A properly-drafted commercial contract will serve as the framework for any business activity you propose. Its terms and conditions must be drafted and negotiated prior to the commencement of the business. In addition, such a business contract should make provision for the process to be followed if affairs do not follow the desired plan.
Clear benefits flow from having a written agreement. All parties concerned will know what their rights and obligations are. In the event of a dispute, litigation can be rendered much simpler – or, indeed, avoided altogether.
In addition to advising on new business enterprises, clients we advise on analysis of, or enforcement of, rights and obligations under existing agreements. Essentially, your commercial contract should be a balance between security and flexibility. At W Davies, in the addition to legal knowledge, our Commercial Department has practical understanding and experience of business issues, so we can relate to your aims and priorities. If required, we can be called upon to assist in certain stages of your negotiations.
People or companies may decide to combine their talents and resources in a joint venture, for the purpose of a specific, new business. Because the individual parties may be able to bring to the business their own specialised experience, frequently a joint venture can be greater than the sum of its parts. We can assist you in the formation of a joint venture company and can draft a joint venture agreement for you.
Where two or more such parties come together for a business purpose, it is vital that the rights and obligations of each are known and understood at the outset. Specifically, if the joint venture is owned on a 50 : 50 basis, then there must be a clear mechanism for the resolution of a “deadlock” situation. All of this can be achieved in a properly-drafted joint venture agreement.
Partnership & Limited Liability Partnerships
Partnerships can serve as alternatives to a company structure. They can provide a greater measure of flexibility. However, clients should be aware of the main difference between a Partnership and a Limited Liability Company. The liability of a company’s shareholders is limited to the extent of the unpaid amount in respect of the shares they own. By contrast, partners in a Partnership have unlimited liability, so they can be held personally liable (jointly and severally) for any unpaid debts the partnership has or incurs.
Limited Liability Partnerships
LLPs are an interesting alternative as the basis for a commercial association. They involve fewer formalities than Limited Liability Companies, while providing the flexibility of a traditional Partnership. We can help at each stage of the LLP’s registration process, as well as with its annual compliance requirements. In relation to Partnerships and LLPs, our advice can include:
- Whether to use a Partnership or LLP as the commercial vehicle
- Guidance for new and retiring partners and members
- Drafting of partners’ or members’ agreements
- Assessing the extent of investment needed from each partner
- How profits and losses are to be allocated between partners
- A range of procedural issues (e.g. a partner exiting or joining)
- How disputes may be resolved
- How to convert Partnerships either to LLPs or to companies
- How the Partnership or LLP may be dissolved
Advice on Business Law
People involved in business activity will need some form of advice on business and commercial law and contractual issues. When you come to us for legal advice concerning your business, you will find that we share your enthusiasm for your commercial aims, making the relationship a collaborative one. You will not only receive the bare legal rules from us – we can augment them with first-hand business experience. ‘One size does not fit all’. Your specific needs are our concern. So we aim to understand exactly what your legal requirements are – then seek to provide you with a service which is tailored to them.
Whether you are starting, expanding, buying or selling your business, you will receive from us individually-focused legal advice at every stage of your business life-cycle. If you require it, our guidance can also include general advice about how to run your enterprise and how to manage a specific transaction or event.
Our business law guidance can cover any or all of the following:
- Agreements with your clients / customers and suppliers
- Documentation between you and your associates
- Investor agreements
- Contracts of employment (Please see also our separate Employment section)
- Leases for your commercial premises
- Loan agreements
- Trading regulations which are specific to your business
Please see also our Company Law section for laws for small businesses.
Supply Terms & Conditions
In the course of your business, you will supply goods or services, or perhaps both. In any case, the supply of these should be provided in the form of a set of Terms & Conditions (“T&Cs”) which are standard for your business (subject to certain variations, as may be appropriate). Frequently, smaller transactions may be based on these standard T&Cs, sometimes with a few variations. In larger transactions, the T&Cs may form part of your overall Agreement with your clients / customers.
Agreements for the Supply of Goods
Usually, such agreements will cover the following matters:
- A description of the goods being sold
- The price
- Dates and means of delivery
- Dates and means of payment
- How to deal with defective goods
- Any limitations on liability
Agreements for the Supply of Service
Such agreements describe the terms and conditions under which the business will provide services to its customers. As with agreements for the sale of goods, agreements for the supply of services may be on standard terms (perhaps with some variations). Alternatively, they may be heavily amended, to meet the circumstances of a specific matter. The following issues will usually be included:
- A Description of the services
- The extent of the services
- Specification of any deliverables
- The time-frame during which the services are to be supplied
- Details of fees and any other payments
- Any limitations on liability
Agreements for the Supply of Goods & Service
Frequently, an agreement provides for the supply of both goods and services. We can assist you in the negotiating and/or drafting of such agreements, or advise you on amending your existing standard T&Cs. We always seek to take a commercial as well as a legal approach. From that, we tailor the T&Cs of any agreement to comply with your business model in the most effective for you.
In some cases, you may wish to expand your business, but you do not want to achieve that growth yourself. In other circumstances, you may want to start a business, wishing the relative security of a tried-and tested commercial ‘formula’. In either case, your solution may be a franchise: in the first, you would be a franchisor; in the second, a franchisee.
