Corporate & Commercial Law Archives - MLP Law

Legal Considerations for Hospitality Businesses

Following the recent surge in popularity surrounding the song ‘Murder on the Dancefloor’, our team have addressed legal considerations relevant to hospitality businesses. In this article, we discuss licensing, regulations, and health and safety measures, offering insights to ensure compliance.

 

Hospitality venues, especially those that host events, must pay close attention to licensing requirements. Obtaining the appropriate licenses ensures that the establishment is legally permitted to offer live music and dance performances. Failure to secure the necessary licenses can lead to severe consequences, including fines, closure orders, or legal action. Venue owners should familiarise themselves with  licensing regulations. Different jurisdictions may have specific requirements for the type of license needed, the permissible hours for live entertainment, and the maximum occupancy of the venue. Complying with licensing obligations is essential.

 

Beyond licensing, hospitality businesses need to be mindful of various regulations governing public spaces and events. These regulations may cover issues such as crowd control, noise levels, and accessibility for patrons with disabilities. Compliance with these regulations ensures the safety and well-being of patrons. For example, fire safety regulations may dictate the maximum occupancy of a venue, and failure to adhere to these limits can have serious consequences in the event of an emergency. Establishments must also be aware of noise ordinances to prevent disturbances to neighbouring properties and maintain good relations with the community.

 

Creating a safe environment for patrons should be a top priority for hospitality businesses. From the design of the dance floor to emergency exit plans, establishments must take proactive measures to minimise risks and potential legal liabilities. Implementing security measures, such as CCTV cameras and trained staff, helps prevent incidents on the premises. Adequate lighting and clear signage contribute to the overall safety of the venue. Regular inspections of equipment and facilities, including emergency exits, can help identify and address potential hazards. In the event of an accident or injury on the dance floor, comprehensive documentation becomes crucial. Detailed incident reports, witness statements, and a well-maintained record of safety protocols can be valuable in defending against legal claims and demonstrating the venue’s commitment to patron safety.

 

By staying informed and proactive in addressing licensing, regulations, and health and safety concerns, venues can ensure a legal and enjoyable experience. Finding the right balance between entertainment and compliance is the key to avoiding legal pitfalls and maintaining a thriving and lawful establishment.

 

To seek advice, contact our Commercial Team via commercial@mlplaw.co.uk.

 

Case Study: mlplaw Facilitated the Sale of Three Different Insurance Brokers Businesses

mlplaw’s Corporate Team, led by Rachel Owen, had the privilege of representing the selling shareholders in three distinct transactions involving insurance broker businesses. The common thread among these transactions was the sale of shares in each company to the same buyer, Deva Risk Group Limited.  We successfully navigated the intricacies of each deal, ensuring a successful outcome for our clients.

Transaction 1:  Sale of a majority shareholding in Hornby Snape Insurance Services Limited

Acting for the selling shareholders in the sale of shares, we negotiated terms for the shareholders exiting the business including the warranties and limitations of liability provisions for the sellers and terms for future earn-out. In addition, we acted for the shareholder remaining in the business under the direction of the buyer and negotiating terms for his position both as a shareholder and a director.

Transaction 2:  Sale of the entire issued share capital of Much Ado Limited

Acting for the sole shareholder in the sale of the entire issued share capital of the company, being a general insurance broker.  This included negotiating deferred payment terms and security for these, suitable warranties and limitations and tax provisions, together with a new service contract for the seller with the buyer.  This transaction was successfully completed in June 2023.

Transaction 3:  Sale of the entire issued share capital of Gomm (2000) Limited

This transaction went through various reforms before finally being agreed and completed as the sale of the entire issued share capital of the company in September 2023, with the selling shareholder also taking an equity stake in the buyer, adding an additional layer of complication. The target company was again a general insurance brokers.

Collaborating with the brokers (Brokerring Limited) and the buyer’s legal team on each transaction, we ensured compliance with and consent from the FCA and ensured good communication and open negotiation, culminating in successful conclusions for our clients.

mlplaw has acted on numerous other insurance broker transactions in the last 3 years and is currently working one two sales and one acquisition.

