishment of a separate corporate body through which the collaboration will be conducted. The partners will have limited liability in the same way as shareholders in a company. The partners will usually sign a member’s agreement setting out how the LLP will be run.




LLP agreement


What is it? This agreement applies when you have a limited liability partnership. Unlike an unlimited partnership a limited liability partnership (LLP) requires the establishment of a separate corporate body through which the collaboration will be conducted. Why is it important? The partners will have limited liability in the same way as shareholders in a company. The partners will usually sign a member’s agreement (LLP Agreement) setting out how the LLP will be run.




Distribution agreement


What is it? A distributor buys goods from a supplier to sell on to customers. They can earn a profit margin based on the “mark-up” they add to the original sale price. A Distributorship agreement is an agreement whereby the manufacturer appoints the distributor on a “sole” or “non-exclusive” basis) to resell the manufacturer’s products in a particular territory/ies. In this case, the ownership of the goods is transferred to the distributor prior to the marketing and sale of the goods which means that the distributor may hold stocks of goods which they pay for and own – they therefore bear the risk as to whether they can resell the goods. There are different types of distribution agreements eg exclusive, sole and selective distribution agreements. Business relationships can sour if based on verbal agreements. Protect your rights by ensuring you have a written distribution agreement.




Model release letter


What is it? A signed Model Release Form protects your profit margin and your copyright. Whether you work in a marketing business graphic design or are a commercial vlogger or blogger you need to ensure that any photographs that you use in your business has a properly signed release form. Whilst you do not generally need written permission to take photos, if you take photos and wish to publish the photos on the internet or in any other way or if you are starting a photography business you can protect yourself from any liability or legal proceedings by using a Model Release Form or Letter. A Model Release Form is the contract between the photographer or User and the “model” (i.e. the subject or owner of the image or photograph). Designed to protect both parties it specifies the ways in which the images or models can or cannot be used (eg for advertising, to make prints, post on social media etc), the media formats, the use or not of the model’s name, the model’s rights (or not) to inspect the end product before publication and the expiry (or not) of the release. Why is it important? A Model Release Form is not about obtaining permission to take photographs – it is about obtaining signed consent to publish the photographs for commercial purposes. Whilst it is generally okay to take pictures of a person or people in a public place without written permission if you want to use that photo for specific commercial purposes eg to promote a product on the internet or elsewhere it is best to be safe and get a signed release form from the “model” or owner of the “model”. Risks But do get legal advice before you use a release form template as it may need adapting to fit your particular needs.And remember! If you want to use images for a purpose not originally agreed, you MUST get further signed consent.




Sales agency agreement


What is it? If you are a business selling products you may decide to employ the services of a sales agent. A sales agent is a freelance self-employed business or contractor who might or might not work for several clients. The term “sales agent” includes a “commercial agent” but it is usual to distinguish the two forms of agency by referring to someone as a sales agent only if they are not a “commercial agent” as the legal position of a “commercial agent” differs substantially from other forms of “sales agency”. The business that owns the products will be called the “Principal” and the sales agent will be called the “Agent”. The sales agent is paid commission only and so is motivated to make as many sales as possible to maximise their income.Central to the relationship between a business and their sales agent will be the “Agency Agreement”. The Sales Agency agreement will set out the product the agent will be selling, where the agent will be selling those products, how the sales are to take place, commission payable on all sales and the key rights and responsibilities of the parties. Why is it important? The use of sales agents as opposed to an employed sales team has a number of benefits for the business (i.e. the “Principal”) since commission is only payable on achieved sales, there are no fixed employment costs, and the agent will often already have a network of contacts ie established customer base, will know the market in their area and will have credibility with their customer base.




