Discuss & Do

Another lively well-informed group of people came to the business premises Discuss & Do event at the Town Hall in Frome in July.  Jon Haines of McAllisters talked about the market in Frome, and the role of the surveyor in negotiating terms.  Neil Howlett of Harris & Harris gave advice about what to expect or ask for in a lease, and the other issues any new business tenant needs to think about.

Finding business premises in Frome is a challenge.  The Chamber with the Town Council has been working with the local planning authorities to make a high priority for them – with some success.

Frome Town Council maintain a register of business premises.  MDC have a page with advice and contacts.  This has a link the register of business property maintained by MDC / Into Somerset but not everything get posted to it.  The Business Property Network lists smaller premises in Somerset & West Wilts.

In Frome it is worth giving your details to all the local agents as property doesn’t always reach the open market.  The main agents for commercial property are:-

There is also a Facebook group Workspace needs in Frome on which people post needs and sometimes property that is available, and there is always Google.

As with many others things people in Frome are good at coming up with innovative solutions and doing things themselves.  Because there is high demand rents are going up and landlords with unused space are looking to use it.  Talk to people you know, look out for notices in windows, and if you think you have found space that would suit you that isn’t being used contact the owner.  You can check the size of premises on the Business Rates register and who owns it from the Land Registry.

Before you start negotiating for premise educate yourself about your options. See the guidance here:

Once you’ve found something that might work for you put your business brain in gear. Don’t blindly sign whatever is given to you; get advice about the commercial terms and the legal contracts before you sign them! Contact our Commercial Property specialists Neil Howlett and Christiana Olomolaiye.

Accountants recommend using a Solicitor

The Institute of Chartered Accountants in England & Wales (ICAEW) produces some good guidance for small business.  Amongst these is a guide ‘Business law and using a solicitor’.

This is what it says.  We think this is good advice.  We hope you will be recommended to Harris & Harris by our clients and professional contacts.  We can offer you specialist advice at a reasonable cost.  If we can’t help we will try to recommend someone who can.

Choosing a solicitor

Start with the basic information sources.

  • Friends and other business contacts, who can recommend solicitors they have used.
  • Professionals, such as bank managers and accountants.
  • Your local business support organisation, Chamber of Commerce or Enterprise Agency.
  • Print and online directories and advertisements.

Personal recommendations are usually the best source. Always ask:

  • What was the solicitor hired to do?
  • Is the solicitor a specialist?
  • Was the solicitor approachable, effective and easy to get on with?
  • How much did it cost?

Be prepared to pay extra for a more experienced and effective solicitor.

Most small businesses find it preferable to use a small firm of solicitors.

  • Your business will be a valued client.
  • Costs are usually lower.
  • It may be easier to build up a good relationship with the individuals.

Even good small business solicitors will not be able to do everything, and will recognise their limitations.

  • Ask how much experience your solicitor has of your particular problem.

Would a specialist be better? Can they recommend someone suitable?

Online dispute resolution platform postponed

Businesses were supposed be ready to implement the new laws on online dispute resolution (ODR) by adding a link to their websites, and online ordering systems by 9th January 2016. The Department for Business, Innovation & Skills (BIS) has issued a statement delaying that which says :

‘We have been informed by the European Commission that due to a number of other member states not being in a position to implement the requirements of the ODR Regulation by 9 January, the ‘go live’ date of the platform has been delayed to 15 February. Businesses will now not be required to carry a link to the ODR platform until it is launched on this new date of 15 February.

‘We recognise that the decision to delay is not ideal as a number of businesses and consumer organisations have been gearing up for 9 January. However, we also acknowledge that as we have not been able to provide you with a link to the platform the six-week delay will give additional time to get ready for its introduction.

‘We can reassure you that although the date of 9 January remains in our Regulations, we fully understand that it will not be possible for businesses to meet this date as the ODR platform will not yet be launched. There will of course be no question of enforcement action before 15 February.’

See the ‘Alternative dispute resolution’ guide which has been updated to reflect these developments, and diarise for early February in the hope we will know more then.

Consumer Rights Act 2015 – 4 Off-Premises and Distance Sales, Variations, and Timing

From 1st October 2015 there are fundamental changes to consumer rights introduced under the Consumer Rights Act 2015.   This Act replaces almost all existing consumer protection legislation.   It introduces significant new concepts and protections for consumers.   All businesses should be reviewing their Terms of Business for consumers, their procedures and staff training.

