Posted On / 15.10.2021

Avoiding common business law mistakes

It is vital that businesses obtain correct and pragmatic legal advice. From contracts to business structures, Solicitor Remziye Aldogan explains how to avoid common business law mistakes and how Battens can help:

Why is it important for a business to ensure their contracts are properly drafted?

It is important for a business to ensure their contracts are properly drafted in the interests of clarity, ease of compliance, to add business value and to minimise the risk of a dispute arising in the future. 

What issues do companies face if they're not compliant with employment laws?

There are numerous employment laws that businesses have to comply with and, in the event of non-compliance, businesses are likely to have increased grievances and disciplinary issues to deal with. This will mean increased management time and cost. In addition businesses will be at risk of facing claims in a court or employment tribunal if they are not complying with their obligations under employment law. Claims can be costly to deal with and it would be prudent for businesses to ensure that they comply with employment legislation, have properly drafted employment contracts and implement appropriate policies and procedures. Non-compliance is likely to have an impact on a business’s employer’s liability insurance as well as negative publicity on social media.

What are the consequences of choosing the wrong business structure and how can a solicitor advise on the right one?

The appropriate structure for any business can be driven by tax efficiency, personal liability of the business owners, the relationship between the parties and the level of administrative or filing requirements. Under a wrong business structure a business owner may be at greater risk of personal liability for the debts of the business. This is a risk that can be avoided with advice from a solicitor on the most appropriate business vehicle, ideally with input from accountants on tax efficiency.  

With Brexit, is GDPR still relevant for British businesses? How can businesses make sure they're fully compliant with data protection laws and what happens if they're not?

GDPR is still relevant for British businesses, as it is effectively enacted under UK statute. Businesses should ensure that they are fully compliant with data protection laws. A solicitor can advise on the business’s practices and the type of data controlled and/or processed, whether in relation to their employees or their clients or customers.

The Information Commissioner’s Office (ICO) website https://ico.org.uk has useful information about data protection matters for individuals and businesses however sometimes there is a need for specialist legal advice as there are various complex obligations imposed by data protection laws. The consequences of non-compliance with data protection laws depend on the type of GDPR breach, but can vary from being ordered to correct a breach to having to pay a hefty fine or pay compensation to a data subject.

What are some of the other common legal mistakes businesses often make?

We regularly see business partners neglecting to put in place appropriate agreements such as a partnership agreement or in the case of shareholders, a shareholders agreement. It is usual for people to form an entity/organisation based on trust, but it is a good idea to discuss and agree terms about what happens in the event one party wishes to leave the business, or in the event of a disagreement. If the relationship between the parties turns acrimonious later on it can be costly and time consuming for all involved to come to a resolution. It is also quite common for companies to miss deadlines when complying with Companies House filing requirements, which can leave them at risk of being issued with a penalty or a fine. Companies that fail to file their annual accounts may see their credit score impacted as lenders may assess the accounts of the company to determine a loan or debenture application.

For more information contact Remziye Aldogan on 01935 846164 or email remziye.aldogan@battens.co.uk