Sub-contracting agreement


What is it? Many business contracts allow one or both parties to sub-contract all or part of their obligations under a contract. This can be done via a letter termed a “Notice of Intention to Sub-contract” from the main contractor to the other party to the main contract or via a formal “Sub-contracting” agreement. Where a “Notice of intention to sub-contract” letter is used, the main contractor (ie sender of the letter) would inform the other party to the contract (ie the recipient of the letter) that the main contractor intends to subcontract certain of their obligations under a contract and will provide details of the subcontractor(s) to whom the obligations will be sub-contracted, a detailed description of the obligations to be sub-contracted with cross-references to the relevant parts of the Contract agreement between the main contractor and the other party to the contract agreement. The recipient will also be reminded that they are not a party to the sub-contract and that the main contractor will remain their primary contact person and will also remain liable for any acts of omissions of the subcontractors. As an option, the main contractor may also decide to enter into a formal “Sub-contracting” agreement with the sub-contractor and send a copy of this to




Franchise Agreement


What is it? Franchising your business lets you licence your business model to companies or individual in particular geographical areas and allows you to increase your profits while maintaining a significant degree of control over your brand. A Franchise agreement is an agreement under which the owner of a business grants a licence or licences to others (the “franchisees”) to operate that business in a particular area within the UK or internationally either on a “sole” or “non-exclusive” basis, for a fee therefore spreading their corporate identity and products or services without the expense of setting up new establishments. All franchisees will use a common identity including the name, trademarks, goodwill, other intellectual property and or products of the franchisor. The franchisor will also provide a “Quality Manual” which in effect is a rule book setting out all the relevant detail needed for the successful day-to-day running of the franchised business eg minimum standards and insurance requirements. The agreement will usually include a confidentiality clause protecting all commercially sensitive information and trade secrets from unauthorised disclosure thereby protecting the interests of the franchisor. Why is it important? Franchising has benefits for the franchisor and the franchisee. The franchisor can grow its business without having to open, staff and manage new premises or branches itself whilst the franchisee can manage his/her own business which has been already tested by the franchisor and has access to the franchisor’s experience and expertise. McDonalds and Kentucky Fried Chicken (KFC) operate their own restaurants and food outlets but also grant franchises to others to operate McDonalds and KFC businesses using their logos with McDonalds and Kentucky Fried Chicken exercising tight quality control over the restaurants, their location, food, health and safety etc.





Managing licenses


Running an online business


Protecting your IP


Business Relationships


Writing a business plan


Health & Safety

Letter ending a contract


What is it? A letter terminating a contract also known as a Notice of Contract Termination, Notice of Cancellation of Contract or a Contract Termination Letter is a formal declaration indicating your intention to terminate a contract with the other party to the contract. When writing a letter terminating a contract ensure that you have the legal right to terminate the contract in the particular circumstances and keep your tone formal,straightforward, courteous and professional. Risks You should also ensure that :

  • The letter contains a clear description of the reasons for the termination of the contract.
  • The date of termination is mentioned.
  • The letter thanks the other party for their services.

Our contract solicitors can provide you with a bespoke letter for a reasonable fixed fee that you can use to cancel a contract or agreement.




Letter assigning a contract


What is it?

Transferring a contract from one party to another is known as ‘assigning’ a contract or ‘an assignment’ of the contract. An assignment ends one party’s involvement in the contract and transfers their contractual rights, benefits and interests to a new party.

Risks

Some contracts may contain a clause prohibiting assignment; other contracts may require the other party to consent to the assignment. Unless assignment is prohibited in a contract, a party may assign their rights to third party without the consent of the other party to the agreement. A letter of assignment is used to effect the assignment and will be signed by the outgoing party and the incoming party.





 
 
 
 

Planning & Highways

Joint Venture Agreement


What is it? This agreement is needed when two or more parties decide to engage in a business collaboration to deal with a particular project. There are two main types of joint ventures: i) A contractual joint venture is a contract between two parties who are looking to work together on a commercial project and pool their resources but do not want to create a separate legal entity such as a joint venture company or an LLP.(eg two businesses collaborating to bid for a contract or carry out research and development) . The collaboration will be generally be short term or for a defined period and will be of restricted scope with a well-defined purpose. ii)A corporate joint venture is a contract between two parties looking to work together on a commercial project where they will both set up a separate company (“a joint venture company”) separate from their current operations, own shares in it, have representatives from each of the companies sitting on its board and or want their company to have limited liability for the debts and obligations of the joint venture. This type of joint venture is usually suitable if you will be collaboration on a longer term project and or your collaboration will be more risky and complex and therefore justifies the time and effort of setting up a separate company.




Manufacturing Agreement


What is it? This agreement is needed if you want to employ the services of another company an individual to manufacture goods/products for you for your business. The agreement should cover a number of key areas including manufacture of the goods, materials, specification, quality control, packaging, storage, confidentiality, data protection, insurance, pricing, payment, delivery, title and risk, intellectual property, disputes, force majeure, service of notices, liability and indemnity clauses.




