Archive for the ‘Business Law’ Category

TRADE MARK UK

Monday, April 16th, 2012

UK Trade mark procedure: from application to registration

The first stage is to complete and file the application form and pay the applicable fee. The fee varies depending on the amount of classes under which protection is sought.

Once the application is filed, the mark will then be put before an Examiner who will then assess the mark against the criteria for registration. The Examiner does not, at this stage, assess whether the mark complies with the relative grounds (previously this was the case).

If the mark is accepted by the Examiner as meeting the relevant requirements, the mark will then be put forward to the Publication stage. The Publication stage generally lasts for a period of two months. The purpose of the Publication stage is to allow other earlier rights holders the opportunity to assess whether the mark conflicts with their mark in terms of the absolute grounds. If the wish to challenge the mark then the earlier rights holder may file an opposition.

If after the end of the Publication period there are no outstanding oppositions under the mark, the Registry will put the mark through to Registration, at which point, the mark will be registered and a Trade Mark Certificate issued.

The mark will last for 10 years and can be renewed for an unlimited number of further 10 year periods.

There are many potential pitfalls to an application such as the absolute and relative grounds for refusal. Care should be taken before filing you mark(s) and a trade mark search is advisable.

NO TRACKBACKS  ANY TRACKBACKS WILL BE IMMEDIATELY DELETED AND MARKED AS SPAM

Business Bankruptcy

Tuesday, February 15th, 2011

According to experts, 50% of businesses fail in their first year and only 20% survive past the four year mark.

It is a sad fact of life that so many businesses never really make it off the ground. And for new business owners, particularly sole traders, who invested substantially to make their idea work, choosing the path of bankruptcy is an all too real option.

Business bankruptcy or IVA?
In the case of sole traders, the business they own is intrinsically linked to them as an individual, so they are liable for all debts should the company fail. For individual bankruptcy, an Individual Voluntary Agreement (IVA) may be best step forward to getting back on your feet, and there are equivalent schemes for businesses.

Business bankruptcy legal advice
Bankruptcy should always be a last resort, and it’s highly recommended you consult a commercial bankruptcy lawyer for advice before going ahead with anything. In order to be declared bankrupt you need to go to court and convince a judge that given your financial situation bankruptcy is the best course of action. Bankruptcy can last for up to 5 years, but is usually set at 12 months by the court.

Going bankrupt
When you are declared bankrupt everything you own is sold to pay off your debts. For the duration of the bankruptcy your finances are controlled by a court officer called the Official Receiver. All of your income will be paid into your bankruptcy although you will be given a small allowance to cover your living expenses. Once the period set by the court has passed, you will be discharged from bankruptcy and whatever is left of your debt will be written off.
There are also quite a few penalties and restrictions imposed on individuals in bankruptcy. For example, you cannot:

  • Take any part in the promotion, formation or management of a limited company (LTD) without the permission of the court.
  • Trade in any business under any other name unless you inform all persons concerned of the bankruptcy.
  • Practice as a Charted Accountant / Lawyer.
  • Act as a Justice of the peace (JP).
  • Become a member of parliament.
  • Become a member of a local authority.
  • Obtain credit for over £250 without the permission from the lender.
  • Act as a company director.

In addition:

  • You may be publicly examined in court.
  • You lose control of your assets.
  • Your credit rating will be affected for many years after the annulment.

NO TRACKBACKS  ANY TRACKBACKS WILL BE IMMEDIATELY DELETED AND MARKED AS SPAM

    What is insolvency?

    Tuesday, February 15th, 2011

    Despite the UK’s economic fortunes improving somewhat of late, hundreds of businesses are still falling into insolvency every month.

    According to credit firm Experian’s Insolvency Index, a total of 1,491 firms became insolvent in May 2010.

    Under UK business law, insolvency is defined in the Insolvency Act 1986 Section 123:

    123. Definition of inability to pay debts (i.e. insolvent)

      1. A company is deemed unable to pay its debts – […]
    1. (e) If it is proved to the satisfaction of the court that the company is unable to pay its debts as they fall due. (Known as cash flow insolvency.)