From Villa to Viral

In the world of Love Island, where romantic entanglements unfold onscreen, the behind-the-scenes realm of influencer marketing and brand collaborations adds another layer of complexity. Within this article, we explore the dynamics of social media influencers, brand partnerships, and the regulatory landscape.

Defining the Influencer Advertising ‘Couple’: Payment and Control

Influencer marketing hinges on a ‘couple’ dynamic: payment and brand control. For content to be deemed an advertisement and regulated by the Advertising Standards Authority (ASA), both ‘payment’ and ‘control’ must be present.

‘Payment’ encompasses a broad spectrum, including monetary compensation, gifts, experiences, and promises of future payment.

‘Control’ refers to the brand’s influence over the content, including the right to dictate, review, and specify aspects of the influencer’s posts. The Incorporated Society of British Advertisers (ISBA) introduced the Influencer Marketing Code of Conduct in September 2021, establishing standards for compliance among brands, agencies, and influencers. This code serves as a benchmark, ensuring each party takes their regulatory responsibilities seriously.

Just as romantic relationships face scrutiny on Love Island, influencers’ content undergoes examination. Even without brand control, if an influencer is paid, consumer protection legislation enforced by the Competition and Markets Authority (CMA) comes into play. Influencers are required to disclose any form of payment, and the CMA emphasises the need for content to be clearly identifiable as ‘paid-for.’

Breaching the CAP Code: A Love Triangle of Consequences and Resolution

A breach of the CAP Code initiates a ‘love triangle’ involving the ASA, the influencer, and the brand. While informal resolutions are attempted, formal investigations may follow. If a breach is upheld, the content must be altered or removed,  with potential sanctions for non-compliance.

Ownership of Influencer Content: Beyond the Contract

In the influencer relationship with brands, contractual nuances dictate content ownership. Brands often acquire extensive license rights, yet the core ownership remains with the influencer. These contractual narratives unfold with brands granted commercial and non-commercial rights in perpetuity.

The ‘De-Influencer’ Drama: Spreading Love or Negative Vibes?

In light of the cost-of-living crisis and changing consumer behaviour, a new trend is emerging on social media platforms – de-influencing. Brands need to be aware particularly when ‘gifting’ free products and have processes in place to mitigate the significant impact of de-influencing for brands and consumers.

Managing Brand Reputation

Brands approach influencer partnerships with caution, engaging in brand reputation management involving due diligence, agency collaborations, PR strategies, termination rights, and post-termination confidentiality. These measures can help protect them from potential reputational damage.

Conclusion

Finding the right balance between creative collaboration and regulation is crucial. Brands, influencers, and agencies must ensure that the  narratives they create align with industry standards whilst ensuring transparency and authenticity in an era where online influence holds unprecedented power.

If you require assistance with your brand management or collaboration contracts, feel free to contact us at commercial@mlplaw.co.uk or 0161 926 9969.

New Year – New start: Setting up a business in the UK

Living in a post pandemic world, coupled with the effects of recession, appears to have driven many more people to consider the benefits of being their own boss and starting their own business.

Got the idea and motivation to succeed?

Stephen Attree, Managing Partner of MLP, explains the next steps.

Starting a business in the UK can be a challenging but rewarding experience. There are a number of important legal, accounting, and employment law considerations to keep in mind, as well as the process of finding suitable premises.

First and foremost, it is important to choose the right legal structure for your business. The most common options in the UK include sole trader, partnership, limited liability partnership (LLP), and limited company (Ltd). Each structure has its own set of pros and cons, so it is important to consider factors such as personal liability, tax implications, and administrative requirements. A sole trader, for example, has complete control over their business but is personally liable for any debts. A limited company, on the other hand, offers limited liability for the shareholders but requires more paperwork and reporting.

