In these economically difficult times, a significant problem is likely to be that clients, customers or suppliers will be reviewing the terms and conditions of their contracts and agreements, and attempting to interpret the conditions to their own advantage.
You need to review your own contracts and arrangements to protect yourself. Outlined below are some of the things you can do, right now - to ensure you don’t get taken advantage of.
- Do you have written terms and conditions? Should new ones be put in place? Review all break points in your current terms and conditions, contracts and agreements. Contact us
- How watertight are existing contracts? Can prices be raised or are they contractually fixed?
- Look at getting out of onerous contracts which cannot be afforded. Check with lawyers if legally binding obligations have been formed or not.
- Consider the cost of terminating contracts – it may be cheaper than continuing.
- Do very thorough investigations into the credit worthiness of any one supplier or customer who is crucial to a business.
- Ask for payment up front, in cash or by irrevocable Letter of Credit payable at sight. Also ask for Director or parent company Guarantees of Obligations and ensure they are drawn up by lawyers, so that they are legally binding.Contact us
- You ought to have written conditions of sale which reserve ownership of the goods (or intellectual property) until full payment is made. If you do not do this, ownership passes on delivery even though payment has not been made. Ensure the written terms apply and are compliant with case law on retention of title. Contact us
- If considering mergers and acquisitions, or fire-sale offers, always take legal advice. Contact us
- Avoid the dubious practices some businesses engage in during a recession, such as price fixing or bid rigging.
- Assess if contracts can be transferred. Some suppliers have been assigning contracts to new subsidiaries with very poor credit records. Sometimes the contract prohibits assignment of even its benefit without consent, so check the legal position before accepting contracts can be moved around a group of companies.
- Be extra vigilant and pro-active: Recover Debts. Often the creditor who proceeds first recovers all their money. Consider issuing Statutory Demands, starting legal action and pursuing other parties for breach of contract. Contact us or read about our debt recovery services
- Do not let large debts build up with customers who may not be able to pay. Take action. Require payment up front, security or even an equity stake in their business. Refuse to provide further goods or services if no payment is forthcoming. Contact us or read about our debt recovery services
- If the business structure needs to be reorganised, or moved to a new location, you need to change the terms and conditions of your employees' employment contracts. Contact us
- Consider reducing your workforce: the redundancy process can be complex and it is vital that it is managed well as mistakes may prove costly. Contact us or read about our cost-effective redundancy package