Huntley Legal's Blog

Even some experienced businesspeople assume that only large companies arrive at a business negotiation with their own standard agreement in place. Or they think they can only offer their own prepared agreement to a customer or supplier that is smaller than their own business.

Not so.

No matter how young or small your business may be, there are good reasons for preparing and using your own agreement as the basis of negotiations or to record your deals.

(This article is part 1 of 2.)

• Do you own or manage a company?
• Did you know there’s consultation underway around laws that affect you?
• Are you aware that changes are in the pipeline over the coming year?

The Department for Business, Energy and Industrial Strategy (BEIS) along with the Financial Reporting Committee (FRC) are commencing or coming to the end of consultation around a host of potential changes.

Some of these will be of interest to anyone who owns or manages a company, so you need to be aware of what’s going on. Note that you may need the assistance of your solicitor and accountant too.

We’ve been experiencing extraordinarily altered times since March 2020. Apart from wishing you and yours a safe passage to the other side, I can’t say anything new or useful about that period. So, the focus of this article is about contractual dynamics that you should manage and plan as we go forward.

Some of these suggestions may be part of your normal routines. But, if you have scheduled contract reviews, terminations or renewals over the coming months, it will be worth taking a look sooner than you usually would. This will give you extra planning time and better information.

As a business, you might extend credit to your customers and get it covered by a guarantee, either from your customer’s company or from one or more of the owners.

Although these personal or company guarantees are seen as “security” for the original credit, they are themselves not secured in any way (unless the guarantor is also willing to give you a mortgage over a property or other assets).

Some people give their whole life to a company. They invest a fortune into it. Yet companies can easily get into trouble, especially now because of Covid.

Company directors often make assumptions about what the role involves. In fact, there are a shedload of misconceptions. I’ll address some of them in this article and more another time, because they are really important.

Electronic signatures are being used a lot more. It has recently been confirmed that they are valid in English law, according to the 2019 Law Commission report and a UK government announcement in March 2020.

There are benchmarks relevant to when an electronic signature is valid and legally binding. In short:

1. Electronic signatures are valid when the person who is signing intends for the electronic signature to validate the agreement, and by using an electronic signature, they agree to be bound by that agreement
2. All other documentary formalities are to be observed as well as using an electronic signature

Of course, the situation is not quite that simple. This article explains more.

Boilerplate text is usually considered to be as dull as ditch-water. But it has taken on a new life since lockdown. What was once a boring part of any commercial contract has become an interesting and vital area.

A year or two ago, if you had suggested to most businesses that they should take an interest in the boilerplate section, they would have rolled their eyes, thinking it was too dreary to motivate them, or too standard and benign to be worth any time or effort.

We would have said that pigs might fly – but they did and they are still flying! Things have changed a bit.

Because of the whole range of national, local and even international rules and restrictions that have impacted all our lives since March 2020, for whole sectors of the business community, some parts of the boilerplate text have become quite familiar. In particular:

When you are selling a company or a business, confidentiality can be a bit of a dilemma because you can’t sell it without telling someone! Unless you’re selling in response to an unsolicited offer, you will probably need to talk to a business sales agent or other people in your sector about the possibility of selling.

Some people are rightly fearful about telling anyone, because it risks creating a rumour mill suggesting that the business is in difficulties. If the communication is not managed well, the news can alarm staff, suppliers, customers, creditors and bankers. It might also alert competitors to a perceived weakness in your business position.

Such rumours could have a negative impact on your business and its price. Buyers will be less keen to part with their money for a business that is rumoured to be in trouble. You should therefore judge carefully what you say, and to whom, and always ask for a confidentiality agreement to be signed.

If my clients are buying a company for a significant price – up to £millions in some cases – they really don’t need me to tell them that they need to do thorough due diligence because they’ve already bought into the idea.

On the other hand, when clients are about to buy a business for a modest price (or possibly, even being paid to take it on), they often ask whether due diligence is worth the bother and cost.

Answer: it’s quite hard to tell!

After lots of fuss, the UK left the EU at 11 pm on 31 January 2020. Months of further fussing are to follow before we know if it will be with or without a trade deal. We are currently in a transition period that is due to end on 31 December 2020 – unless, by the end of June 2020, there is an agreement between the EU and the UK to extend it by one or two years.

That means we have been experiencing a really long period of uncertainty since 2016, and now face a further long period of uncertainty.

That said, we do have a modest level of certainty about what happens during the transition period, even if we don’t know how long it would be.

This article explores more.