Once you have chosen the legal structure for your business, unless you are setting up as a sole trader you will need to register it with Companies House. This process involves providing information such as the business name, registered office address, and details of the directors and shareholders. It is also necessary to obtain any necessary licenses or permits depending on the nature of your business. For example, if you are planning on selling food or drink, you will need to register with your local council and comply with food safety regulations.

Next, you will need to consider accounting and tax requirements. As a business owner, you will need to keep accurate records of your income and expenses, and file regular tax returns with HM Revenue and Customs (HMRC). It is important to keep up with these obligations to avoid any penalties for late or incorrect filings. You may wish to consult with an accountant to ensure compliance and also to maximise tax efficiency.

Another important aspect to consider is employment law. This includes things like minimum wage regulations, working hours, and holiday entitlements. You will need to ensure that you are providing a safe and healthy working environment for your employees, and that you are adhering to any other relevant laws and regulations. You will also need to keep records of employment contracts and employees’ details for legal compliance.

Finally, one of the most significant and practical aspects of starting a business is finding suitable premises. This can be a challenging task as it involves balancing factors such as location, cost, and size. You will need to consider things like accessibility, parking, and the needs of your business. Some businesses are able to operate from home, but other require a physical shop or office. It’s important to take into consideration all your business need when selecting a location, whether that’s footfall, the cost of the rent or even the need for a specific type of location such as a warehouse, factory or even storage space.

Starting a business in the UK can be a complex and challenging process, but with the right planning and support, it can also be incredibly rewarding. It’s important to consider all legal, accounting, and employment law aspects in addition to finding suitable premises. It’s always a good idea to seek professional advice from lawyers, accountants, and other experts to ensure you are fully compliant with all relevant regulations, and to give your business the best chance of success.

For more information or to request a copy of our guide to starting your business, please get in touch:

commercial@mlplaw.co.uk

Stephen Attree – stephena@mlplaw.co.uk

 

What is the ‘UKCA mark’ and does it affect you?

As of 1st January 2021, the ‘UKCA’ (UK Conformity Assessed) product marking replaced the use of the ‘CE’ marking for products being placed on the market in Great Britain (England, Wales and Scotland).

By way of a recap, these are administrative markings which demonstrates conformity with health, safety, and environmental protection standards for products sold within the relevant territory (the European Economic Area (EEA) in relation to the CE mark, and Great Britain in relation to the UKCA mark).

Note, the UKCA does not apply to goods being sold in Northern Ireland.

UKCA / CE Marking – compliance

The technical requirements which you need to meet for the UKCA marking are largely same as the CE marking requirements. If you have previously needed to use CE marks therefore, we do not anticipate there being significant, if any, change for you in this regard. However, in any event, we recommend that a full review of the new UKCA rules is undertaken in respect of each of your relevant products, to ensure you are fully compliant going forward. 

Below, we have set out the key requirements which you must adhere to, to ensure compliance:

  1. UK Declaration of Conformity

As with products marketed in the EEA, you will also need to prepare a UK Declaration of Conformity in relation to the UKCA marking. As expected, this declaration will be largely the same as what was previously required, and should include details such as:

  • a description of your product, and identification of it (e.g. its serial number);
  • the name and address of the body involved in assessing the conformity of your product (if required); and
  • details the applicable legislation with which your product complies.

2. Using the UKCA marking

Like the CE mark, you must apply the UKCA mark to your products. There are certain requirements you must also adhere to:

  • the letters forming the marking must be of a certain size;
  • the marking must be at least 5mm in height (unless any exemptions apply – please let us know if you would like us to check if this applies to your products under UKCA); and
  • the marking must be visible.

3. Technical documentation

You must keep documentation to demonstrate that your products conform with the UKCA requirements. These records should be kept for at least 10 years after they are placed on the market. Again, please let us know if you would like further advice about your record keeping requirements.

How we can help

To determine whether your products are compliant under the UKCA regulations, a full analysis of your products and the applicable legislation relating to them will need to be undertaken.