Memorandum of Understanding


What is it? An MOU is a pre-contract, non-binding document setting out the key terms agreed by parties who intend to enter into a binding contract. It is also known as Heads of Terms, a Letter of Intent or a Term Sheet. It is a useful tool when two or more parties intend to enter into a future contract and want to identify, describe and agree, without it being contractually binding, the terms to be further negotiated and then recorded in a contractually binding contract. There will occasionally be statements in a MOU which are exceptions to the general approach that a MOU is not binding : this will occur if the parties put in statements which the MOU expressly states are to be of legally binding effect until a definitive contract is signed. If that is the case those statements will generally be binding. Why is it important? An MOU is useful to set out the progress made during negotiations, reduce the potential for misunderstandings, indicate the major issues which still need to be resolved and make it clear what the parties intend when they enter into the contract. Risks The disadvantage of a MOU is that it can take up a considerable amount of time and may distract the parties from working on negotiating a full and detailed binding contract. There have been occasions when the parties to a proposed commercial arrangement never actually agree or sign a definite contract and have gone on to implement their deal based only on the MOU. This creates a very uncertain legal position which may lead to disputes and legal problems.




Agency Agreement


What is it? The term “agent” is often used as shorthand in a business or legal context to mean a person authorised to act for or on behalf of another who is sometimes called the “principal” As a business you need to be able to distinguish whether or not a particular arrangement amounts to a commercial agency rather than another kind of agency or relationship. This is vital if you are to understand the various legal obligations, duties and liabilities that you owe your contractors/ agents and vice versa. There are different types of individuals and companies which describe themselves as “agents”. These include for instance – commercial agents, sales agents. Employment agents, escrow agents etc. Why is it important? A commercial agent is a kind of sales agent whose relationship with their principal is largely governed by the Commercial Agents (Council Directive) Regulations 1993 whereas the relationship between any other type of sales and their principal is largely governed by the common law and not by the Regulations. A “commercial agent” is defined by the Regulations as a “…self-employed intermediary who has continuing authority to negotiate the sale or purchase of goods on behalf of their principal or to negotiate and conclude such transactions on behalf of and in the name of that principal”. Risks All commercial agency arrangements must comply with the Commercial Agents Regulations 1993. In accordance with the European Withdrawal Act 2018( ad subject to the terms of any final Brexit deal) the Regulations will remain in force post-Brexit.In contrast a sales agent is a freelance self-employed individual or contractor who may or may not work for numerous clients. You need an Agency Agreement if you want to appoint a third party to act on your behalf, marketing and selling your products and services – generally in exchange for commission on any sales. An agency agreement sets out the terms and conditions of the relationship, the commission or fees the notice period and any exclusivity rights. Other ways in which a business can expand without considerable outlay are via a distributorship and a franchise. In contrast to a distributorship, an agent earns commission on sales but does not pay for the goods, own the goods or set the sale price charged to the customer.




Referral Agreement


What is it? A referral agreement is used where, in order to obtain more customers and sales and widen Business A’s customer base or sell into a new market, a supplier of goods or services (Business A) wishes to engage another person or business (Individual B or Business B) to effect an introduction/referral of new customers to Business A in return for which the agent receives a fee for the introduction/referral itself or for the introduction/referral where it results in a sale within a stated period after the introduction/referral. It is also known as an Introduction agreement. Examples of referrers/introducers are agents who introduce a seller of a business to a potential buyer or who introduce a potential investor to a business. Why is it important? If a business colleague is referring work to you or you are the referrer you should get a referral agreement that sets out the terms of your agreement. This will help avoid problems. A referral agreement can also be used where an e-commerce website wishes to increase its sales by allowing other websites to refer customers to them in return for a commission on sales obtained through such referrals. The fees can be either a fixed fee or percentage basis with payment when the referral is made or upon the first transaction or both. The fees and payment clause can be drafted so that if the refer fails to introduce any new business they will not get a fee.There are specific referral agreements for the introduction of clients for financial services eg investment advice and insurance products.




