Identifying Potential Buyers or Targets

Once the company is ready to sell its business, the next step is finding the right buyer (or target company if you are the acquirer). This stage involves initial discussions and negotiations, which are often informal. For the seller, it is essential to engage only with serious buyers to avoid wasting time or divulging confidential information.

To protect sensitive data, both parties should sign a Non-Disclosure Agreement (NDA) before any detailed discussions begin. The NDA ensures that any information shared during negotiations remains confidential. If you are the seller, you take this step to protect your business secrets during the process.

Letter of Intent (LOI) or Heads of Terms

Once both parties are on the same page regarding the key points of the deal, they usually sign a Letter of Intent (LOI) or Heads of Terms. This document outlines the principal terms of the deal, such as the purchase price, the payment structure, and the intended timeline.

Typically this document is not legally binding, instead it serves as a roadmap for the transaction. It helps clarify each party’s intentions and provides a foundation for the more detailed agreements that follow. Importantly, the document may include an exclusivity clause, which prevents the seller from negotiating with other buyers for a set period. This gives the buyer confidence to proceed with due diligence.

Due Diligence

Due diligence is one of the most critical stages in any transaction, particularly for the buyer. During this phase, the buyer thoroughly investigates the business to assess its value and identify potential risks. This involves reviewing all legal documents, financial records, contracts, intellectual property, and any ongoing or potential legal issues.

From a legal standpoint, the buyer’s goal is to uncover any hidden liabilities, such as unpaid debts, unresolved litigation, or regulatory violations. On the other hand, the seller must be transparent and provide full access to all requested information. Failing to disclose material facts or providing inaccurate data could prompt the other party to take legal action after completing the deal, such as filing a warranty claim.

During this phase, both parties may renegotiate certain terms based on what they uncover during due diligence. For instance, the buyer may request a price reduction if they discover significant liabilities or ask the seller to include an indemnity in the sale contract to cover a particular issue.

Negotiating the Transaction Agreement

Once the parties complete due diligence, they shift their focus to drafting the final transaction agreement. This is the legal document that will bind both parties to the terms of the deal. There are two primary types of agreements in M&A transactions:

• Share Purchase Agreement (SPA); and 
• Business Purchase Agreement (BPA).

An SPA involves the transfer of the seller’s shares to the buyer, meaning the buyer acquires the shares of the company and, as a result, control over the entire company, including all of its assets and liabilities.

A BPA involves the buyer purchasing specific assets, such as the goodwill, specific property, inventory, or intellectual property. 

The negotiation of the terms within this agreement is critical, as it will define everything from the purchase price to warranties and indemnities. Representations and warranties are key elements here: the seller makes certain guarantees about the state of the business, such as confirming that there are no undisclosed liabilities. The seller may be held liable if these terms are breached after the deal.

Finalising the Transaction

Once all conditions are met, the parties finalise the deal by signing the agreement and completing the transaction. At this point, ownership transfers – either of shares or assets – depending on the deal’s structure.

The buyer pays the agreed purchase price, and the seller hands over control of the business or assets. In a share sale, the buyer takes ownership of the company, including all its assets and liabilities. In an asset sale, the buyer acquires only the agreed-upon assets and any liabilities the parties have agreed to transfer.

Post-Transaction Integration and Compliance

After the deal is complete, the real work begins. The buyer will need to integrate the acquired business into their existing operations, which may involve aligning staff, systems, and business practices. This can be a challenging process, especially when it comes to merging corporate cultures and maintaining employee morale.

Both parties will also need to ensure they comply with any post-closing obligations set out in the transaction agreement. This could include managing employee retention plans, dealing with transitional arrangements, or addressing any final legal matters such as property transfers or tax filings.

Additionally, both the buyer and seller should consult with tax advisors to understand the implications of the deal. In the UK, there are tax consequences to consider, such as Capital Gains Tax or Stamp Duty Land Tax, which could impact the financial outcome of the deal.

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Key Takeaways

M&A transactions in the UK are complex and require careful legal and financial consideration. To protect their interests, the buyer and seller must take care at every step, from the initial preparation phase to post-closing integration. Business owners should engage experienced legal and financial advisors throughout the process to navigate potential risks and secure the best possible outcome for their company.

By following these key legal steps, business owners can approach M&A with confidence, knowing they have the legal framework in place to execute a successful deal.

If you need help navigating the M&A process, our experienced corporate lawyers can assist as part of our Right Law Solicitors membership. For a low monthly fee, you will have unlimited access to solicitors to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.