    2. A company is also deemed unable to pay its debts if it is proved to the satisfaction of the court that the value of the company’s assets is less than the amount of its liabilities, taking into account its contingent and prospective liabilities. (Known as balance sheet insolvency.)

    Liquidation
    If your business becomes insolvent it may be put into liquidation. This is where the assets and property of the business are redistributed to satisfy all claims of your creditors.

    The liquidation process can be instigated by the directors and shareholders of the insolvent business but the process will only be legally effective if there is a convening of a meeting of creditors where they can appoint a liquidator of their choice – known as creditors voluntary liquidation (CVL).

    Alternatively, a creditor can petition the court for a winding-up order which can place the insolvent business into a compulsory liquidation.

    Generally, the priority of claims on the insolvent company’s assets will be determined in the following order:

    1. Firstly, the costs of the liquidation are met out of the company’s remaining assets
    2. Secondly, the preferential creditors under applicable law are paid
    3. Thirdly, in many legal systems, the claims of the holders of a floating charge will be paid; other claims may also fit into this layer
    4. Fourthly, if there is anything left, the unsecured creditors are paid out proportionally in accordance with their claims. In many jurisdictions, a portion of the assets which would otherwise be caught by a floating charge are reserved for the unsecured creditors.
    5. In the very rare instances where the unsecured creditors are repaid in full, any surplus assets are distributed between the members in accordance with their entitlements.

    There are two insolvency procedures available to companies; these are Administration or a Company Voluntary Arrangement.

    Administration
    Administration is a procedure designed to avoid, or at least delay, liquidation. Businesses in Administration appoint an Administrator, who must be a licensed Insolvency Practitioner, to manage the company’s affairs and protect the interests of creditors while restructuring the company so that it can continue as a going concern.

    One particular type of Administration is pre pack administration. This is where the Administrator immediately completes a pre-arranged sale of the business, often to its directors or owners, to enable a best price to be achieved and thus maximise the price of assets for the business’ creditors.

    Company Voluntary Arrangement (CVA)
    A CVA is a legal agreement between an insolvent business and its creditors where a fixed amount lower than the outstanding actual debt is paid to creditors. These payments are usually made on a monthly basis and remaining debts are written-off at the end of the agreed terms. The CVA is managed by a Supervisor who must be a licensed Insolvency Practitioner. If the CVA fails, the insolvent business is usually put into liquidation.

    NO TRACKBACKS  ANY TRACKBACKS WILL BE IMMEDIATELY DELETED AND MARKED AS SPAM

    Commercial Property

    Wednesday, January 5th, 2011

    If you run a new business and have outgrown running operations from your bedroom then you will inevitably be looking for a commercial property to base your company in.

    Before you contact a commercial property agent you will need to decide whether you want to buy a property or lease one. Whichever is right for you will depend on how you see your business growing and changing in the future.

    If you envisage rapid expansion then leasing would represent a more flexible option than buying. As your space needs increase you won’t have to go through the hassle of selling your original premises.
    Obviously, although buying will not afford you as much flexibility when changing properties, it will generally allow you more freedom of action as an owner rather than a tenant.

    If you want to make changes to the property, you will not have to waste time and money obtaining the landlord’s approval and you will not have to get involved in negotiations with rent and lease reviews.

    There are many factors outside of your own business that could have a bearing on your decision to lease or buy – fluctuations in the property market for example. If you anticipate rental rates to go up rapidly it may be unwise to lease.

    If you own the building this will obviously represent a significant asset, which allows you to borrow against it and lease out it to other businesses. You would benefit from any future appreciation and not have to worry about increasing occupation costs.

    Getting a mortgage for a commercial property
    For small businesses, the most common form of finance for purchasing a commercial property is a commercial mortgage.

    These are offered by a variety of lenders, including High Street banks, and the terms and costs can vary. You can compare and arrange deals by yourself or employ a specialist commercial mortgage broker.

