Hidden Traps of Commercial Business

June 8, 2009

It may seem like a good idea to sign the contract and “just get on with it” but what are the hidden costs that can end up hurting your business?

Be wary of falling into traps such as the following:

  • if you are a business that provides a service, agreeing the rates upfront, but forgetting to include a provision for increasing them for future years or if the contract automatically renews;
  • conversely, unwittingly letting a contract roll over on the renewal date and committing yourself to another year (or more) of receiving the service when you do not need to renew it;
  • not allowing your business to terminate the contract;
  • conversely, allowing the customer to terminate the contract too easily or without penalty within a certain time frame;
  • failing to check, and re-check the numbers and types of services/goods being provided within the contract;
  • mispricing on websites – this happens quite often, for example,  when Amazon accidentally offered goods for sale at the wrong price, and customers bought them, it relied on a clause in its terms and conditions saying that the contract was not formed at the time of the customer’s order but only at the time when Amazon accepted the customer’s order; Amazon may have had a lucky escape (although to be fair, not without some bad publicity) but in a similar situation Kodak felt obliged to honour the price;
  • entering into an on-line contract without complying with the necessary EU distance and e-marketing regulations that govern the same;  
  • not restricting/excluding liability;
  • not having a process to handle disputes or customer complaints, thereby avoiding escalation of problems;
  • either not having in place suitable terms and conditions of business or, just as bad, having ones in place that have been cobbled together (e.g. from a competitors site – we know you do it!) and that do not match the needs and requirements of your own business;
  • having in place some form of sales agreement that has been copied and pasted and adapted (we know you do this also!) for so many sales that no-one in the organisation can remember what or where the original copy now rests! In these cases it is vital that the business not agree to anything that it cannot comply with otherwise it will find itself in breach of the agreement before the ink will have time to dry. Worse again, is providing the other side with too much comfort such as indemnities that could prove very costly in the event of a breach of the agreement.

There are some issues that will remain true for all businesses but many will be particular to a particular type and size of business. These issues can normally be avoided altogether and although it is not the glamorous and exciting aspect of “rainmaking” in terms of bringing in new sales it can save the business a lot of money and management time in not having to sort out an expensive legal mess afterwards.

We can advise your business in putting in place easy to use contracts and policies in order that you can concentrate on making those all important sales !

Please contact David on dreilly@dreilly.ie for further information on this topic or any other legal problem or matter.

 

 

 

 

 

 

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