We are posting a series of brief summaries of the changes, highlighting their significance, and with links to further advice.   This is not intended to be legal advice upon which you should act, but awareness of issues which you need to consider.

See the guidance issued by Business Companion – the sale and supply of goods from 1 October 2015.

For legal advice please contact Neil Howlett or Andy Hambleton

Variation of Terms

It will be much more important for traders to obtain the agreement of the customer before delivery to any changes in the goods to be supplied.  There is draft CMA guidance allowing minor technical adjustments or changes required by law or necessity which can be or not real significance to the consumer.  However, traders may have still an obligation to inform consumers of such changes.

If there is the likelihood of a need to make changes between the date of the contract and delivery it may be possible to do so fairly if the possible variation is clearly described, there is a valid reason for it, and the consumer will be given notice in advance and the right to cancel.

In principle a trader may be able to change any terms provided that the consumer is given the right to terminate without being left worse off, although traders will need to be wary of anything that may give rise to a claim for breach of contract and civil damages.

Timing and Delivery

Goods must be delivered without undue delay and in any event not more than 30 calendar days after the date of the contract, unless that period is varied by agreement.

Services must be performed within a reasonable time, which is a question of fact in each case, unless the time or a method for fixing the time is set out in the contract.

On-premises and Off-premises contracts.

One element of the current law not brought into the Consumer Rights Act is the requirement for giving Notice of Cancellation Rights for Off-premises contracts.  These remain the same as before.

See Business Companion – Consumer contracts – off-premises sales

Distance Selling

The Consumer Rights Act has not changed the law of Distance Selling – the sales of goods, services and digital content without face-to-face contact with the customer. This includes sales online, by mail order or by telephone. In our experience many websites are not compliant with this law.

See Business Companion – Distance Selling

Consumer Rights Act 2015 – 3 Consumer Notices & Unfair Terms

From 1st October 2015 there are fundamental changes to consumer rights introduced under the Consumer Rights Act 2015.  This Act replaces almost all existing consumer protection legislation.   It introduces significant new concepts and protections for consumers.  All businesses should be reviewing their Terms of Business for consumers, their procedures and staff training.

We are posting a series of brief summaries of the changes, highlighting their significance, and with links to further advice.   This is not intended to be legal advice upon which you should act, but awareness of issues which you need to consider.

See Consumer Rights Act 2015 – 1 All Change? and 2 Services & Digital Content

For legal advice please contact Neil Howlett or Andy Hambleton

The Consumer Rights Act will apply to all forms of contract.  Previously, obligations of fairness were restricted to contracts which were not individually negotiated.  The Consumer Rights Act’s test of fairness will apply to all contracts, including oral contracts.   It will be much more important for a trader to be able to prove on the balance of probabilities what they agreed to provide or do, and on what terms.  That will be a great deal easier if the terms are in writing and there is a copy signed by the consumer.

Consumer Notices & Pre-contractual statements

The Consumer Rights Act introduces a new concept of a Consumer Notice.  That is anything which sets out the rights or obligations of the trader and consumer or restricts the trader’s liability.   Anything in these will be subject to the same test of fairness as if they were set out in a trader’s Terms & Conditions.

This will apply to marketing communications, brochures, and signs at premises, all of which will be treated in the same way as if they were contract terms.

Anything said or written to a consumer about a service or trader, whether by or on behalf of the trader, will be treated as a term of the contract if the consumer takes it into account when deciding whether to enter into the contract, and when making any decision about the services after the contract is entered into.

This will make it a great deal easier for consumers to bring claims which would previously have had to be pursued under the complex law of Misrepresentation.

Unfair Terms

The Consumer Rights Act 2015 replaces the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations 1999 (though UCTA remains for B2B contracts).

All written terms of a consumer contract must be “transparent”, i.e. in plain and intelligible language, not using jargon the average consumer must be able to understand them. One ECJ decision said that it must enable the consumer “to evaluate, on the basis of clear, intelligible criteria, the economic consequences for him which derive from it”. Any ambiguity will be interpreted in favour of the consumer. In addition terms must be:-

  • Legible, if in writing, which means that they cannot be hidden away in small print
  • Prominent, which is a new definition, requiring that they are brought to the consumer’s attention in a way that an average consumer would become aware of them.  The average consumer is assumed to be reasonably well informed, observant and circumspect.  The more significant the term, or the closer to the boundary of fairness, the greater the obligation to make it prominent.

