As many people and businesses break for the festive period and, dare we say it, from today’s election result and the political fallout, we have taken a look back at the most common commercial issues and problems which led to litigation for our clients in 2019.
With this in mind, and personal New Year’s resolutions looming, we have set out our ten resolutions which if followed should increase your chances of avoiding potentially costly commercial disputes in 2020.
- Ensure you have terms and conditions covering the goods/services you provide. Ideally these should be professionally drafted and be specific for your business.
- Review and update any existing terms and conditions. When was the last time these were reviewed and updated to ensure they are still fit for purpose?
- Check whether your current terms and conditions have been modified since they were originally drafted. If so, and if different terminology has been used which changed any meanings or introduced new undefined terms then you should seek advice as to the impact these modifications may have.
- Ensure your up to date terms and conditions are the last sent out in any transaction. Many businesses have clauses asserting that the last terms and conditions sent are the ones that govern the contract between the parties.
- Ensure any changes or extensions made are clearly set out in writing and consider their impact on the original agreement.
- Avoid, where possible, agreeing to help one another by way of accepting payment outside the agreed periods. If this is unavoidable then it should be made expressly clear this is an exception and what remedies will apply if there is a default.
- Include provision for payment of legal costs in your terms and conditions, especially if debt amounts are below the small claims track threshold. This will then provide a contractual right to claim them when the court may be less likely to utilise their discretion to award them under their own powers.
- Ensure clarity on jurisdiction. Failure to do this is potentially one of the most expensive mistakes businesses make and disputes relating to international agreements and services are the most common we help our clients resolve. Failure to clarify jurisdiction provides the other party an opportunity to try to argue that the country they are based in is the most appropriate forum to hear the dispute.
- Ensure arbitration clauses are clearly drafted as, if they are not, they can be almost worse than none at all. If the arbitration clause is unclear, and the other party will not agree an adhoc arbitration, the court’s clarification is required to confirm the body and rules which will oversee the arbitration, otherwise it can be left open to challenge; and finally…
- Do all you can to assess the security or creditworthiness of the other contracting party or parties. It is easy for solicitors to say what businesses should do and there is an element of risk in all transactions/relationships; however, you should consider the level of risk and potential reward before beginning. If there is a lack of history or there are previous issues with the other party then their refusal to provide security may be sufficient to indicate this is a transaction to avoid.