Frequently Asked Questions

The post Mergers and Acquisitions (M&A) Process: Legal Steps for Business Owners appeared first on Right Law Solicitors Ltd.

Under UK laws, gift cards often occupy a grey area, as they are not explicitly regulated. Practically speaking, you should ensure that you are including essential terms around refunds on the physical or virtual gift card. 

1. Clear Terms and Conditions

You must provide clear and transparent terms and conditions for your gift cards. This includes information about:

• expiry dates; 
• usage restrictions; 
• refund policies; and 
• any fees associated with the card. 

Failure to provide clear terms could lead to disputes and potential legal issues under UK consumer protection laws. Key considerations include transparent communication of terms and proper handling of online sales, which are subject to a 14-day cooling-off period. By ensuring transparency in your gift card policies, you can avoid regulatory scrutiny and maintain customer trust.

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2. Online and Distance Selling Considerations

Under UK distance selling regulations, consumers who purchase gift cards online or over the phone are entitled to a 14-day cooling-off period. This period begins the day after the gift card is received. It is really important to mention this in your terms and conditions. Otherwise, the 14-day cooling-off period could be extended under UK consumer laws.

The cooling-off period does not apply if the gift card has been used, even partially. You must clearly communicate this in your terms and conditions. It is crucial to note that the cooling-off period only applies to the purchaser of the gift card, not the recipient. Once the gift card has been given to the intended recipient, the original purchaser’s right to cancel typically expires.

In any event, it is crucial that you specify any terms and conditions attached to the gift card. Refunds and policies around this must be stated very clearly to avoid any ambiguity or future dispute.

3. Expiry Dates

While it is legal to set expiry dates on gift cards, you must clearly communicate these to consumers. The expiry date should be prominently displayed on the card and in the terms and conditions. Unlike some other countries, the UK does not have a law specifying minimum validity periods for gift cards. Generally, market standard timeframes are 12-24 months or longer, but this is not a legal requirement. 

4. Other Considerations 

Some further considerations are outlined below: 

• Changes to Terms: You cannot unilaterally change the terms of a gift card after purchase, as under consumer laws, a unilateral change of your terms is likely to be considered unfair. Any changes must be communicated clearly to consumers and should not significantly alter the value or usability of the card.
• Faulty Cards: If a gift card is faulty, you must offer a refund or replacement under UK consumer rights legislation.
• Company Insolvency: If your company goes into administration, gift card holders become unsecured creditors. While not legally required, many administrators try to honour gift cards to maintain goodwill. You should have contingency plans in place for this scenario.

Specific Refund Scenarios

• Unwanted Gift Cards: UK law does not require businesses to offer refunds for unwanted gift cards. However, some companies choose to do so as a gesture of goodwill. If offering this service, you should clearly outline the process and any associated fees.
• Partially Used Cards: There is no legal obligation to refund the remaining balance on a partially used gift card. However, you may consider allowing consumers to use remaining balances on future purchases to maintain customer satisfaction.
• Expired Cards: Once a gift card has expired, you are not legally required to honour it or provide a refund. However, you choose to extend expiry dates or allow grace periods as a customer service measure.
• Lost or Stolen Cards: Businesses typically treat gift cards like cash. This means you would not be responsible for lost or stolen cards. However, if a card is registered and can be proven lost or stolen, you may choose to replace it as a goodwill gesture.

Key Takeaways

When offering gift cards, make sure your terms and conditions are clear and transparent to comply with UK consumer protection laws. Be specific about expiry dates, refund policies and any fees. If you sell gift cards online or over the phone, remember that consumers have a 14-day cooling-off period for unused cards, which you must clearly state. The right to cancel usually ends once the gift card is passed to the recipient. While you are not legally required to refund partially used or expired cards, offering replacements or grace periods can help maintain customer goodwill.

If your business supplies gift cards, our experienced contract lawyers can assist you as part of our Right Law Solicitors membership. For a low monthly fee, you will have unlimited access to solicitors to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.

Frequently Asked Questions

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Dilution of Control

Issuing shares means giving away a portion of the business’s ownership. For small businesses, especially those led by a few founders, this can result in a loss of control. As new shareholders come on board, the influence of existing shareholders may decrease, potentially leading to them no longer having the majority vote on key decisions.

Loss of control can complicate major decisions like mergers or acquisitions. Minority shareholders can legally challenge significant business moves, leading to disputes or legal action.

Increased Legal and Regulatory Burden

Once shares are issued, businesses must comply with strict legal and regulatory requirements. These can include rules related to financial reporting, shareholder meetings, and corporate governance under the Companies Act 2006.