Although a term which is not “transparent” may still be enforceable it is more likely to fail the test of “fairness”.

The CRA does not apply to unwritten terms.  Although Sam Goldwyn was not precisely correct any trader seeking to rely upon verbal terms which are advantageous to them as against a consumer is going to be climbing Mount Everest.

A term is unfair if “contrary to the requirement of good faith it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer”.  Any attempt to limit or exclude liability is subject to review. In particular for:-

  • Breach of contract
  • Liability for injury or death not caused by negligence
  • Damage to property

There is a ‘black list’ of items that cannot be excluded.  Any attempt to exclude them will be ineffective.  They are:

  • Excluding liability for death or personal injury resulting from negligence
  • Excluding the statutory tests for conformity
  • Excluding liability for incorrect installation of goods
  • Excluding the obligation to provide services with reasonable skill and care.

There is an extended ‘grey list’ of terms which will be assumed to be unfair and therefore ineffective.  These include:-

  • Disproportionate charges if the consumer ends the contract.
  • Terms which allow the trader to change the characteristics of the Goods (or Services) after the consumer has become bound by the contract.
  • Terms which allow the trader to change the characteristics of the goods or services after the consumer has become bound by the contract.  There is an exception where there is a contract which is “indefinite” and where the trader gives reasonable notice and the consumer has the right to terminate the contract.
  • Terms where the trader can set the price after the consumer has become bound by the contract and has not agreed the price or method of determining the price.  The explanatory notes to the Act gives as an example of lack of prominence a low headline price with hidden extras in separate terms and conditions.

The grey list is not exclusive.  A Court could determine that any term is unfair against the statutory test.

Provisions excluding common law rights are possible but are likely to be subject to assessment against the grey list and the test of fairness.

Terms can be excluded from assessment against fairness if:-

  • They are the main subject matter of the contract, or
  • Terms that set the price; although price may be excluded, terms such as time and method of payment may still be subject to assessment against fairness.

Courts considering consumer contracts must consider the issue of fairness if there is sufficient legal and factual material available, even if it is not raised as an issue by the parties.  The introduction of an obligation of good faith is also a novel concept under English law.  Courts continue to be reluctant to apply it in commercial contracts.

Given the present pressures on the Court Service it seems unlikely that there will be legions of campaigning Judges going through the small print of every consumer contract which comes before them.  The danger is of Judges looking for ways to find in favour of consumers and that these issues will arise at a hearing without prior notice to a trader who is attempting to defend their position.

Useful guidance

Rules for the supply of goods: BIS’s Consumer Rights Act: Goods Guidance for Business 

Rules for the supply of services: BIS’s Consumer Rights Act: Services Guidance for Business

Rules for the supply of digital content: BIS’s Consumer Rights Act: Digital Content Guidance for Business

Unfair terms: The current guidance on unfair terms is CMA Unfair contract terms guidance: CMA37 This guidance makes reference to Annex A, which contains examples of terms which the CMA’s predecessor body, the Office of Fair Trading (OFT), required be withdrawn and substitutes which were accepted under the UTCCRs.  The CMA has not updated Annex A but has stated that it remains of substantial illustrative value.

Consumer Rights – all change again . . .

In May 2014 we wrote about the new Consumer Contracts Regulations. Consumer law is set for a major change later this year, and all traders dealing with consumers will need to prepare for that.

The Consumer Rights Bill is currently before Parliament. This will implement the EU Consumer Rights Directive and codify consumer law that is currently set out in a number of fragmented (and sometimes inconsistent) pieces of legislation, some of which date back to the 1970s. In particular, it introduces consistent definitions of key concepts (such as who classifies as a ‘trader’ or ‘consumer’), introduces new statutory rights and remedies for consumers, and updates and modernises the law, in particular for the digital economy.

