Business Law

A “battle of the forms” arises when two businesses are negotiating the terms of a contract and each party wants to contract upon the basis of its own terms.

A typical scenario is the buyer sends the seller a purchase order with the buyer’s terms and conditions on the back, and then the seller sends back an invoice with its own terms and conditions on the back (and of course there is much conflict between the two respective sets of terms and conditions!).  The terms of the contract are then not mentioned again, and the goods and or services delivered.  So whose terms and conditions apply in the event of a dispute between the parties relating to the contract?

The answer is hard to predict, because each case may turn up on its particular facts and there are no “hard and fast” rules which the Court will follow.

A good starting point is who fired the “last shot”, that is the last party to put forward terms and conditions that were not expressly rejected by the recipient.  However this is not always the case as the last set of terms and conditions may have been sent and received after the contract had been formed (e.g. after the goods are delivered and accepted by the buyer).

Sometimes the Court will consider the parties previous dealings for evidence that one party has accepted the other’s terms and conditions.

Therefore to try and avoid the uncertainty of a “battle of forms” a business can take certain steps to protect its position.

Make sure you send to the other party a copy of your terms and conditions as early as possible in the transaction, and include the terms and conditions with your offer or acceptance.  For example the seller should send the terms and conditions with the initial acceptance of the buyer’s purchase order, rather than including it on an invoice delivered after shipping the goods or performing the services.

Place a signature line on your standard form, above a statement acknowledging consent to your terms and conditions and ask the other party to sign.  Usually a signature of consent will bind the party who signs.

If you need help and guidance on procedures for entering into contracts or any issues relating to a “battle of the forms” then please contact Daven Naghen on 01775 722261 or email daven.naghen@maplessolicitors.com

A Court in Milan has convicted three Google employees of breaking Italian Law by allowing a video to be posted on-line which showed an autistic teenager being bullied.

The three employees were convicted of breach of Italian Laws on privacy, and each received 6 months suspended prison sentences.

David Drummond, Chief Legal Officer at Google and one of those convicted, said he was “outraged” by the decision.

Not surprisingly representatives for Google have stated that Google intend to appeal.

The case related to footage posted on Google videos in September 2006.  It became the most viewed video, until it was removed from the website about 2 months later.

Google claimed that they were not responsible for the material uploaded onto the website, and that the sheer volume of material which would have to be previewed before being posted made it impossible to do so.

Legal experts in this country have compared the decision to say prosecuting the Post Office for hate mail that is sent in the post.

Legal experts in the United Kingdom believe that it is unlikely that such a similar result would occur in this country.

However this ruling will cause concern for those involved in running social media sites such as Facebook and You Tube.

Daven Naghen commenting on the case said as follows:-

“It does seem unlikely at this stage that such a prosecution would be brought within this country based upon English Law.  However I would strongly advise that anybody that runs similar websites should ensure that they have rigorous procedures in place to preview uploaded material and to remove it as soon as reasonably practicable.”

We will keep you updated on any further news on this topic.

Introduction

The Small Business Enterprise and Employment Act 2015 (“SBEEA 2015”) has introduced a number of measures intended to improve transparency and trust in companies and other similar entities like LLP’s, most notably the requirement for a register of people with significant control (“PSC”) over the legal entity.

The PSC Register is intended to give more accurate, open and current information on who ultimately owns and controls companies and other legal entities and the information will be publically available at Companies House.

Who needs to keep a PSC Register and from when?

From 6th April 2016 most UK companies and LLP’s will be required to keep and maintain a register.  This will need to be kept internally from 6th April 2016 and will need to be filed at Companies House from 30th June 2016 when the entity delivers its confirmation statement (which replaces the annual return).  Companies incorporated after 30th June 2016 will need to send a statement of initial significant control with other applications/incorporation materials.

Where should the PSC Register be kept? 

PSC information may be kept on the central register as maintained at Companies House and in an entity’s own register, most typically maintained at the entity’s registered office.  A company must give notice to the Registrar of the place where its PSC Register is kept available for inspection.

Which persons or entities should be recorded on a PSC Register? 

All individuals that meet at least one of the conditions set out below are deemed to be a PSC.  A company, LLP etc that meets at least one of the conditions set out below is also deemed to be a Relevant Legal Entity (“RLE”) and needs to be included in the Register.

The five conditions are:-

Condition 1: direct or indirect ownership of more than 25% of the shares in the company.

Condition 2: direct or indirect control of more than 25% of the voting rights of the company.

Condition 3: a direct or indirect right to appoint or remove a majority of the directors of the company.

Condition 4: the actual exercise or right to exercise significant influence or control over the company.

Condition 5: the actual exercise or right to exercise significant influence or control over the activities of a trust or firm which itself meets one or more of the first four conditions.

Information required for the PSC Register

For an individual the information to be recorded as:-

Name.

Service address.

Usual country/state of residence.

A nationality.

Date of birth.

Usual residential address (this will not appear on the public record).

Date on which the individual became registerable.

Nature of control.

For an RLE the information required to be recorded is:-

Corporate/firm name.

Registered/principal office.

Legal form and governing law.

Applicable company register and number.

Date on which the legal entity became registerable.

Nature of control.

The PSC Register must never be empty.  Even while simply taking reasonable steps, this fact must be recorded on the PSC Register.  For example the Register should say in such circumstances:-

“The company has not yet completed taking reasonable steps to find out if there is anyone who is a registerable person or a registerable relevant legal entity in relation to the company.”

Even if there are no PSC’s or RLE’s, then the Register must include the following statement:-

“The company knows or has reasonable cause to believe that there is no registerable person or registerable relevant legal entity in relation to the company.”