If you think you require advice on this and if you would like us to advise on the product marking requirements for any products you sell, please contact our Commercial and IP team on 0161 926 9969 or commercial@mlplaw.co.uk  to receive expert legal advice for your business.

Commercial & IP Team March 2021

MLP Law Ltd.

Families in Business and Family Businesses Post Lockdown – What Now?

Welcome to our series of blogs, addressing post-lockdown issues from a legal perspective. This week we hear from our Family Enterprise specialists in our MLP Law Corporate and Commercial team.

After the turbulence over the past months and some businesses having fared better than others, the next few months and planning the medium to long term is crucial to all business. Particularly so for family businesses, to ensure they maintain balance and harmony within the family group as well as the business. This article considers the key issues family businesses should be considering as we come out of lockdown and progress through the year.

Key considerations:

How does everyone in the family feel, and have their perspectives on medium term goals and ambitions changed? Misaligned expectations are the common cause of disputes and tension, simply assuming people want to get ‘back to normal’ is a mistake. It is important to consider what the new normal looks and feels like for everyone in the family dynamic.

How do the senior management team in the business feel?  (everyone in the business is important, this article is considering the top level, board, shareholding and family aspects of post lockdown planning). What are their plans and have their perspectives and ambitions changed?

What are the short and medium term plans for the family owner managers?  Retirement, a willingness to lighten the grip on the reigns (and who takes hold) or earlier exit from the day to day running of the business are very possible outcomes as people reflect on the last 12 months.

We’ve been helping family enterprises for decades and, in particular over the last few years, helping manage transition within the business as roles and responsibilities shift as time passes. As we all know, your view, priorities and goals now are not necessarily going to be the same in 5 years, 10 years or longer.

Reviewing those changing dynamics now will set the business and family unit in good stead.

In particular, the family enterprise (how the family operates as distinct from the business) needs to consider how the roles in the business, in the family and around ownership and sharing the wealth generated by the business will change now, in 5 years and in the 10 years or more. There are a number of ways to do this successfully. We know that the most successful family enterprises adopt an open collaborative approach to the review, involving as many individuals as possible in the family dynamic. 

A successful review should explore the below, amongst other issues:

A consideration of those that may be looking to retire (and when).

Is the distribution of the wealth being generated in line with the family’s stated values?

Are the values and aims of the family enterprise still relevant or do they need to adapt to the new normal?

What are the likely roles for the younger generation in the business (if any) in the future and is there likely to be an appetite from them to take up these roles?

How will the family support the younger generation / young adults in the family in pursuing their future careers and endeavors?

These challenges and questions are not new, but the challenges thrown up over the last 12 months or so means that it is likely that everyone has or will reflect on and reset their values and goals, consider their futures against their values and seriously consider if what they are doing and going to do, truly aligns with their long-term goals and values.

Facilitating and enabling these discussions early on in an open and honest way with each other – their immediate family and wider family, in any business is crucial now as it has ever been.

We can help businesses and business owners address and facilitate those conversations. In particular:

Are the non-family senior managers in the business fully engaged and being rewarded and valued? If not, how do you address that?

Are there clear succession plans in place?

Is the distribution and share of the wealth generated fair and transparent (salary, dividend income, capital wealth)?

What is the timescale for the next transition of ownership and roles – family and business (whether retirement, through children taking senior roles, or younger generation being introduced into the business) What processes are in place to make that happen successfully?

When was last time the vision of values and any charter or constitution of the family enterprise was reviewed?

We can help with these and many other issues both inside and outside the business.

If you would like any help with the issues raised please contact our expert family business advisers on corporate@mlplaw.co.uk or 0161 926 9969. Click here for more information and to review your business’ vulnerability score.

Data Protection In a Post Lockdown Workplace: Are You Prepared?

As we contemplate a return to the office, we have noticed that a number of clients have not properly aligned their key policies. For example, their Return to Work Policy may provide that temperature checks may be taken to test for Covid-19 symptoms. However, we often find that clients fail to update their Data Protection Policy too, to take into account the increased use of sensitive personal data.