The Bill sets out a series of tiered remedies for the consumer in the event the consumer’s statutory rights are breached. These comprise:

  • A short-term right to reject the goods, lasting 30 days. If the consumer requests that the goods be repaired or replaced (see below), this is extended by the time taken to repair or replace) or 7 days from the date of return (whichever is longer);
  • The consumer may also require the trader to repair or replace the goods at the trader’s cost, and within a reasonable time and without causing significant inconvenience to the consumer (unless this would be impossible, or the costs required would be disproportionate compared to the consumer’s other remedies).
  • If the trader refuses to repair or replace the goods or is unable to do so at the first attempt, or if the consumer cannot enforce this right as it would be impossible or disproportionate, the remedies move on to the next tier;
  • The next tier is a right to an appropriate price reduction (up to the full price paid by the consumer), or a final right to reject. The final right to reject is subject to a right of deduction for use, to take into account the use the consumer has made of the goods since they were delivered.

The Department for Business, Information and Skills (BIS) intends that the Bill will come into force on 1 October 2015 and intends to publish guidance on the Bill in April 2015. This will give businesses six months’ notice to make the changes required to inform consumers of their new rights in relation to faulty goods, services, or digital content.

The primary source of information will be the Trading Standards Institute Business Companion website, which will present general advice and also more detailed advice on the law.

Businesses will need to plan to review and update their terms and conditions for consumers once the Bill is passed and the Guidance issued, and review their sales processes and staff awareness so they are ready for the planned implementation in October 2015.

Contact: Neil Howlett

Copyright for Photographers

Copyright for Photographers

Neil Howlett, Commercial Law Partner at Harris & Harris, gave a talk on 16th January 2015 to the members of Wessex Camera Club on copyright for photographers. This covered what could be protected by copyright, and the practicalities of taking photographs in public places. He also advised them about protecting and exploiting their rights, something which has become much more difficult in the modern world of digital photography and publishing.

As in any other context good evidence and record keeping are the start. People are much better protected if they put in place good legal agreements; model releases, licensing agreements, and contracts when they are commissioned to take photographs. They should define who can do what and be practical. Legal documents can never give 100% protection but without them the position of a rights owner may be worse.

Harris & Harris are happy to help photographers and others in the creative industries with legal agreements.

There is plenty of reliable advice available for free. The Intellectual Property Office (IPO), the Government body responsible for Intellectual Property Rights, publishes useful material written in plain English. Their Copyright Notice 1/2014 “Digital images, photographs and the Internet” explains how to use digital and photographic images on the internet. The IPO also provides online tools including IP Equip training and an IP Health Check, to help you create value from your ideas, turning inspiration into sustainable business success.

Please contact Neil Howlett

Holiday Pay – is it such a big deal?

There has been lots in the press about the Employment Appeal Tribunal (EAT) decision on holiday pay.  The EAT decided that non-guaranteed overtime which the employee is contractually bound to perform if asked must be taken into account.

This is not a great surprise.  It is in accordance with the intention of the original EC Directive that the workers should not suffer any detriment by taking holiday.  Indeed the conclusion of the EAT can be reduced to the very simple proposition – “‘Normal pay’ is that which is normally received.”

This also applies to taxable travel time payments in excess of the actual expenses incurred.  Guaranteed overtime was already to be included.  Overtime which the worker requests but is not contractually obliged to do will not.

This only matters for holiday pay calculated for the 4 weeks holiday which is covered by the Working Time regulations.  The additional 1.6 weeks holiday which makes up the statutory holiday in Britain, or any additional contractual holiday are not covered.

On a procedural point the EAT decided that as claims to the Employment tribunal will be for “unlawful deduction from wages” a claim can only be brought if the employee has taken holiday within the last 3 months, and then only for previous holidays if there has not been a break of more than three months between them.  This limits the extent of claims via the ET.

It is highly unlikely that the EAT’s decision will be the last word on this issue.  Leave to Appeal to the Court of Appeal has been given, and after that there is still the Supreme Court.  The government intervened and sent a QC to argue against the propositions accepted by the EAT.  BIS has already set up a Task Force, containing only employers organisations, to “assess the possible impact”, though a tweet from BIS put the purpose rather differently – “limiting the impact”.

This one will run and run. Expect lots of anti EU rhetoric, and possibly unsolicited calls from claims companies.  If you are an employee who may have lost a substantial amount you should get advice and start a claim within 3 months of your last deduction, but expect that to be stayed until there is a final decision on this case, which could be another year.  If you are employer you may want to calculate the potential value of claims and make provision for them.  Employers may also want to review their contracts to see if they can be changed.

