Business Toolbox: Legal

Business toolbox: Legal tips for electrical contractors

Knowing where you stand legally is incredibly important for small businesses – so we’ve put your legal questions to our experts!

Our Legal expert:

Sha Hotchin, Special Counsel at Longton Legal

Q: What steps should we take to protect our business against potential liability claims or disputes with clients?

Sha Hotchin, Special Counsel at Longton Legal, says:

Protecting your business against potential liability claims or disputes with clients is crucial for long-term success and stability. Implementing a proactive approach to risk management can help safeguard your business and maintain positive client relationships. Here are essential steps to consider:

Clear contracts and agreements

Draft comprehensive contracts that clearly outline the scope of work, deliverables, timelines, and payment terms. Ensure that both parties fully understand and agree to the terms before starting any project.

Regular communication

Maintain open and transparent communication with clients throughout the project. Address concerns promptly, provide progress updates, and manage expectations to minimise misunderstandings.

Document everything

Thorough records of all interactions, communications, and project milestones can serve as crucial evidence in the case of a dispute and help demonstrate your commitment to fulfilling contractual obligations.

Insurance coverage

Invest in appropriate business insurance, such as professional liability insurance, to mitigate financial risks associated with potential claims. Understand the coverage limits and conditions to ensure comprehensive protection.

Compliance with laws and regulations

Stay informed about relevant laws and industry regulations to ensure your business operates within legal boundaries. Compliance reduces the likelihood of facing legal issues.

Alternative dispute resolution

Include clauses in contracts that stipulate the use of alternative dispute resolution methods, such as mediation or arbitration, to resolve conflicts more efficiently and cost-effectively than traditional litigation.

Customer satisfaction

Prioritise customer satisfaction by delivering high-quality products or services. Satisfied clients are less likely to pursue legal action, and positive reviews can enhance your business’s reputation.

Legal consultation

Consult with legal professionals to review contracts, assess potential risks, and obtain guidance on best practices for risk management in your specific industry.

By proactively addressing potential liability issues, maintaining clear communication, and being vigilant about legal compliance, your business can significantly reduce the risk of disputes with clients and protect its long-term success.

* Please remember, this advice does not take into account your personal or business circumstances, is general in nature, and is provided for information purposes only. Please seek professional legal advice that’s tailored to your circumstances if you need it.

Our Legal expert:

Carol Grimshaw, Principal Lawyer at Grimshaw Legal

Q: A customer is refusing to pay their invoice. What should I do?

Carol Grimshaw, Principal Lawyer at Grimshaw Legal, says:

Communicate: Call your customer, noting payment must have slipped their mind at this time of year and ask for their credit card. If they refuse…

Negotiate: A payment plan for some regular money is better than none. It’s also better than paying more money for debt collection. If your customer breaks the agreement by not paying…

Write a letter of demand: Tell your customer, “The next step is legal.” You don’t want to but they’re leaving you with little option. The courts may read this letter, so be professional. If the demand fails…

Manage risk: There are several basic steps a lawyer takes before writing court documents. So, a lawyer’s fees are worth the cost to get the next steps right.

Legal change: The law changes regularly. Your lawyer will know the changes applicable to your business and how to maximise your outcome, including highlighting any ongoing risks you have with customer engagement.

Note: By 31 January 2024, small businesses will be legally required to obey privacy laws and the recently amplified unfair contracts rules. In a dispute, your compliance with those rules can frame how you get paid (or not). Best to get ahead of it now.

* Please remember, this advice does not take into account your personal or business circumstances, is general in nature, and is provided for information purposes only. Please seek professional legal advice that’s tailored to your circumstances if you need it.