If you had the opportunity to do business with a well-known name what would you do?

These are businesses with large marketing budgets to develop a Brand where you like and trust them. However, if you are entering a business contract with them what should you watch out for?

Points to remember:

1. Their image of trust is developed for their Consumers not you.
2. They will know that you are unlikely to pay someone to properly check over any documentation you are sent.
3. They will have standard contracts drafted by skilled lawyers that are very much biased in their favour.
4. They are highly unlikely to have any sense of being even-handed. This is business and they are much bigger and more successful than you are.

There are obviously exceptions to the above, but you would be wise to assume the worst and then hopefully be delightfully surprised.

I have seen many contracts from large businesses that are on the edge of being legal. They are often resistant to any amendments because ‘that is their contract’. The last such person I argued with had less knowledge and understanding of their own contract than I did because going through it was not what they did.

What to check for:

1. Who the party to the Contract is. Do not assume anything. It could be a large company you have never heard of that owns the Brand.
2. What are the payment terms? The time for you to be paid will probably be 60 days. The time for you to pay them will be less. Can your business survive such a long delay for payment?
3. What are the penalties if you are late paying? Most businesses will charge you interest of 8% above the base rate once you are late. Large companies will add compensation and costs which if you are finding it hard to pay the original bill make it all even harder.
4. What are delivery terms? When does risk pass? Make sure it is when you receive the goods not before.
5. What Warranty is given? If you supply goods or services to Private Individuals i.e. consumers, you will have to give a warranty to them. Make sure the supplier gives you one.
6. Be careful about them reserving the right to make changes without notice to their Terms of Business- you may not like them and be stuck with them.

And finally, a big one– if you have a contract for a year make sure you know how it ends. Do not assume it is automatic after a year.

Often there is a provision that you have to give notice three months before the end. If you do not the contract will roll on for another year- and you will have to pay again.

So make sure you have all documentation carefully checked by someone who fully understands what it all means.

Do not rush to sign. Get your facts then make a measured decision if the contract is right for you and your business.

Do not be dazzled by big names. They have power and will use it.

Barkley Legal is happy to go through any documentation and explain it all to you in straightforward language.