May 2011: Careless emails cause contract hazards

Cousins Business Law Commercial Solicitor, Sue Mann shares her thoughts on why email may be causing difficulty for your business. 

Thousands of businesses each year could be inadvertently committing to unsatisfactory terms of work via email because they have not clearly identified their working arrangements. The age of emails has blurred the boundaries of what is a contract and what is not. It’s very easy to fire off an email quickly, but do you realise that such an email has the same status as a proper legal contract?

Without expert legal input and advice on terms, businesses could be leaving themselves open to problems.

A response to an email outlining details of an agreement, and agreeing to undertake the work, is effectively a binding contract, but it is unlikely to be a ‘watertight contract’. It might not, for instance, set out payment terms or limit liabilities. Businesses which do not invest in the right legal advice could therefore be laying themselves open to unnecessary problems.

If you do not have a properly drawn up contract:

• you may not have agreement over some fundamental points (which means that a judge might later have to decide what these points should have been – and you will be paying for the privilege!);
   
• there will be uncertainty as to the basis on which the products or work are being supplied (and you can be certain that if a disagreement ever arises, the other party will have a different ‘recollection’ of what was agreed, meaning you have less chance of being paid and a higher chance of it all ending up in messy court proceedings);
   
• everything implied by law will apply to your contract even if that’s not what you intended (did you really want Westminster or Brussels to decide what you have agreed to?);
   
• you won’t have any limitations on your liability;
   
• you won’t have any retention of title on any products you supply (so you have less chance of being paid);
   
• you may find that your customer or supplier has introduced their own standard terms which are likely to be more to their benefit than yours.

It’s always advisable to draw up a proper contract to consider all of these points, and if you are presented with such a contract to get advice on whether your interests are really protected. It will save you a lot of hassle, time and money in the long term.

For advice on contracts you are about to sign or concerns about agreements you’ve already made, call Sue on 0121 246 4437 or via email here.     

Over the past few weeks we have received many enquiries from property owners looking to minimise the amount of business rates they pay whilst their property stands empty. This is a particularly important issue since the threshold for claiming Empty Property Rates Relief was reduced from £18,000 to £2,600 in April 2011. 

Property owners therefore need to review tactics to minimise liability for business rates by adopting new initiatives.

The Meanwhile Scheme was introduced by the government to help revitalise town centres and increase the temporary occupation of vacant units for non-commercial purposes rather than having property sit empty whilst a landlord finds a permanent tenant.

The “Meanwhile Lease” is one of the options available to landlords where the property is occupied on a short term flexible basis by a charity or other non-profit organisation whilst the landlord continues to market the shop or other premises until a suitable commercial tenant is secured. At that point the landlord would be able to exercise a break clause to regain vacant possession. The costs advantages to the property owner are obvious as the “Meanwhile Occupier” is likely to be exempt from paying business rates.

Some of the uses for which “Meanwhile Leases” can be put are art/culture based exhibitions, learning facilities, workshops and other community based projects.

Cousins Business Law is able to assist with the implementation of a Meanwhile Lease at a fixed fee which both protects the landlord’s investment and ensures the Meanwhile Scheme meets its objectives.

In basic terms, the temporary occupier would be liable for payment of business rates but would make an application to minimise the amount payable. This structure of the arrangement therefore benefits both parties. From a landlord’s point of view, the Meanwhile Scheme is a useful way to avoid or at least minimise business rates for empty property whilst the non-commercial tenant is able to occupy property rent free for a specific project on flexible terms.

Outside of the Meanwhile Scheme it is possible for the principles to apply equally for a lease to a commercial tenant where both parties see it as a short term letting (e.g. 6 months) and require flexibility. The added advantage for the property owner is that so long as the unit is occupied for at least 6 weeks no rates would be payable once the property becomes empty again for 6 months (industrial/warehouse) or 3 months (all other property). Once again we can draft a suitable lease to be put in place at a fixed fee.

For more information please call Paul Harrison on 01604 456591 or send an email with your contact details to Paul here.

See also Empty Property Business Rates 2011 and Small Business Rate Relief 2011      

If you run an e-commerce business and sell goods online new EU rules could have a significant impact. The aims of the proposed Directive as explained by the European Commission are laudable – harmonisation of relevant laws throughout Europe, rationalisation and updating of various laws which have grown up somewhat piecemeal over a long period of time and protection of the consumer to encourage and stimulate online trade. So far so good but, as is so often the case, the devil is in the detail.

Of the many provisions in the draft Directive, there are a couple of aspects in particular which could affect the viability of your business. Rather than being able to select where you sell as at present, you would have to make your goods available throughout the EU – currently 27 member states. You would also have to allow a 14-day ‘cooling off’ period within which consumers could return the goods and, where those goods have a value of over £35, you would have to pay the cost of returning them. Clearly the cost and administration of these changes will have an effect on all businesses selling to consumers online but, for smaller businesses currently struggling to survive, the cost of compliance could see some businesses failing to survive. Read more about these new rules in our blog. In the meantime, make sure you are ready to adapt. For further information on the draft Directive or for advice on any contract matters, contact Sue Mann on 0121 246 4437 or by email.

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