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Contracts - Commercial Law at Forbes Solicitors

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Our Commercial Solicitors offer practical legal advice and assistance with a variety of commercial contracts and terms and conditions. Every business is unique and so the advice we provide is never "off the shelf" and will directly apply to the individual needs of your business.

We offer clients our technical expertise with a practical approach, which ensures that clients understand the options available to them and put the right contracts in place to make informed decisions when evaluating and pursuing commercial business opportunities and contracting with their customers or suppliers alike.

We assist clients in advising on and/ or preparing and negotiating commercial contracts from an initial expression of interest through to the final agreement being signed.

Our team advise a wide spectrum of business organisations of a range of sizes across most sectors and industries. Our commercial expertise suits businesses of all types, including companies, LLPs, partnerships, sole traders, and alternative business structures and includes:

  • Terms and Conditions of Business (Sale or Purchase)
  • Commercial Contracts including Supply of Goods and/ or Services, Agency, Distribution, Manufacturing, Consultancy, Introducing, Sponsorship, Transport and Warehousing & Franchising
  • Commercial Joint Ventures
  • Commercial Securities (Guarantees and Bonds)

We understand the importance of teamwork and we will work closely with you to gain the best possible understanding of your business and legal requirements.

Commercial law can be a complicated and time-consuming affair so it pays to call on the help of experienced Commercial Solicitors with years of experience.

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FAQs

Do I need to sign a business contract?
 
 

All businesses enter into contracts all the time. These contracts may not be custom drafted by a solicitor, they may not even be written down. However, should you form a written or oral agreement with another party, be it a customer, supplier or anyone else a contract is likely to have been formed and this contract is likely to be legitimate and effective.

Some agreements are crucial to the proper functioning and success of the business and such contracts should be recorded in writing and signed by the parties involved. A written contract provides certainty over the content of the agreement between the parties, it can allocate the risks involved between the parties, set out payment terms and delivery dates and agree on the consequences should these terms not be met.

What contracts does my business need?
 
 

There are some key contracts that are of critical importance to the continued functioning of your business. Various agreement forms are available to businesses to reflect the many types of relationship that can exist between parties. The different rights granted and duties imposed vary depending upon the particular terms within the agreement.

Below is a brief summary of the types of agreements that are available:

  • A distribution agreement is a legal agreement between a supplier of goods and a distributor of goods. The supplier sells the goods (which it may or may not have produced) and the distributor buys the goods to re-sell. The supplier will have no contractual relationship with the ultimate customer.
  • In an agency agreement, in general an agent is given authority to enter into contracts with customers on behalf of the principal business. A contract for the supply of goods or services is then made between the business and the customer. Other types of agency are available whereby an agent simply finds customers and introduces them to the principal business.
  • A licence agreement can be used where a business wishes to maintain ownership of an asset (for instance a trade mark or copyright) but will permit another business to use the asset in return for a payment. This is commonly used where the business wishes to utilise the resources or expertise of another business to market its product.
  • A franchise agreement is a legal agreement whereby a business (a 'franchisor') allows another party (a 'franchisee') to use a uniform business in return for the payment of a franchise fee. The franchisor will lay down specifications for the franchisee to meet and can have much control of the business. The franchisee gets the benefit of a successful business model and the business reputation.
  • A manufacturing agreement can be used where one business appoints another to manufacture specified goods or products.

Another contract of vital importance to your business will include the terms and conditions of your sale of your product to the customer.

What should I include in a distribution agreement?
 
 

A distribution agreement should firstly deal with the appointment of the distributor and the terms of the appointment. Is the distributor to be granted an exclusive right to distribute the goods in a reserved area and should the distributor be allowed to distribute the goods outside this area? Both have to be considered in the light of competition law provisions.

The agreement may be used to control the channels within which the distributor can operate. For instance, should the distributor be able to supply the products over the internet or make further wholesale supplies?

"White labelling" whereby the distributor receives the products and resupplies them under its own brand or the brand of another business, is an arrangement that can be dealt with in an agreement.
The agreement should also deal with the respective duties of the distributor and the supplier. Who is to advertise the product; will there be any sales targets; how is stock to be held and ordered?

