Q1: I am starting a business in partnership with a friend and I want to make sure we both know our rights and responsibilities. Will a partnership agreement help?
A: If you have decided on a partnership structure to run your business, you should give serious consideration to implementing a written partnership agreement. A written partnership agreement provides the framework in which the business will operate and can reduce the potential for disagreement between partners. It is in the written partnership agreement that, amongst other things, the rights and obligations of each partner can be clarified, so yes, it should help. Even the agreed length of the partnership can be recorded in it as can each partner’s exit arrangements.
Your business does not have to have written partnership agreement and in the absence of one there is legislation that will apply, but if later on there is a dispute about what had been agreed and you do not have a partnership agreement, you could end up becoming involved in costly litigation.
The provisions of a partnership agreement can vary considerably from business to business. However, an effective partnership agreement should properly deal with key issues such as ownership and profit-sharing percentages for each partner and provide provision for resolving partnership disputes.
At Libra Solicitors, we understand partnership agreements. We can draft bespoke agreements tailored to your individual needs or review your existing agreement to ensure its provisions contain the key partnership information you think should be clearly recorded. In addition if you are involved in or are considering litigation because of a partnership dispute, our expertise could help you.
For a more confidential discussion about your specific requirements, call us on 01223 632420 and arrange an appointment.
Q2: Should I consider suggesting the implementation of a shareholder agreement in our business even though it is effectively family run and owned?
A: Having a shareholders agreement in any situation where there is more than one shareholder in a business, we believe, would be prudent. A well drafted agreement can help avoid disputes between the shareholders themselves, and also contain provisions which set out the process to resolve any dispute.
Shareholders agreements can address a number of key issues that may cause problems if they are not properly addressed. For example, voting rights and how they are allotted can quickly become a prickly issue when key decisions have to be made. The transfer of shares or conditions of sale in respect of the shares themselves is another issue that could become contentious. Dealing with the issues sooner rather than later in formal agreement could avoid costly disagreements at a later date.
Whether you want us to examine your current agreement to determine its capacity to protect your interests in a business, or require us to draft an agreement that will give you the structure and protection you need, we are confident that we can provide you with effective solutions. For a confidential discussion about the issues that may be concerning you, call us on 01223 632420 arrange an appointment.
Q3: I have been sent a contract from a new supplier which I have not signed as I want negotiate better terms than they are offering. How can you help me?
A: Whatever the size of your business, negotiating contract terms with other businesses can be tough and there are pitfalls. You want to achieve the best possible advantage for your business, but at the same time you might not want to push too hard as you might want to create a reliable longer term relationship with the business you are negotiating with.
At Libra Solicitors, we believe that balanced negotiation could bring better long term benefits to your business and will allow you to maintain your existing business relationships and build new ones.
Whether you want to negotiate better contact terms for your business or re-negotiate contract terms that have already been agreed, our outcome focused approach could help your business achieve its objectives when dealing with other businesses.
For a confidential discussion about how we could help your business, call us now on 01223 63240 and arrange an appointment.
Q4: I have decided to form a business partnership with a friend selling bicycles. Should we be using a standard terms of business document?
A: If you have a business that sells goods or services that are consistently similar, it makes sense to have a document that outlines the standard terms of business for each customer or client. However, if your business is providing bespoke goods or services that tend to vary from client to client, then it may be advisable to negotiate and draft a separate agreement each time you enter an agreement.
When drafting your terms of business you should include what each party is agreeing to. The type of clauses that you should probably consider using should for example, include, a description of the goods/services provided, the price to be paid and any specific payment requirements, as well as the period in which the contract is to be performed. You may wish to include any clauses that seem necessary in the circumstances, such as when delivery is said to have been taken by the customer. In addition, you should carefully consider any standard clauses relevant to carrying out your particular type of business. However, it is important to note that generally, the courts view business to business contracts in a different light to those between businesses and consumers who are given greater protection from unfair contract terms.
There are certain issues and responsibilities that cannot be excluded by standard or non-standard terms of business, such as those excluding liability for death or personal injury caused by your negligence. In other circumstances, even if it is acceptable to limit your liability, the limitations you impose must be reasonable.
You should note that in the event of litigation, your terms of business could be carefully scrutinized by the court. If it has serious flaws, it may well damage your chances of litigating or defending an action successfully. For a confidential discussion about using standard terms of business agreements, call us on 01223 632420 and arrange an appointment.