MLP can help you align your policies with each other to avoid any conflicts or non-compliance.

For the past year, remote working has become the norm in an effort to halt the spread of Covid-19. Now that the vaccine roll out is well underway, and cases are dropping significantly, a return to life as we knew it is looking more and more promising. To this effect, many employees will no doubt welcome an increased return to the office on a more regular basis.

Despite the vaccine rollout however, the fight against Covid is far from over.

It is still too early to ascertain just how effective the vaccine actually is. For instance, even though someone gets the vaccine, there is still a chance that they could catch Covid, have no symptoms, and pass it on to someone else.

As an employer, you will be required to implement measures to halt any future outbreaks of Covid among your employees, at least for the time being. This may involve ongoing testing – such as lateral flow tests, temperature checks, and employee declaration forms.

Needless to say, ongoing monitoring such as this brings with it a range of privacy issues, which must be considered.

See below for a few FAQs relating to employee data and your responsibilities.

Please also see our blog by our Employment Team for further information:  https://www.mlplaw.co.uk/coronavirus-and-the-gdpr-2/?sf_paged=2&_sft_category=employment-and-hr

1.If I carry out workplace testing, do I need to consider data protection laws?

Yes. By undertaking testing, you will be collecting and processing data relating to your employees’ health. Under the GDPR, this is considered to be sensitive personal data, which requires additional safeguards. For example, you should implement security measures to ensure that such information cannot be made available to unauthorised individuals.

At the very least, all data must be handled lawfully, fairly, and transparently. We recommend providing any employees who are tested with a privacy statement setting out how their data will be used and how it will be protected. If you are planning to undertake workplace testing, we recommend you update your privacy policy accordingly; please let us know if you would like assistance with this.

You may also want to consider undertaking a Data Protection Impact Assessment, particularly if you have never processed sensitive personal data such as health data before. Again, we can assist with this and advise on the additional steps which you can take to ensure this data is processed in accordance with the GDPR.

2. Am I allowed to ask my employees if they have symptoms?

Yes. The Information Commissioners Office (ICO) has stated that you may ask your employees about symptoms if you have a good reason to do so. However, you should bear in mind the ‘data minimisation’ principle; only collect the minimum amount of information you actually need. Again, consider setting this out clearly in your privacy policies.

3. Can I ask my employees if they have Covid symptoms?

Yes. Under the ICO’s guidance, given the current circumstances, it would be reasonable to ask your employees to let you know if they have symptoms. On a wider note, you should consider the regulatory guidance as issued by the government in relation to your particular sector when deciding whether to ask your employees if they have symptoms. Again, from a data protection point of view, you still need to bear in mind the data minimisation principle – i.e. only collect the minimum amount of data that is needed. For example, only ask your employees to disclose if they have symptoms of Covid, rather than about their health in general.

Conclusion


As it is likely that many of us will be making a more frequent return to the office over the next couple of weeks and months, we recommend that you consider how you will ensure the ongoing protection of your employees. If you are required to monitor your employees through health checks or declaration forms, we strongly advise you update your data protection policies and procedures to ensure full compliance with the GDPR.

How can we help?

If you think you may need assistance with updating your data protection policies, or if you require advice on the nature of data you should (or should not be) collecting from your employees, please contact our Commercial and IP team on 0161 926 9969 or commercial@mlplaw.co.uk  to receive expert legal advice for your business.

Unsolicited marketing: we all moan about it…but is it a case of Pot, Kettle, Black when it comes to your approach to marketing?

Most of us at some stage have expressed frustration about receiving unwanted marketing calls, trying to sell us something we do not need or are remotely interested in. Chances are, many of those organizations are contacting us foul of The Privacy and Electronic Communications (EC Directive) Regulations 2003 (PECR). 

However, is there a chance that your organization’s marketing practices could also put you at risk?