A franchise relationship should be governed by a Franchise Agreement, covering, at least, the following:
- The nature of the franchise / need for compliance
- Territory of the franchise, i.e. the area it covers
- The extent of the initial payment
- To what does initial payment entitle the franchisee
- The split of the initial payment split (e.g. fee? advertising? etc.)
- Franchisee’s liability for royalty payments?
- Minimum Guarantees, if relevant
- Intellectual Property (“IP”) issues (please see also our IP section)
- Conditions for termination
- That the franchisee is satisfied with the elements the franchisor contracts to provide
- The premises
- How extensive the right of audit by the franchisor is
- The position after the initial period of the franchise / transfer of the business
- Restrictive covenants, i.e. restrictions after the franchise is ended
Advantages of a Franchise
- Franchisee has no requirement to develop the business concept
- Despite its costs, franchising gives a recognised ‘brand’ (name & logo) from day one
- Training, strategy and methods are tried-and-tested – so the start-up risk is lower
- Franchisee’s advertising forms part of a much larger campaign than he / she could afford
- The up-front financial commitment results in higher franchisee motivation
- Franchisee may be able to gain from franchisor’s bulk buying potential (e.g. computers)
- Probable, on-going guidance from the franchisor – compared with a stand-alone operation
Disadvantages of a Franchise
- High, initial expenditure before franchisee receives any income stream
- Non-returnable, monthly payments are required – even if business is insufficient / nil
- Franchisee finances the franchisor’s market growth (fine, provided franchise has income)
- Franchisor may have a ‘take it / leave it’ attitude to contract changes asked by franchisee
- The franchise business never truly belongs to the franchisee
- If contract terminates, franchisee is time-barred from similar enterprise, in same area
If you feel that a franchise is the right business model for your aims, we would be delighted to assist you.
You will know that the Construction industry is a complex business, liable to contention. So you must take suitable steps to protect your position, manage risk and avoid disputes, wherever possible.
Where your focus is on building works, our Construction solicitors advise on the drafting and negotiation of construction contracts. We will guide you as to whether a form of standard contract is appropriate. If so, we will say whether it needs to be tailored in any way for your intended purpose. Alternatively, we may advise that you need a completely bespoke contract, to meet your specific needs. Of course, we are here to advise you throughout the cycle of your projects.
Terms of Appointment
As a vital part of the construction and development process, Terms of Appointment are needed for project managers, architects, surveyors, quantity surveyors, surveyors and others engaged in the construction industry. So you can obtain from our Construction team drafting assistance and practical advice regarding professional appointments across the spectrum of both residential developments and commercial developments.
Practical legal advice on non-contentious construction works
Our Construction solicitors have the expertise to provide you with practical legal advice on all aspects of non-contentious construction works. This can be at each stage of the development and construction process – from project inception through to completion and beyond. Our guidance would include, at least:
- Preparation of amendments to standard-form construction contracts
- Drafting of bespoke Construction agreements
- Advising you on professional appointment documentation
- Ancillary Construction matters
- Collateral warranties (please see also our section on contentious construction works)
Business Sale & Purchase
Buying a business or selling a business can involve many complex legal issues. But to guide you through every stage of your selling a business or your acquisition of a business for sale, our commercial solicitors can provide you with a wealth of experience in dealing with all types of business sale and business purchase. If required, we can involve our colleagues in the firm who specialise in Commercial Property, Employment and Intellectual Property. To give you a full ‘end-to-end’ service, we can liaise also with accountants and finance specialists, if you need their input. (Please see also our section on Company Law).
Whether you buy or sell, we will assess the steps needed for your protection, by considering:
- Should the sale / purchase be of shares, or of assets?
- Inspection of the books of the business / due diligence
- Valuation of assets and liabilities
- Consequences for capital gains tax purposes
- Status of current contracts with clients / customers and suppliers
- Stock / equipment / fixtures and fittings / goodwill / intellectual property rights
- Transfer of real estate (as relevant)
- Disclosure letters
- Necessary insurance
Buying a Business
When acquiring a business, the proposed transaction must be fully investigated, to avoid any shocks. In a purchase, “caveat emptor” (“buyer beware”) applies. So we must examine all aspects of the deal. Specifically, for your commercial success, you must understand fully:
- Exactly what you are purchasing
- The benefits of acquiring it
- The risks involved
- Your aims and expectations
We will guide you through the purchase documentation – and, if wished, will assist in the price negotiation. As well as assessing the best structure for the enterprise, W Davies’ Commercial Department will take time to understand the business to be acquired, your reasons for buying and your specific commercial needs. This ‘rounded’ approach will help you to achieve a successful, timely and cost-effective conclusion.
Selling a Business
Organisation is the key to the successful sale of a business. So our Commercial team talks with you to understand the business to be sold and your reasons for disposing of it (a great offer? retirement? the poor economy?) The ‘rounded’ approach will help you to achieve a successful, cost-effective sale. A business sale is largely the mirror image of the buying process, though with some key differences:
- Confidentiality Agreement: as the seller, you must give the intending purchaser key items of data about the business (e.g. its financial state, your staff’s terms of employment and your client list); so you will want the other party to sign a Confidentiality Agreement, which we can draft for you
- The Sale Agreement: this includes important sections (often lengthy and complicated) on warranties, indemnities and restrictive covenants
- Employment issues: if you have staff, there are employment matters to consider