Of crucial consideration will be the terms of payment and the passing of the title of the goods. Is title to be passed on delivery or only once the distributor has paid for the goods? Is the supplier to be granted the means to re-obtain the stock should the distributor delay payment?

Is employing an agent right for my business?
 
 

Depending upon the nature of your business an agency agreement may be more suitable to market your goods or services. Alternatively, a distribution agreement may be more beneficial, or taking on an employee or consultant.

An employee can be used to market and sell your products, can be trained, there is control over working times and they will owe certain duties to you. On the other hand, with an employee comes further tax consequences and the necessity to pay a continual salary, in contrast to that of an agent that operates on a commission basis.

As agency relationships are less subject to competition law provisions, agency agreements can allow your business to have more control over the agent's ability to sell the products and determine the conditions of these sales. By contrast, with a distribution arrangement, once the goods have been sold to a distributor the goods become the distributor's to deal with - that freedom can be limited in line with competition law rules. An agency relationship may also be an appropriate means of marketing goods where such goods are tailor-made or high value and close contact with the ultimate customer has to be maintained.

Another factor is the size and resources of the parties involved. Can your business afford to supervise an agent, market the goods itself and hold the stock, or would it be more suitable to sell the goods to a distributor who will then be responsible itself for the stock and marketing the product?

Another final factor is the issue of liability for the goods and services. If your business is concerned about potential liability to the end customer then a distribution agreement where the customer contracts with the distributor may be more suitable. Your business may also be responsible for compensation to an agent upon termination of the agreement, which can be very costly for a business. These rules are applicable even where there is no written agreement.

What should I include in an agency agreement?
 
 

An agency agreement should detail the agent's authority to enter into contracts on behalf of your business - is the agent appointed simply to find customers or is the agent provided with the authority to enter into contracts in specified circumstances? What territory will the agent cover and will that agent have exclusive rights to that territory?

The agreement should also set some duties for the agent:

  • Is the agent to market the products?
  • Will there be targets to meet?
  • Can the agent be involved in competing products or is this to be restricted?
  • What is to happen should a dispute arise over the products?

Terms of the agreement will also deal with how the agent is to be paid and whether this is to be by commission.

Finally, the agreement should deal with the termination of the agency relationship. You should bear in mind that an agent may by law be entitled to compensation upon such termination, which can be very costly.

What should I include in a licensing agreement?
 
 

A licensing agreement is typically used by business going both ways. For instance, many businesses will have the use of certain computer software, which will have been licensed to them by the developer. They may also have their own assets which they wish to licence out to others.

A licence agreement should determine what is being licensed, to whom, for how long and for what purposes. This licence could be for general use or could be restricted to certain purposes. The grant of the licence should also specify whether it is to be exclusive or if others are allowed to be given use of the subject of the licence too.

Other areas of the licence should deal with the subject of royalties for the licensing and how these royalties are to be paid and calculated.

The licence agreement may also ensure that the asset is to be protected and maintained by the licensee who is to ensure that nothing is done to harm the licensor's ownership of the asset - this is especially important regarding the licensing of intellectual property rights.

What will a franchise agreement commonly contain?
 
 

A common franchise agreement will allow a franchisee permission to use the business model, trade names and other intellectual property and reputation of the franchisor's business in return for a specified payment.

As it is the reputation and success of a proven business model that is key to the relationship, the franchisor will usually be granted a degree of control over the running of the franchisee's business to ensure that it is obliging by the business model and not continuing in a way that may harm the reputation of the business. In return, the franchisor will often have duties to assist the franchisee in running the business.

Other clauses should deal with employees, the licensing of intellectual property, which assets belong to the franchisee or franchisor and the confidentiality of the trade secrets of the franchisor.

The franchise agreement should also cover the procedure should a franchisee wish to stop being a franchisee, for instance, whether the business can be sold as part of the franchise and whether the franchisee can operate a competing business elsewhere.

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Our dedicated Commercial team

John Pickervance

John Pickervance

Associate

Commercial

PinCentral Lancashire

Call0333 207 1134

Katie Lee

Katie Lee

Paralegal

Commercial

PinCentral Lancashire

Call01257 240 830

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Monday to Friday: 09:00 to 17:00
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