Failure of PSC’s/RLE’s to give information

PSC’s/RLE’s commit an offence if they fail to make disclosure and the entity may apply sanctions to them, eg loss of voting rights.  The entity itself can commit a criminal offence if it does not apply with the PSC Register requirements, and imprisonment is a possible penalty.

Further advice/guidance

If you need further advice or guidance in respect of the PSC Register then please Daven Naghen on 01775 722261 or email daven.naghen@maplessolicitors.com or visit our offices or arrange an appointment at our offices at 23 New Road, Spalding, Lincolnshire PE11 1DH.

Many of us decide to set up a limited company when we go into business, there may be many reasons for choosing this type of business medium but one of the main reasons is it offers you limited personal liability.

If you have started up your company with another party however, no matter how well protected or limited your liability may be to the outside world, you may still encounter major problems in terms of both stress and finances if you later fall out with your fellow shareholders or are unable to agree on a certain point.

Even the best of friends can fall out over business and it is important to remember that just because you all start out with same plan and ambitions in mind that is not necessarily going to remain the case. Many factors can influence how a person chooses to react in their work/ business life, for example family, illness or even just a general change of heart.  The story of starting up a business with a friend and not bothering to put something as formal as a shareholders’ agreement into place and then having a difficult and protracted fallout is all too familiar.

A shareholders’ agreement is essentially a contract between the individual shareholders, it can set out what will happen if certain circumstances arise, what will happen if one of them wishes to leave the business , what share of profits each of the shareholders are entitled to etc . A shareholders’ agreement can be drafted to so that certain issues must have a majority or even unanimous vote in order to proceed.  This is beneficial as often a company has a shareholder with more than 50 % of the shares who can effectively run the company.  If this provision is included, it will protect the minority shareholders from this situation.

If you have worked for years to build up the goodwill of your company and then a key member leaves, the last thing that you would want is for them to set up in competition with your company.   A clause could be inserted into the shareholders’ agreement to prevent this and thus protect the company going forward.

A bank may insist on this type of protection (i.e. a shareholders’ agreement) before offering any funding/credit to a company.  It is such an important and fundamental document.

The shareholders can agree near enough whatever they like between themselves in a shareholders’ agreement. It is a private agreement and does not have to be lodged at Companies’ House and will not be inspected by the public.

A shareholders’ agreement may help prevent a great deal of argument and distress in the future and will ultimately be a cheaper option then taking action in the courts when the company has hit problems as a result of disagreements with the shareholders. You cannot afford to own/manage a business without a shareholders’ agreement.

If you think that a shareholders’ agreement would be beneficial to your company please call Gemma Mayer on 01775 722261 or email gemma.mayer@maplessolicitors.com or write to Gemma at 23 New Road Spalding Lincolnshire PE11 1DH.

Maples would just like to say a big thank you to everyone who came to see us at the Evans Easyspace Business to Business Exhibition in Peterborough on Friday 15th May 2009.

The day was a huge success despite the poor weather conditions and we feel the contacts we took from it will prove invaluable throughout the forthcoming months.

We would also like to take this opportunity to say “Congratulations” to the following for getting the top three scores in our Wii Golf Competition on the day:-

1st Place and a £250.00 Voucher off Legal Fees – Stuart Meadows from Peterborough Business Club

2nd Place and a £150.00 Voucher off Legal Fees – Matt Bunnage from Boldfield Computing

3rd Place and a £100.00 Voucher off Legal Fees – Richard Lunn from Active Business Support Limited

Again thank you to everyone who came to see us and we look forward to seeing you all again at future events!

Tenants Security of Tenure under the Landlord and Tenant Act 1954

This Act provides the statutory regime under which commercial tenants (usually) have a right to renew their tenancy at the end of the contractual term.

The tenant can therefore often require the landlord to grant a further lease on similar terms to the existing lease unless the landlord can take advantage of some of the exceptions in the Act.  These exceptions are however very narrow (provided that the tenant has been complying with its lease covenants) and often the landlord has to pay compensation to the tenant even if the landlord can exercise them.

For this reason many landlords require their tenant to contract out of these provisions.  This now involves a system of serving a formal notice on the prospective tenant at the outset of the lease.  The tenant then needs to sign a declaration confirming that he is prepared to take a lease without the usual statutory protection.  Unless a statutory declaration is used there will need to be a 14 day cooling off period between the service of the notice and the signing of the declaration / lease completion.

Where a tenant has the protection of the Act the landlord will need to serve at least 6 months written notice on the tenant prior to termination of the lease.  This notice (usually called a “Section 25 Notice”) either contains details of the landlords proposals for any renewal lease or states the exceptions that the landlord is intending to exercise to avoid the requirement to grant a new lease.

The Act is convoluted and both landlord and tenant need to be aware that failure to meet with the formalities and requisite deadlines can easily have serious consequences.  Even where these are complied with, court proceedings to determine new lease terms (where a tenant is enforcing its right to renew) or determine the landlord’s exercise of the exceptions are sometimes necessary.

Landlords therefore need to be careful that they do not rush into granting a lease to a commercial tenant without considering whether or not they are actually prepared to let the property on what may, in effect, be a permanent basis.

From the tenants’ perspective they should not agree to contract out without considering what might happen at the end of the term.  Potentially the Tenant stands to loose the goodwill they may have built up at those premises and possibly even some value to their stock and equipment, if they have to leave the premises at the end of the term.  It may also allow the Landlord to negotiate any new rent under a proposed new lease from a position of greater strength.

Given these competing interests between landlord and tenant it is often an important item to be discussed during lease negotiations and established in the Heads of Terms.

This is a complex area and both parties should take specific legal advice.  This note is merely a very basic guide and the applicability of the Act to a particular lease will vary depending on it’s terms and surrounding circumstances.

For more information on this contact James Turner