- Review the terms of the contract carefully – are there any rights to terminate early or cancel?
- Payment – protect yourself by securing payment as soon as possible – consider requesting deposits, payment on completion or seeking personal guarantees from a company’s directors.
- Amendments to the contract – in the event that you wish to relax performance terms for the other party, ensure that the amendment is agreed and recorded in writing so that the underlying obligations are not lost altogether.
- Retention of title clauses – where high value goods are being supplied, ensure that a retention of title clause is included and, if customers have solvency problems, that any claims are notified to the relevant insolvency practitioner as soon as possible.
- Insurance – check whether you have any business interruption or credit insurance in place which might protect your business in the event that operations are severely disrupted or you suffer significant bad debts.
- Termination – check that you have suitable legal grounds for terminating an agreement and document the reasons for doing so – if you terminate in circumstances where you are not entitled to do so, that is in itself a breach of contract entitling the other party to terminate and claim damages. If terminating for breach, specify the breach and follow the contractual termination procedure strictly.
- Don’t delay – a termination right can be lost by delay or allowing the contract to continue to be performed. If you do not wish to terminate immediately write to the other party to let them know that you are reserving your rights and explaining why and for how long.
Taking Action – we at Wollens will be happy to advise you on specific contracts and/or to undertake a general review of a range of contracts to help identify those contracts that could potentially be terminated early and without liability by you or the other party.
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