Licensing Agreement


What is it? There are numerous types of licensing agreements eg IP licensing agreement eg a trademark licence agreement, a licence to occupy property, a software licence agreement etc.A software licence agreement is an agreement between a software licensor (generally a software developer and/or owner) and licensee who will be using the licensed software in the course of a business or personally. Why is it important? We always recommend that our clients get a licensing agreement if for example they want to give a person or another business the right to use their technology, software or any other type of intellectual property. A software licence will set out what the user may or may not do with a piece of software thereby helping developers ensure that they maximise returns on their investments, restrict others from free use of their creative and inventive work and product software that remains stable across a broad range of computer systems.




End User Licence Agreement


What is it? This is a licence agreement between a software provider and a user where software is distributed en-masse through retailers or electronically eg Microsoft and people who use its software. The different types of end-user licences include a Web Wrap software licence (designed for use with software that is distributed electronically via download ) Click Wrap Licence (designed for use with software that can be distributed electronically via download or on physical media such as a CD or DVD-Rom, Shrink Wrap Licence (designed for use in or on the packaging of software that is distributed on physical media such as a CD or DVD-Rom).




Service Level Agreement


What is it? Businesses often seek to obtain services from other businesses for various reasons. In some cases, a simple service agreement is all that is needed especially where the services in question are to be provided over a short term.However, in some cases a long-term relationship and the need for service consistency is essential. In such cases a business owner may prefer to enter into a Service Level Agreement with the service provider. Why is it important? Commonly used in the IT & Technology industries, but also applicable in other areas of business especially where large-scale or complex services are involved Service Level Agreements set out the services to be provided under a contract and also sets out the levels of performance to which those services must be provided. Detailed provisions govern the monitoring of the performance of the services and the agreement. Risks The service provider is thereby incentivised to consistently provide services in line with the agreed performance levels. If it fails to meet the agreed service levels it is subject to penalties. Service level agreements are preferable to standard service agreements as they contain much more detail, enhanced clarity and accountability over and above standard service agreements.




Partnership agreement


What is it? There are 2 main types of partnership agreements: An unlimited partnership – This is a relationship between two or more parties carrying on business together to make a profit. It is usually referred to as a “partnership” or a “general partnership” to distinguish it from other types of partnership such as a limited liability partnership. A partnership can arise by law even if there is no agreement in writing and even if the parties did not intend to create a partnership. An unlimited partnership is not a separate legal entity unlike a company or a limited liability partnership. Therefore, its partners have unlimited liability for the partnership’s debts. A limited liability partnership – Unlike an unlimited partnership a limited liability partnership (LLP) requires the establishment of a separate corporate body through which the collaboration will be conducted. The partners will have limited liability in the same way as shareholders in a company. The partners will usually sign a member’s agreement setting out how the LLP will be run.




LLP agreement


What is it? This agreement applies when you have a limited liability partnership. Unlike an unlimited partnership a limited liability partnership (LLP) requires the establishment of a separate corporate body through which the collaboration will be conducted. Why is it important? The partners will have limited liability in the same way as shareholders in a company. The partners will usually sign a member’s agreement (LLP Agreement) setting out how the LLP will be run.




Distribution agreement


What is it? A distributor buys goods from a supplier to sell on to customers. They can earn a profit margin based on the “mark-up” they add to the original sale price. A Distributorship agreement is an agreement whereby the manufacturer appoints the distributor on a “sole” or “non-exclusive” basis) to resell the manufacturer’s products in a particular territory/ies. In this case, the ownership of the goods is transferred to the distributor prior to the marketing and sale of the goods which means that the distributor may hold stocks of goods which they pay for and own – they therefore bear the risk as to whether they can resell the goods. There are different types of distribution agreements eg exclusive, sole and selective distribution agreements. Business relationships can sour if based on verbal agreements. Protect your rights by ensuring you have a written distribution agreement.




