FAQs

The short answer: very. These are contractual provisions that you want to govern the relationship between your company and its customers. Often, different provisions will apply to individual customers (business to consumer or “B2C”) as opposed to business customers (business to business or “B2B”). Most businesses nowadays have terms of use for their websites, and on those sites there may also be a link to the terms and conditions which will apply when a customer, individual or business, buys products and services from your business.

Terms and conditions are therefore very important: you will want to use them to protect your business as much as possible, whilst being open and clear with your customers as to what their rights are. Laws like the Consumer Rights Act 2015 will regulate what you can and can’t say to consumers, and what promises as to quality, refunds and so on you need to give them. You can impose stricter terms and conditions on businesses you sell to because businesses are expected to be able to protect themselves to a greater degree than ordinary consumers.

It is a binding document designed to regulate the relationship between the shareholders of a company. If you are a shareholder in a company and you either already have other shareholders or you want to bring some on, potentially as directors as well, then a shareholder agreement can be very useful.

It sets out the rights and obligations of each shareholder to the other(s), can define roles and responsibilities and can set out a framework for what should happen if things go wrong, or someone wants to sell their shares or even the whole company. Yes, the articles of association may regulate some of that relationship, as may the Companies Act 2006, but you might want to make things more detailed and also you might want to keep some things off a public register (unlike articles, which are a publicly-viewable document).

As a sole trader, your business is just you, even if you trade under a business name that gives the impression of a larger concern. If you are a sole trader, when things go wrong, or you need to borrow money, or your business is sued, you are potentially on the hook for the whole of your personal assets.

When you set up a company, you create another legal entity (like another legal “person”) that can enter into contracts, borrow money and be sued, all in the company name. Setting up a company gives you limited liability, and can offer you a degree of protection for your personal assets. A corporate structure can also be beneficial for tax planning purposes.