Keeping records of shareholder meetings, filing financial statements with Companies House, and getting shareholder approval for major decisions like issuing new shares or changing the company’s structure. Legal risks of failure to comply can include:

• penalties, such as fines or being struck off the company register; and
• invalid decisions and disputes over legal actions.

Risk of Shareholder Disputes

The more shareholders you have, the higher the risk of disagreements. This is especially true when the interests of minority shareholders conflict with those of the majority. Common causes include:

• disagreements over company direction;
• profit allocation; and
• disputes over major business decisions.

However, minority shareholders are protected in certain circumstances under the Companies Act 2006 and can file claims if they feel their rights are being ignored. This may lead to court orders forcing the company to buy back shares. Moreover, disputes can be costly, time-consuming, and damage the business’s reputation.

Increased Liability for Directors

Issuing shares increases the responsibility of directors to act in the best interest of the company and its shareholders. As the shareholder base grows, directors will face more scrutiny. Directors’ duties consist of the following:

• avoid conflicts of interest;
• ensure decisions are made in the company’s best interest, not their own; and
• comply with company rules, such as those outlined in the articles of association.

Directors may face personal liability if they breach fiduciary duties, meaning they could be sued or removed from their position. If directors fail to act in good faith, they could be held responsible for losses caused by their actions.

Restrictions on Future Fundraising

Existing shareholders often have the right to buy new shares before outside investors. If a business issues shares without offering them to existing shareholders, it could result in legal disputes and the issue of shares being deemed to be invalid and unwound.

If shareholders feel their ownership is being diluted unfairly, they can take legal action. Disputes over the valuation of shares may arise, causing delays or complications in future fundraising efforts.

Key Takeaways

Issuing share capital may be a helpful way for businesses to raise funds, but it’s essential to be aware of the legal risks and challenges involved. From dilution of control to shareholder disputes and regulatory burdens, businesses must carefully consider the legal implications before issuing shares, such as ordinary shares and preference shares. Seeking professional legal advice and drafting an explicit shareholder agreement can help businesses navigate these challenges and ensure compliance.

However, directors face increased responsibility, and failing to manage conflicts of interest could lead to personal liability. Moreover, existing shareholders have legal rights that may complicate future capital raises. If you have any questions regarding share capital, our experienced startup lawyers can assist as part of our Right Law Solicitors membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.

Frequently Asked Questions

How can I protect my business from losing control when issuing shares?

In the case of a limited company, one option is to issue different classes of shares, which can grant different voting rights. This can allow key founders or shareholders to retain control over significant business decisions.

What legal protections do minority shareholders have?

Minority shareholders are protected under the Companies Act 2006, which allows them to challenge decisions they believe are unfair or prejudicial to their interests. They can also ask the company to buy back their shares in certain cases.

What are pre-emption rights?

Pre-emption rights allow existing shareholders to buy new shares before they are offered to outside investors, thus protecting their percentage of ownership. These rights can prevent dilution without their consent.

The post Disadvantages Of Share Capital: Legal Implications For Businesses appeared first on Right Law Solicitors Ltd.

What is a Witness Statement?

A witness statement is a written document used in court proceedings, such as in the commercial court. It describes a witness’ account relating to the dispute and the facts as they believe them to be true. A witness may have to attend the trial to give their evidence, and if so, the other party’s legal representative may cross-examine them. 

What Are the Legal Requirements for Witness Statements?  

You must follow the legal requirements associated with witness statements. Not only are these significant as they are a legal requirement, but also because there are consequences for failing to follow these. Below, we list some of the legal requirements related to witness statements. If asked to write a witness statement, it is wise to get legal assistance from a litigation solicitor. 

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Writing a Witness Statement

When writing a witness statement, you can use a template provided by the court. The witness statement must comply with Part 32 of the Civil Procedure Rules and Practice Direction 32. This includes the format of the witness statements and what is required within it. If you do not follow this, the court may not allow you to include the witness statement or claim costs for preparing it. When writing a witness statement:

• try to write the facts chronologically;
• ensure it is written in your own words;
• ensure you understand it; 
• it must factually contain what you believe are the facts;
• where referring to documents, put these in an exhibit in chronological order and ensure each page is numbered; and 
• it can be signed electronically. 

Statement of Truth

A legal requirement for witness statements is to verify them with a statement of truth. Otherwise, you may be unable to use the witness statement at the court trial. Rules relating to statements of truth can be found in Part 22 of the Civil Procedure Rules. A statement of truth shows that you honestly believe your witness statement is true and accurate. 