Model release letter


What is it? A signed Model Release Form protects your profit margin and your copyright. Whether you work in a marketing business graphic design or are a commercial vlogger or blogger you need to ensure that any photographs that you use in your business has a properly signed release form. Whilst you do not generally need written permission to take photos, if you take photos and wish to publish the photos on the internet or in any other way or if you are starting a photography business you can protect yourself from any liability or legal proceedings by using a Model Release Form or Letter. A Model Release Form is the contract between the photographer or User and the “model” (i.e. the subject or owner of the image or photograph). Designed to protect both parties it specifies the ways in which the images or models can or cannot be used (eg for advertising, to make prints, post on social media etc), the media formats, the use or not of the model’s name, the model’s rights (or not) to inspect the end product before publication and the expiry (or not) of the release. Why is it important? A Model Release Form is not about obtaining permission to take photographs – it is about obtaining signed consent to publish the photographs for commercial purposes. Whilst it is generally okay to take pictures of a person or people in a public place without written permission if you want to use that photo for specific commercial purposes eg to promote a product on the internet or elsewhere it is best to be safe and get a signed release form from the “model” or owner of the “model”. Risks But do get legal advice before you use a release form template as it may need adapting to fit your particular needs.And remember! If you want to use images for a purpose not originally agreed, you MUST get further signed consent.




Sales agency agreement


What is it? If you are a business selling products you may decide to employ the services of a sales agent. A sales agent is a freelance self-employed business or contractor who might or might not work for several clients. The term “sales agent” includes a “commercial agent” but it is usual to distinguish the two forms of agency by referring to someone as a sales agent only if they are not a “commercial agent” as the legal position of a “commercial agent” differs substantially from other forms of “sales agency”. The business that owns the products will be called the “Principal” and the sales agent will be called the “Agent”. The sales agent is paid commission only and so is motivated to make as many sales as possible to maximise their income.Central to the relationship between a business and their sales agent will be the “Agency Agreement”. The Sales Agency agreement will set out the product the agent will be selling, where the agent will be selling those products, how the sales are to take place, commission payable on all sales and the key rights and responsibilities of the parties. Why is it important? The use of sales agents as opposed to an employed sales team has a number of benefits for the business (i.e. the “Principal”) since commission is only payable on achieved sales, there are no fixed employment costs, and the agent will often already have a network of contacts ie established customer base, will know the market in their area and will have credibility with their customer base.




Sub-contracting agreement


What is it? Many business contracts allow one or both parties to sub-contract all or part of their obligations under a contract. This can be done via a letter termed a “Notice of Intention to Sub-contract” from the main contractor to the other party to the main contract or via a formal “Sub-contracting” agreement. Where a “Notice of intention to sub-contract” letter is used, the main contractor (ie sender of the letter) would inform the other party to the contract (ie the recipient of the letter) that the main contractor intends to subcontract certain of their obligations under a contract and will provide details of the subcontractor(s) to whom the obligations will be sub-contracted, a detailed description of the obligations to be sub-contracted with cross-references to the relevant parts of the Contract agreement between the main contractor and the other party to the contract agreement. The recipient will also be reminded that they are not a party to the sub-contract and that the main contractor will remain their primary contact person and will also remain liable for any acts of omissions of the subcontractors. As an option, the main contractor may also decide to enter into a formal “Sub-contracting” agreement with the sub-contractor and send a copy of this to




Franchise Agreement


What is it? Franchising your business lets you licence your business model to companies or individual in particular geographical areas and allows you to increase your profits while maintaining a significant degree of control over your brand. A Franchise agreement is an agreement under which the owner of a business grants a licence or licences to others (the “franchisees”) to operate that business in a particular area within the UK or internationally either on a “sole” or “non-exclusive” basis, for a fee therefore spreading their corporate identity and products or services without the expense of setting up new establishments. All franchisees will use a common identity including the name, trademarks, goodwill, other intellectual property and or products of the franchisor. The franchisor will also provide a “Quality Manual” which in effect is a rule book setting out all the relevant detail needed for the successful day-to-day running of the franchised business eg minimum standards and insurance requirements. The agreement will usually include a confidentiality clause protecting all commercially sensitive information and trade secrets from unauthorised disclosure thereby protecting the interests of the franchisor. Why is it important? Franchising has benefits for the franchisor and the franchisee. The franchisor can grow its business without having to open, staff and manage new premises or branches itself whilst the franchisee can manage his/her own business which has been already tested by the franchisor and has access to the franchisor’s experience and expertise. McDonalds and Kentucky Fried Chicken (KFC) operate their own restaurants and food outlets but also grant franchises to others to operate McDonalds and KFC businesses using their logos with McDonalds and Kentucky Fried Chicken exercising tight quality control over the restaurants, their location, food, health and safety etc.





Managing licenses


Running an online business


Protecting your IP


Business Relationships


Writing a business plan


 

Managing employee performance

Share Purchase Agreement


What is it?