Overview

Although the introduction of the GDPR was arguably one of the most high profile shake-ups of privacy laws in recent years, a perhaps lesser well known, but equally important, set of privacy rules, is PECR. Having been adopted in 2003, PECR came long before the GDPR or the Data Protection Act 2018. The PECR now sits alongside the GDPR and sets out guidelines on unsolicited marketing using electronic communications i.e. by telephone, email, or text. 

It’s important firstly to note the difference between solicited and unsolicited marketing: 

  • Solicited marketing is when your customer has asked you to send them a specific type of marketing information. 
  • Unsolicited marketing is when you send your customer marketing information that they have not specifically asked for. So, even though they may have ‘opted in’ to receive marketing information from you, this simply means that they are not opposed to receiving such information in the future – regardless of the content. 

If you undertake solicited marketing, then the PECR will not apply to you, as it does not restrict this form of marketing. However, if your organization sends unsolicited marketing messages, you will need to ensure you comply with PECR – or risk incurring a hefty fine.

So, can you continue sending your customers unsolicited marketing?

Put simply, under PECR, consent to receiving marketing messages is needed before you send any unsolicited marketing material. 

This consent needs to be given knowingly and freely, and you need to provide information about your organization and the method of marketing you wish to use (e.g. by telephone, email, or text). The customer must take positive action to confirm their consent. This could mean, for example: ticking a box, adding a consent button on your website linking to an ‘opt-in’ page, or completing an online consent form. Whatever method you use will depend on your organization and your usual course of business with your customers – however, as stated above, the main thing to bear in mind is that the consent must be given freely. 

Once consent has been obtained, you should keep a record of which customers gave it, the type of marketing they wish to receive, and how they want to receive it. This is important, as if there are ever any complaints against your organization, you will be able to show that you were compliant and hopefully avoid incurring a fine. 

Finally, you need to remember that customers have the right to withdraw their consent at any time. As such, you need to provide the option for them to do so in all your communications with them. This could be as simple as a statement saying ‘if you wish to no longer receive any marketing from us, please click here’

What will happen if you don’t comply?

Non-compliance with PECR can result in hefty fines of up to £500,000. Sanctions for breaches of PECR are enforced by the Information Commissioners Office (ICO), which can fine you up to £500,000.

The ICO’s powers are wide-ranging, however, and a lot of factors will be taken into account as explained in its current Regulatory Action Policy.  

For example, they will consider factors such as the nature of the breach and how serious it is, the number of people affected, and how much their privacy is invaded. Aggravating factors include your organization’s attitude to non-compliance – have you been intentionally negligent and reckless in their approach to marketing? Equally, the ICO may also take mitigating factors into account, a consider, for example, what steps have you taken to minimize any damage caused by affected individuals. 

Things to consider

If you or your organization sends any form of marketing material out, firstly consider whether it is unsolicited; if so, we recommend you review your current marketing practices to determine if you are PECR compliant and, if not, take immediate steps to ensure you are. 

How we can help

In light of the above, are your current marketing practices compliant under PECR? 

If you think you require advice on this and if you would like us to review your current marketing regime to ensure you are compliant, contact our Commercial and IP team on 0161 926 9969 or commercial@mlplaw.co.uk to receive expert legal advice for your business.

Are your “UK made” products – actually made in the UK, or are you potentially misleading your customers?

To label your products as being made in the UK, you will need to demonstrate that there is either a ‘substantial transformation’ and/or that at least 50% of the manufacturing of / value added to such products is completed in the UK.

Please read through our guide below and let us know if you would like us to advise on the origin / labelling requirements for any products you sell. (NB: Our guidance is based on the law as it applies in the UK. The destination countries of any products you export to are likely to have their own product labelling laws.)

  1. Origin of Goods

There is extensive guidance on both Preferential rules of origin and Non-Preferential rules of origin. In summary however, Preferential origin is used to provide duty benefits through free trade agreements. Non-Preferential origin will apply when countries wish to identify the origin of goods for other reasons, such as for statistical reasons or trade control purposes.