Exchanging Witness Statements

When you are a party to court proceedings, you must file your evidence with the court. This, therefore, includes any witness statements. The court often asks you and the other party to also exchange your witness statements. This is useful for you as you can see your opponents’ evidence, and it could reveal mistakes that you can deal with before the court trial. This can be done through a supplemental witness statement. 

Consequences Relating to Witness Statements

There are consequences relating to the legal requirements of witness statements. Therefore, it is essential to get your statements right. For example, if you make a statement of truth or false evidence or allow our legal representative to do so on your behalf, this is contempt of court, which is a serious offence.

Key Takeaways

A witness statement is a written piece of evidence that relays a witness’s version of facts. These are significant to a court case as they can support and dispute a party’s argument. Also, witnesses can be cross-examined on these. You must comply with the legal rules relating to witness statements. Not doing so can have consequences, such as the witness statement not being used as evidence and even contempt for court proceedings. Rules relating to witness statements include, for example, that a statement of truth must accompany them and that you may need to exchange witness statements with the other party. There are also rules related to writing your witness statements, such as that they must be written in your own words. Rules related to witness statements can be found in Part 33 Civil Procedure Rules and Practice Direction 33. 

If you need to prepare a witness statement, our experienced disputes and litigation lawyers can assist as part of our Right Law Solicitors membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. So call us today on 0808 196 8584 or visit our membership page.

Frequently Asked Questions 

The post Witness Statements: Legal Requirements and Significance  appeared first on Right Law Solicitors Ltd.

When Might I Have the Right to Make a Negligence Claim?

As a business owner, you may have a right to sue a business by making a negligence claim. This may occur if you suffered personal or financial loss as a result of a professional conducting business with you. You may claim this because they have not acted with an adequate duty of care when they should have done so. The level of duty of care is what a reasonable professional in their profession would have done. 

There are many types of businesses where a professional duty of care arises, including, for example, the legal industry, the finance sector, and the property industry. Businesses that you may be able to sue with a negligence claim include:

• chartered accountants;
• barristers;
• notaries;
• architects;
• planning consultants;
• insurance providers; and 
• tax advisers.

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How Do I Make a Negligence Claim?  

If you think you may have a claim for negligence in your commercial dispute, you must get legal advice from a lawyer. They can guide you through the process and advise you on whether to make a negligence claim. 

Pre-Action Protocol for Professional Negligence 

The first step before a professional negligence claim is to establish if the Pre-Action Protocol for Professional Negligence (professional negligence PAP) applies to your commercial dispute. This is legal guidance for you to follow before making a negligence claim. Like other pre-action protocols for commercial litigation, it encourages you and the other party to take an alternative route to resolving the dispute rather than curt litigation. This PAP applies to, for example:

• legal professionals;
• accountants;
• financial advisers; and
• auditors.

Some areas of commercial disputes where you may have a negligence claim have their own types of PAPs to follow.

Making a Legal Claim

If you do go down the route of a claim to the court for negligence, there are steps you will need to follow. Despite following the procedure, you should note that alternative dispute resolution (ADR) can be considered at any stage in a professional negligence claim. If this is suggested, it is essential to comply where it is reasonable, or you could incur court costs. ADR can include:

• mediation;
• arbitration;
• adjudication; and
• early neutral evaluation.

The first step in a negligence claim is to write a Preliminary Notice, which lets parties to the claim know about our claim. This gives a brief outline of the details of the potential negligence claim, such as the parties involved. A Letter of Acknowledgment should be sent to you by the professional once you send them the Preliminary Notice.

The second step of a negligence claim is to write a Letter of Claim. This means you are sure you have grounds for a professional negligence claim. It tells the party you wish to claim professional negligence against that you intend to do so. It is essential that this is written correctly, or it could affect your claim. 

Key Takeaways

As a business owner, you may experience professional negligence and want to make a negligence claim. Professional negligence is when a professional in a field of business does not meet the duty of care that a reasonable person in that profession would exercise. If you wish to make a negligence claim in a commercial dispute, you must follow a pre-action protocol, such as the one specifically for negligence claims. If you go on to make a litigation claim for professional negligence, there is a set procedure to follow that starts with writing a preliminary notice. Parties can follow an alternative dispute resolution (ADR) process at any stage during the process, which you should follow where it is reasonable to do so. 

If you need help understanding negligence claims in commercial disputes and the legal rights and responsibilities in the UK, our experienced disputes and litigation lawyers can assist as part of our Right Law Solicitors membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. So call us today on 0808 196 8584 or visit our membership page.