A Share purchase agreement (SPA) is an agreement setting out the terms and conditions relating to the sale and purchase of shares in a company. Share purchase agreements are often complex documents which can become lengthy and create significant delay, friction and cost if not dealt with by experienced, business minded lawyers.

Why is it important?

There is often a choice and negotiation over whether it’s best for either or both parties to buy/sell assets rather than shares. This would depend on whether the current owner (seller) is a limited company. If not, there can be no share sale! Further, where a buyer wants to preserve as many customer relations as possible, they may elect to buy the shares as opposed to assets.

The seller’s solicitor usually draws up the draft share purchase agreement.

Risks

While the buyer’s solicitor will try to protect the buyer the interest of the seller’s solicitor is to minimise this protection, in particular by limiting the seller’s liability for misrepresentation. However, in practice, where there is fraudulent misrepresentation the seller will still be liable so the buyer may accept such clauses since they are not valid if the seller can prove fraudulent misrepresentation.

Please contact us if you require specialist commercial lawyers to review, draft, negotiate, amend or generally advise on a share purchase agreement.




Asset Purchase Agreement


What is it?

An asset purchase agreement is an agreement setting out the terms and conditions relating to the sale and purchase of assets of a business. In an asset purchase, the company itself will be selling the assets, whilst in a share sale, the individual shareholders will be the sellers.

Occasionally a buyer will prefer to acquire certain assets of a business rather than acquire all of the shares in a company and therefore, both its assets and liabilities.

A buyer will normally prefer to buy the assets of a business, while the seller will prefer to sell the shares. The main benefit of an asset purchase is that a buyer may selectively pick the assets and liabilities they want to acquire and there is generally less risk of hidden liabilities than with a share purchase.

Risks

The main disadvantage of an asset sale, as opposed to a share purchase agreement is that each item must be transferred in accordance with its proper rules and made enforceable against third parties (eg through consents and approvals). This is especially the case for customer contracts, as a third party may view the transaction as an opportunity to renegotiate their contract thereby adding delay and additional costs to the transaction.

In addition, there may be other important contracts that are non-transferrable, or licences and consents unique to the seller which may not be transferrable.

In an asset sale it is vital to identify what exactly is being purchased. Assets transferred as part of an Asset purchase agreement may include:

  • Plant and machinery.
  • Premises;
  • Stock;
  • Contracts;
  • Know-how; and
  • Goodwill.

Please contact us if you require specialist commercial lawyers to review, draft, negotiate, amend or generally advise on a share purchase agreement.




Disclosure Letter


What is it?

A Non-Disclosure letter or Non-Disclosure Agreement, also called a Confidentiality Agreement, is a legal contract between two or more parties by which the parties agree not to disclose information (which is intended to be kept secret) that they have shared with each other during a business relationship to third parties.

Why is it important?

This Agreement may either be one-way (unilateral) or two-way (mutual), depending on whether both parties will be providing the secret information. If one party will be providing the secret information to the other, it is called a Unilateral Non-Disclosure Agreement.

For example, where an inventor of an idea is sharing the idea with another person, the inventor is the disclosing party and the other party is the receiving party. If the two parties will share the secret information between themselves, it is called a Mutual Non-Disclosure Agreement.

This Agreement can be used to share intellectual property, share commercial trading information or formalize a business relationship, for example, between an employer and an employee





Reorganisation & Redundancies

At risk of redundancy letter


What is it? This is a letter that can be used to inform the employee that the employee is at risk of being made redundant.




Dismissal for redundancy letter


What is it? This is a letter that can be used to inform the employee that the employee is being dismissed for redundancy reasons. Why is it important? It is best practice for the employee to be given the right of appeal against redundancy.




Invitation to a redundancy appeal meeting


What is it? This is a letter to an employee inviting them to a redundancy appeal meeting.




Redundancy consultation letter


What is it? This is a letter to an employee informing them of the redundancy consultation procedure. Why is it important? The letter should contain details of the consultation procedure.





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Pure Business Law is the trading name for Pure Business Law Ltd-a private limited company registered in England & Wales with company registration number 10405413. Registered office and Principal place of business : Excel House, 3 Duke Street, Bedford. MK40 3HR. VAT number 265 5386 75.

 

 

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