(a) Preferential Origin

To qualify for “Preferential Origin”, at least 50% of a particular product’s value must be added in the country to which it is claimed the product originated from. Therefore, if less than 50% of the value of the products you supply has been added in the UK, they would not qualify for preferential origin. The scope for misinterpretation of these rules is clear and can cause difficulty and it is always better to discuss individual or borderline cases.

(b) Non-Preferential Origin

Non-Preferential rules of origin are decided by each country to which they are being imported to, and are generally based on two criteria:

(i) Wholly obtained: these are products which are obtained entirely in the territory of one country without the addition of any non-originating materials.

(ii) Last substantial transformation: in a case where more than one country was involved in the production of the products, the country where the last ‘substantial transformation’ took place determines the origin of the products. Therefore, if your products are manufactured in the UK, whether they qualify for Non-Preferential Origin or not would depend on the level of manufacturing which took place in the UK before being finalised.

2. Sale of Goods Act 1979

If you unwittingly mislead your customers as to the origin of your products, you risk being in breach of the Sale of Goods Act 1979 (SGA) to the extent that the sale of your products is governed by this act (i.e. if you are selling your products in the UK). You may also be at risk of equivalent laws in your products’ destination country.

Section 13 of the SGA states that if there is a contract for the sale of goods by description, there is an implied condition that the goods will correspond with the description. As such, if a customer makes an order from you on the basis that their product of choice originates in the UK, it would be misleading to provide them with a product which originates elsewhere, as it would not correspond with its description as advertised.

In addition, some customers may be more comfortable with purchasing or leasing products which are UK made due to a perceived standard of quality and regulation. For example, the British Standards Institution (BSI) publishes standards, guidelines and specifications to help companies meet certain technical standards for their products.

How we can help

To determine whether or not your products can/should be labelled as being “made in the UK”, a full analysis of the manufacturing and production processes which take place in the UK will need to be undertaken.

If you think you require advice on this and if you would like us to advise on the origin / labelling requirements for any products you sell, contact our Commercial and IP team on 0161 926 9969 or commercial@mlplaw.co.uk  to receive expert legal advice for your business.

Lessons for business people from the Vaccine supply headlines…

Here at MLP Law, we have been fascinated with the recent supply issues causing headlines across various media. 

In this blog we explore not the human angle (which is self-evident, and better left to others), but the valuable lessons businesses and business people can learn from the approach. Negotiations, supply chain management, supplier relationship management, and the all-important differences between Price and Value. We cannot profess to have been involved in these negotiations though we have had clients involved in a number of supply contracts arising out of procurement through the pandemic.

Too few businesses recognise the value of looking after their supply chain, and too often focus solely on price which means a loss of focus on what actually might be the most important element of a relationship.

Results and time delivery targets or price?

Quality and guaranteed supply or price?

Preferred customer status if there is a shortage of raw material / stock or price?

Good fast cheap – Which two do you want? All three simply isn’t possible or viable.

It seems as a large block purchaser the EU drove a hard bargain on the price they were paying. Good news for the finance / treasury team, but at what cost?

In normal commerce, often risks such as shortage of supply, delays, exchange rate and macro-economic factors aren’t considered enough.  There is a risk that in looking short term at the bottom line a best price is pursued instead of best value.

What does good value look like to you? 

Is that reflected in the commercial terms and documented contractual agreement(s)?

 Whilst lawyers identify risks, great lawyers go further and whilst mitigating risks never lose sight of the fact that, in commercial agreements, a deal is to be done. Not always at any cost, though you should recognise the benefits of the deal to both parties / all parties.

Identify early on the real concerns of each party, what is motivating them to negotiate and enter into this agreement?  Often, mistaken assumptions and misunderstandings can mean the discussions focus on the wrong areas (price – all customers want the best price right?) instead of what really matters –

•             Quality

•             Assured delivery

•             Preferred status in a shortage or if delays hit the sector

•             How Tariffs and additional costs are borne between the parties

 All factors that can be affected, and influenced, with a good supplier relationship management approach.