    You will need to pay quite a hefty deposit, as a commercial mortgage is likely to cover around 70% to 75% of the value of the property. Remember to factor in additional costs you will have to meet such as interest payments, conveyancing and capital repayments as well as broker fees if you use one.

    NO TRACKBACKS  ANY TRACKBACKS WILL BE IMMEDIATELY DELETED AND MARKED AS SPAM

    Starting a new business?

    Wednesday, December 15th, 2010

    To lay the foundations for a successful business it is important to give due thought and consideration to the legal decisions you make when starting a business. Read further for legal advice on all the business law issues that arise when setting up a new business.

    Establishing a structure for your business
    Sole trader, partnership or limited company?
    Under business law, one of the first things you need to do when establishing your own company is to decide the on the structure of the business.

    There are essentially 3 structures to choose from and each has its own advantages and disadvantages.
    They are:

    • sole trader
    • a partnership with one or more people
    • a limited company

    Sole Trader
    This is the simplest form of business model. There are no legal formalities required to set yourself up in business as your own boss. The downside is that you also carry the can if things go wrong. You are personally liable for all the debts of the business, and creditors could look to your house, car, savings etc. to settle any money owed to them. You do not have to produce audited accounts, but you will need to keep records for the taxman. If you do set up in business on your own in this way you should advise your tax office, as you will now be taxed as a self-employed person.

    In Partnership
    If you set up your business with one or more people, then you will be in partnership, whether or not you actually get anything down on paper – even if the partners are other members of your family. Your partnership will be governed by the Partnership Act 1896 but generally this is not what you want or need. Anybody working together in partnership (including families) should get a Partnership Deed drawn up by a solicitor, which covers how the partnership will work on a day-to-day basis, how it can develop and how it can be ended. Generally each of the partners is personally responsible for all the businesses liabilities, whether they knew about them or not. Therefore choose your partners carefully. Partners remain self-employed and only need to prepare accounts for tax purposes (although we’d recommend you prepare them properly anyway).

    Limited Company
    This is the most formal way to run a business, but it has the added advantage of limiting your liability to the amount of share capital you have invested in the business. Note that banks and others will therefore ask you for personal guarantees for loans etc. The disadvantages are that there is a cost involved in setting up a company – you can buy one off-the-shelf for as little as £125 and that you have to comply with Companies Act legislation – accounts, records and returns at Companies House. As a Director you are no longer self-employed, but employed by the company, so you are likely to have to deal with National Insurance and PAYE Income Tax matters.

    Registering your company name
    Business names no longer need to be registered with any Government Department. They are now governed by the Business Names Act 1985. You’ll find an excellent guide to the Act on the Companies House website. You will need to display your trading name in accordance with the Act at your place of business, and on stationery and invoices etc.

    Basically, when starting a business, you need to check, as best you can, that the name you choose to trade under is not the same or similar to any other business, particularly in your locality. If it is then you may find yourself being sued for “passing-off” i.e. trading on the back of someone else’s reputation, or even in breach of a trademark

    If you set up a limited company then you will only be able to register a name which is not already on the register. You can search the Companies House Register online here.

    Trading Laws
    If you are going to be supplying goods and services to the public then you are going to need to know about certain bits of consumer legislation – such as the Sale of Goods Act (they must correspond with their description, be of satisfactory quality and be fit for the purpose) and the Trade Descriptions Act.

    Terms of Trading
    If you are going to be dealing with the public and other businesses then you need to get your Terms of Business sorted out. These deal with your contractual relationship with your customers and suppliers. They should cover such items as estimates for work, payment terms, transfer of title to goods, failure to perform contractual duties etc. The terms on which you trade should be as beneficial as possible to you (without putting your client or supplier off), and are unique to you and your business. It is worth getting them professionally drafted by a commercial solicitor.