For advice on Employment Law contact:

Neil Howlett

Andy Hambleton

Is a verbal contract worth the paper on which it is written?

We regularly see clients who say “I haven’t got a contract”. What they mean is “I haven’t got a bit of paper”. Under English law almost any contract (except for buying land or a guarantee) can be made by word of mouth (or email). The main difference is that there is much more room for disputing the terms of a contract if it isn’t recorded – that’s more business for lawyers. Even for those areas where writing and signature are required the courts may find those in an exchange of emails.

A contract comes into existence once the parties have agreed the terms. It isn’t necessary for them to have agreed all the terms. The test is objective – the court looks at what the parties have said and whether the essential terms have been agreed. That is now commonly working through a set of emails.

Even for substantial commercial contracts there no requirement for greater formality. It is possible to create a legally binding contract before a document is drawn up and signed by the parties, even where they both expect to move on to that. As one judge put it – “Even if certain terms of economic or other significance have not been finalised, an objective appraisal of their words and conduct may lead to the conclusion that they did not intend agreement of such terms to be a precondition to a concluded and legally binding agreement.”

Even where there is an agreed intention for further condition to be fulfilled or terms to be agreed that may not prevent the contract coming into existence, if a reasonable person experienced in the business sector would think it had. A statement that a ‘formal contract will then follow in due course’ did not necessarily indicate that acceptance of a signed quotation was not legally binding.

If the parties can’t agree such further terms the existing contract is not invalid. If the parties can’t agree the court will, if necessary, enforce terms that are standard in the sector or give business efficacy to the terms agreed. What the court is very unlikely to do is to write in for you the terms that are often the most important, such as limitations on liability or practical protections for your assets and intellectual property.

The lesson is that when negotiating contracts all written communications relating to negotiations and contractual terms should be marked “Subject to Contract” unless and until you are to enter into a binding agreement on the basis of the terms agreed. As you approach that point be ready to instruct a solicitor to prepare a formal contract. Help us do that for you by letting us have clear “Heads of Agreement” setting out the essential commercial terms, and marked “Subject to Contract”. Help us save you money and protect your business.

 

Flexible Working – Does it work?

All employees who have worked for an organisation for more than 26 weeks now have the right to request flexible working arrangements. This includes part-time working, flexitime, job sharing, shift working or homeworking.

This is a much wider right than was available previously. It remains only a right to request and only once every 12 months. The old prescriptive rules on how to deal with such requests are gone; requests have to be considered in a reasonable manner and within a reasonable time. ACAS has produced a Code of Practice and Guidance for employers to help them understand the changes and how to handle requests in a reasonable manner.

Employers can refuse requests if granting the request would have an adverse impact on the business based on one of the business reasons set out in the legislation. These are: the burden of additional costs, an inability to reorganise work amongst existing staff, an inability to recruit additional staff, a detrimental impact on quality, a detrimental impact on performance, detrimental effect on ability to meet customer demand, insufficient work for the periods the employee proposes to work or a planned structural change to your business.

Although this system is fairly simple employers will need to be very careful about the overlap between a request for flexible working and direct or indirect discrimination. An employee seeking flexible working is supposed to specify the change which is being requested, when it is to come into effect, what effect they think the change would have and how they think any such effect might be dealt with. Employers are only required by this new law to consider requests that do that, and to respond to that specific request, but a failure to consider a request that doesn’t meet those criteria or a refusal of one that does may still result in a claim of Discrimination under the Equality Act 2010. Compensation for breach of the Flexible Working Regulations is capped at £4,000; compensation for Discrimination is unlimited. Remember that protected characteristics are wide: race, disability, age, sexual orientation or religion or belief, and part-timers should be treated equally with full timers.

There will also be challenges where several employees request flexible working; ACAS recognises that may require an employer to choose between them, though not many employers are likely to take up the suggestion of drawing names out of a hat! Remember too that health & safety obligations continue for employees who work at home.

Flexible working can work for both employers and employees. Here at Harris & Harris we have many years’ experience of partners and staff at all levels working part-time and job sharing – more than 40% of us work “flexible hours”, including many who by choice work less than 5 days a week. It requires flexibility on both sides, but it enables us to recruit and retain good people so it’s worth the effort.

For advice please contact Neil Howlett or Andy Hambleton.