Undoubtedly, we see a disadvantage in larger, more bureaucratic, organisations where too many people (production, safety, finance governance, board) can stifle innovation and commerciality need to sign off on an agreement leading to delays and ticking boxes.  The organisation may get a good deal technically but at the cost of delays and being slower to market, and slower to respond.

The smaller, more agile company can get things done and agreed a lot quicker. 

If you have any questions or queries in relation to this blog, please do get in touch – by telephone on 0161 926 9969 or by email to stephena@mlplaw.co.uk.  

Brexit and the GDPR: Most UK businesses operating in the EU will now need to appoint an EU representative. Check out our guide below for further information.

Since 1st January 2021, following the end of the Brexit transition period, the EU GDPR no longer has direct effect in the UK. This means that data flows between the UK and the EU member states are no longer permitted, unless appropriate safeguards have been put into place. 

If you only undertake business within the UK, this is not likely to affect you. However, if you also operate in the EU, you may be required under Article 27 of the GDPR to appoint an ‘EU representative’. 

If you do need to appoint an EU representative, they will serve as your business’ contact for data subjects and will act on your behalf regarding your EU GDPR compliance. This representative should be based in one of the states where some of the individuals whose data you are processing are located. You should also provide all the EEA based individuals whose personal data you are processing with details of your chosen representative.  

Criteria

The requirement to appoint a representative will only apply if you process personal data on behalf of individuals living in the EU. Therefore, if you mainly contract with other businesses (and therefore do not process much, if any, personal data), it is unlikely that you will need to appoint a representative.

If you are unsure as to whether you need to appoint a representative or not, we advise undertaking an assessment of your data processing activities in the EU.  Please let us know if you would like assistance with this.

Risk of fines

Finally, it is worth remembering that breaches of the GDPR can be costly. By not appointing a representative when you are required to, you may be liable for a fine of up to €10 million, or 2% of your revenue from the most recent financial year (whichever is higher).

How we can help

Put simply, if you deal with customers in the EU, but do not have an office there, it is likely that you’ll need to appoint an EU representative.

If you think you require advice on this and if you would like to discuss your data processing activities in further detail, contact our Commercial and IP team on 0161 926 9969 or commercial@mlplaw.co.uk  to receive expert legal advice for your business.

Supplier Contract Negotiations

Price variation
I had my own personal experience of price variation early in 2021. I accepted a quote for a small external building job on my house, in January, and subsequently couldn’t get the builder to commit to a date for the job to begin. So by April, I went on to get another quote from another supplier which came back double the price of the first one and then later (but not that much later) I got a third quote which was triple the price of the first one. At this point I reluctantly had to accept that I was unlikely to get the January price again and this was down to the rapidly rising cost of raw materials due to economic uncertainty and lack of availability. Many of my friends had experienced similar situations.
 
Contracts
In the current climate, suppliers may not be able to commit to fixed prices, especially where there are long lead times between customers ordering goods and services and suppliers being able to supply them. They therefore, may insist on including a price variation clause in their contract to enable them to pass on any increases in the cost of supplying the goods and services to customers due to the increased cost of components and raw materials in their supply chain.

If you are a supplier, you would ideally like to pass through any third party price increases in your supply chain and for all price increases to be automatic.

If you are a customer, you would ideally like to be able to terminate the contract where a price increase is unacceptable or at least to know what the maximum price increase possible will be by agreeing a cap or agree to link any price increases to an index. You would like to be able to restrict the amount of opportunities the supplier will have to increase the price for instance to agree that price increases can only take place before the contract delivery date or to agree the intervals at which process increases can occur during the contract term. You would also like to agree that if the cost of supplying raw materials decreases you can apply a price variation in the other direction.
 
Our role
As in all contract negotiations, compromise is the name of the game and our job is to help you get your contract agreed in the best possible terms to protect and support the future growth of your business.

If you have any questions or queries in relation to this blog, please do get in touch – by telephone on 0161 926 9969 or alternatively by emailing Stephen, Karen or our Corporate Team on karend@mlplaw.co.uk or corporate@mlplaw.co.uk