    NO TRACKBACKS  ANY TRACKBACKS WILL BE IMMEDIATELY DELETED AND MARKED AS SPAM

    Payments into the court

    Saturday, July 24th, 2010

    Circumstances when the court may order a payment into court:

    When the court has ordered security for costs to be paid;
    As a condition of granting some relief;
    As a sanction for a party failing to comply with a rule, practice direction or court order; and
    When the court deems that an interim payment should be made towards a claim.

    Payment into court of security for costs
    Payment into court is one means of providing security for costs when that has been ordered by a court.

    Payment into court as a condition
    An order for payment into court as a condition is common when applications for summary judgment or strike out are dismissed but the court still has doubts about the respondent’s position. The court, after hearing the application, accepts that it is arguable that the claim or defence may succeed but considers that it is improbable that it will do so.

    The respondent will be ordered to make a payment into court as a condition of being granted relief from the strike out or summary judgment order sought.

    Payment into court as a sanction
    The court has power to order sanctions for non-compliance with court orders, rules and practice directions.

    Interim payments
    An interim payment is a payment on account of any damages, debt or other sum which a defendant may be held liable to pay to or for the benefit of a claimant. The court may only make an order for an interim payment where certain conditions are satisfied.

    NO TRACKBACKS  ANY TRACKBACKS WILL BE IMMEDIATELY DELETED AND MARKED AS SPAM

    Responsibilities of Landlords and Tenants

    Saturday, July 24th, 2010

    When acquire a commercial leasehold property, a legally binding contract known as a lease with the owner of the commercial property will be entered into.

    The parties under commercial lease law are referred to as the landlord and the tenant. The lease lays down the responsibilities and obligations of both parties and these are known as covenants.

    Common tenant covenants include paying service charge, keeping the interior of the property in good repair and not altering the structure. Common landlord covenants include insuring the property and affording the tenant quiet enjoyment of the property without interruption.

    It is important for both parties to read the lease with extreme care because once it is signed the respective parties are bound under commercial lease law by all the clauses.

    When taking on a commercial property lease it is important to understand the responsibilities for the repair and maintenance of the building that is being rented.

    Tenants are typically responsible for internal repairs and maintenance. In some cases however they will also be responsible for external maintenance. This is more likely if there is a sole occupant of a building.

    In multi-occupancy premises the landlord is more likely to carry out external repairs and maintain common parts. Ultimately, however, the division of maintenance responsibilities will be determined by what’s agreed in the lease. As a result it is important to check a lease carefully before it is signed.

    It is particularly important, before signing a lease to check what the liability is with regard to repairs needing to be done.

    Dilapidations
    When signing a lease it is important to be clear on the repairs the landlord may require a tenant to pay for at the end of the agreement. This is known as dilapidations. This can often be a problem area.

    For example a tenant may be responsible for reinstating the premises to its original condition. As a result it is important to get professional help from a chartered surveyor, who will record the state of the premises when the lease was taken on to prevent the landlord from making unjustified demands later on.

    NO TRACKBACKS  ANY TRACKBACKS WILL BE IMMEDIATELY DELETED AND MARKED AS SPAM

    Business Partnership Dissolution

    Saturday, July 24th, 2010

    Dissolution of a partnership occurs on the following events:

    Notice (PA 1890 S26 & S32) – Notice can be given by any partner to the others. No reason need be given and the notice can have immediate effect, in fact it does not neccessarily have to even be in writing. Of course any well written partnership agreement will have a clause that supersedes these sections.

    Expiry of a Fixed Term (PA 1890 S27 & S32) – Where the partners have agreed a fixed term to carry on as a partnership then on expiry of this term the partnership will be dissolved unless their agreement provides for it’s continuation (S32). If however the partners carry on after the expiry of the fixed term then they will be deemed to be carrying on business as before however the business will now be a partnership at will (S27).

