What happens when you don’t have that legal document
I was recently interviewed on a common complaint of business owners: ‘If I only I’d known before…’ It’s a good feeling seeing clients who are glad they had the necessary documentation in place before a major business transaction.
What have you heard a new client say about wishing they’d had certain information before?
One of the areas that pops up for me time and time again is the PPSA. It is usually businesses that have lost goods to a customer who has gone into liquidation, because they failed to register correctly or at all on the PPSR. I often hear people saying they wished they’d paid more attention to our newsletters or come to our information sessions on this topic.
Where is it useful in business to have legal information before making a transaction/decision?
Buying or selling a business. This is because there are sometimes lots of parts to this type of transaction. For example, finance (where is this coming from, such as bank or vendor finance), assignment of the premises lease (the landlord needs to be on board), and warranties about aspects of the business such as the financial position, liabilities, environmental concerns, or employee issues. We provide our clients with a ‘selling/buying a business checklist’ free of charge which gives them some things to consider before they enter into a sale contract.
What types of advice can lawyers help businesses with at the set-up stage (whether for a new business or new project/transaction)?
There are a number of things that a start-up will need to do to get a business up and running. Often the to-do list can be overwhelming. In my experience, putting together a list of things to be done and the order of priority can be really helpful for a start-up and their budgeting. For example a list might include: setting up the entity structure (company, trust etc), renting premises (reviewing a lease), shareholder’s agreement, and website terms and conditions. We can help put these into an order of priority list and then work through that list within the client’s budget.
What are some of the pitfalls of running blind? What are specific cases/examples where this occurred?
The old saying of ‘spend a little at the front, save a lot at the back’ rings true in the business world. I have seen many situations where a supplier of goods on credit has not had proper terms of trade in place (relying on the handshake deal) and has not been paid, with no recourse to repossess unpaid goods. Another example is entering in a lease without having read through the fine print. The rental may be attractive but there may be some very adverse clauses tucked away in the lease and once that document is signed the tenant is locked in. Ignorance is no defence to the law.