What can we do to make sure that our affiliates, subcontractors, etc operate in a way that maintains and enhances our brand reputation?

Posted on By Robert Briggs

It is crucial to carry out appropriate due diligence. Ask questions that will uncover things that may pose a risk to your reputation. For example, how do they handle client complaints?

You could oblige them to comply with a code of conduct. In this way you can ensure that your standards are upheld and you could include a clause on dispute resolution.

You could include specific clauses in a set of terms and conditions. However you must beware of ‘liquidated damages provisions’, where a penalty is payable for example for late completion. These should only be used as a genuine pre-estimate of losses which will be suffered by a breach of the contract and not used as a penalty clause, otherwise the provisions may be held to be unenforceable.

As a professional consultant can I be sued if I give free advice?

Posted on By Robert Briggs

Technically you could as a recent legal ruling (Burgess and another v Lejonvarn [2016] EWHC 40 (TCC)) has found that a professional consultant owes a duty of care in Tort for professional services performed gratuitously.
The consultant in question had given various free services relating to a friends’ landscape gardening project. It was a significant project approached in a professional way, with services provided over a relatively long period and involving considerable commitment on both sides. The project did not go smoothly, the relationship broke down and the former friends claimed for the cost of remedial works.
This highlights a risk common to any professional who offers informal advice, however, it is important to remember that this was not a piece of brief ad hoc advice given in an informal way.

We have been negotiating with a suppler and have now received the contract produced by their solicitor. This does not reflect what we discussed and is more favourable to the supplier. What can we do?

Posted on By Robert Briggs

You need to go back to the supplier and discuss your issues with the agreement to ensure that you are happy with the terms.

In a business to business agreement it is down to the parties to agree the terms. The solicitor should produce an agreement to reflect those terms, however they may have just used a standard agreement without taking full instructions from their client.

Please do not sign the agreement until you have read, understood the implications of and are happy to accept all of the terms.

I supply services to other businesses and I have not been paid for the work I have done, what can I do?

Posted on By Robert Briggs

One of the main causes of failed companies is cash flow problems caused by late payment.

Some businesses think it is good practice to pay people as late as possible for goods or services delivered under a commercial contract or agreement. This results in time and effort being invested to chase payments which should have been made as a matter of course. Many pay late because they are paid late and this makes matters worse.

Whenever you buy something you are entering in to a contract with the supplier. Essentially the supplier provides the goods or services agreed and you have to pay them. The contract will either directly, or by implication, contain a time frame in which you have to pay. If you don’t pay within that time then you are breaking the contract. Paying on time should be normal, just as sticking to any other aspect of the contract.

In relation to business to business contracts in the UK and the rest of Europe, the law dictates that there are penalties and compensation which has to be paid if goods or services are not paid for on time.

The law

The penalties and compensation

A fixed fee:

  • £40 for debts under £1000,
  • £70 for debts under £10,000,
  • £100 for debts over £10,000.

Interest:

  • 8% above Bank of England base rate.

Debt recovery costs:

  • Reasonable debt recovery costs

Practice

Many businesses owners fear antagonising their clients by using the law. However it is a statutory right and its primary aim is to stop companies paying their bills late.

Rather than using it as a last resort when faced with an overdue invoice, the late payment legislation is designed to be used as a deterrent against late payment, and as part of standard business practices and credit management techniques.

In much the same way as a supplier reminds purchasers that payment is due within a specified time limit, the supplier should also remind them that interest and compensation for debt recovery costs will be charged on overdue invoices.

Of course businesses do not have to use the legislation and if they include contractual interest in the agreement, this is payable instead.

Risks for Late Payers

Beside acquiring a reputation as a late or non-payer, claims for interest on late payment do not have to be made straight away (a supplier has six years in which to make a claim, five years in Scotland) as long as trading terms were agreed and the customer was duly notified when interest began to accumulate.

Businesses may still make claims for interest after they have stopped supplying goods or services to a particular purchaser.

The only way for purchasers to be sure of avoiding future claims is to pay bills on time.

Crab Alert – Liquidators and receivers acting in connection with a business can and often do pursue ex-customers for interest on late payments, going back up to six years.

How can Crimson Crab help?

We can help businesses implement a procedure for managing late payments and help with recovery. Please get in touch to find out more.

We also provide a Crab Sheet on Late Payments this is just £10 or free to Reputation Advocates.