    Charging Order over Partner’s Assets (PA 1890 S33) – Where a creditor obtains judgement over a partner he may use S23 to enforce the judgement. Basically S23 allows the creditor to place a charge over partnership assets, the creditor cannot make a direct claim over any of the partnership assets. At this stage the other partners are entitled to pay off the creditor and look to the partner for the money otherwise the creditor may obtain an order from the court for the sale of the partner’s share in the assets. Of course such a sale will be most disatisfactory to the other partners as a third party may end up owning a part of a partnership asset as such the other partners have the right to give notice to dissolve the partnership.

    Death of Bankruptcy (PA 1890 S33) – Death or bankruptcy will automatically terminate the partnership so that the PR’s of the deceased can collect for the estate the amount to which the former partner was entitled.

    Illegality (PA 1890 S34) – Where it is or it becomes illegal to carry on the business of the partnership then the partnership will dissolve.

    Court Order for Dissolution (PA 1890 S35) – The court can order dissolution of a partnership on various grounds including where it is ‘just and equitable’ to do so.

    NO TRACKBACKS  ANY TRACKBACKS WILL BE IMMEDIATELY DELETED AND MARKED AS SPAM

    Legal fees when buying a business

    Saturday, July 24th, 2010

    We are often asked to give a quote for the buying and selling of a business, sometimes its an Internet business, often its a more traditonal business.

    Firstly it will come as no surprise to know that it can be very expensive. So do shop around. We can offer fixed fees but these fees do have a habit of fast becoming fluid. This is largely due to the nature of the transaction and the approach taken by the parties.

    Here is a common example.
    You agree a fixed fee for your sale of your business. Your affairs are all in order (or so you think) you do not envisage any problems. Unfortunatley the buyer will look at it differently.

    If you are unable to produce contract x or policy y, if your accounts are weak or there are holes in your loan accounts then this will inevitable lead to the buyer seeking to reduce the price. This will lead to delays and stress and possibly heartache.

    So do try and get your house in order as soon as you can. The Due Diligence is crucial and can be very painful. What you think the sale price is and what is agreed in the Heads of Terms may well be different in three months time. So this is why a fixed fee is often difficult to pin down.

    We do offer fixed fees but very rarely do they come in at the fixed fee. Its akin to a builder. He gives you a fixed fee and you pay a deposit. Unfortunately you find out when he is digging, problems with the foundations, the fixed fee then goes out of the window. Our advice is to agree a fixed fee. However build in a ceiling that fees will not exceed xx that way this gives you some protection in the event that problems do arise.

    NO TRACKBACKS  ANY TRACKBACKS WILL BE IMMEDIATELY DELETED AND MARKED AS SPAM

    Subleasing Commercial Property

    Saturday, February 13th, 2010

    If you are leasing a commercial property, and you find that you cannot get out of the lease then it may be possible for you to sub-lease the property.

    Most leases of commercial buildings give the tenant the right to sublet.
    Subletting means that the tenant grants a new lease (the Sub Lease or Underlease) out of the existing lease (the Head Lease).

    A Sub Lease cannot be granted for a term that exceeds the term of the Head Lease. Subject to this point, whether or not a sub lease can be granted depends on the terms in the Head Lease, and where the Head Lease is silent on the point then there is no restriction on the grant of a Sub Lease. More often though the Head Lease will permit a Sub Lease to be granted subject to it complying with certain conditions laid out – and subject to the landlords consent.

    Usually the easiest way of granting a Sub Lease will be to grant a lease by reference to the Head Lease – i.e. a lease in which you set out the rent and term but otherwise import into it all the same terms as are in the Head Lease. This should pass on to the sub tenant all the responsibilities of the tenant – though of course it does not relieve the tenant of those liabilities to the landlord – a direct contract remains between the Head Landlord and the Head Tenant.

    In the grant of a Sub Lease it means that there are generally two documents required:

    1. the Sub Lease itself; and
    2. the Licence to Sublet – this is granted by the landlord

    The same conditions regarding registration requirements and SDLT apply to a Sub Lease as they do to a Lease.

    NO TRACKBACKS  ANY TRACKBACKS WILL BE IMMEDIATELY DELETED AND MARKED AS SPAM