Frequently Asked Questions

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What are Heads of Terms?

Heads of terms are a written outline of the main points of a deal, agreed on by the parties involved. They are usually not legally binding (except for certain clauses, like confidentiality), but they show that both sides are serious about moving forward with the deal.

The main purpose of heads of terms is to:

• confirm the main terms of the transaction;
• set a timeline for the deal;
• outline the steps each party needs to take before finalising the agreement; and
• identify any conditions that must be met for the deal to go through.

Key Elements to Include

When drafting heads of terms, it is important to focus on the big-picture points, not the fine details. Here are some important elements to include:

1. Transaction Structure and Timeline: What exactly is being bought or sold? When do key steps need to happen?
2. Price and Payment Terms: How much is the deal worth, and when will payments be made?
3. Conditions and Approvals: Are there any approvals needed (e.g., from regulators or boards)?
4. Exclusivity and Confidentiality: Will the parties agree not to negotiate with others for a period? Is there any sensitive information that needs protection?
5. Governing Law: Which country’s laws will govern the deal?
6. Key Milestones: Are there any key performance indicators (KPIs) or other major milestones to hit?

The goal is to set out the key points of the deal without focusing on small details, write the heads of terms clearly, but keep them flexible rather than rigid.

Clarity is Crucial

Vague language can lead to misunderstandings later. It is vital to use language that is specific, clear and unambiguous as to the areas of agreement between the parties. The language should clearly show what each party intends. It should leave no room for interpretation or ambiguity.

Where some key details remain undecided, the heads of terms should clearly explain how the parties will agree on those details in the future.

Planning for What Comes Next

Heads of terms should outline what happens next in the deal process, including:

• who will draft the final agreement;
• timelines for further negotiations or due diligence;
• whether there will be an exclusivity period; and 
• how costs will be handled if the deal falls through.

Clear next steps help keep everyone aligned and ensure that both parties know what to expect.

How to End the Process

Include provisions for how the heads of terms can be ended, such as:

• what happens if the deal falls through;
• whether there will be any “break fees” (compensation for time or money already invested); and
• what happens to shared confidential information.

Legal and Professional Review

Even if the heads of terms are not legally binding, it is still a good idea to have a lawyer review them. A lawyer can catch potential issues, ensure binding clauses are enforceable, and advise on any legal or regulatory concerns.

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Key Takeaways

Negotiating heads of terms is a crucial first step in any business deal. By clearly outlining the main points, preparing well, and negotiating strategically, you can set the stage for a successful transaction. While the process might seem complex, taking the time to get it right at this stage can save you from major headaches later on.

By following these tips and seeking advice when necessary, business owners can confidently navigate the heads of terms process and create a strong foundation for a successful deal.

If you need help drafting heads of terms, our experienced contract lawyers can assist as part of our Right Law Solicitors membership. For a low monthly fee, you will have unlimited access to solicitors to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.

Frequently Asked Questions

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Requirements for Franchisors

1. Disclosure Requirements

While the UK does not mandate disclosure prior to entry into a franchise, the British Franchise Association (BFA) encourages ethical behaviour from franchisors, such as providing accurate information to potential franchisees. This includes upfront costs, such as initial investment, as well as ongoing fees like royalties. Most importantly, a franchisee will be eager to learn about return on investment, which should come with an appropriate disclaimer. 

2. IP Protection

Protecting intellectual property is crucial for maintaining quality across the franchise network. For a touchless car wash, this can be done by being prescriptive on all signage and/or by providing requirements for the fit-out of premises. This ensures consistency in client experience and is an essential element of all franchises. It is also important for franchisors to register their trade marks to protect their brands before starting to franchise branches, and to clearly define how franchisees may use these on-site and virtually. 

3. Key Documents

Two documents form the basis of a franchise relationship and should set out the rights and responsibilities of each party:

• Franchise Agreement: This dictates the main terms of the operation, such as territory rights, fee payment, training obligations and termination. It is legally binding and can save the franchisor important legal fees and time when dealing with quality control and compliance with business practices. 
• Operations Manual: This sets out the day-to-day operations and should discuss equipment maintenance, customer service standards, marketing conditions and reporting requirements. This is usually enforced by reference to it in the Franchise Agreement.

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Leasing Concerns and Environmental Considerations

1. Choosing Premises & Leasing Arrangements

Selecting the right premises is crucial for a business like a touchless car wash, where the customer experience takes place on-site. Franchisees can be given criteria for the selection of their location and may be told how to carry out the initial fit-out.

2. Environmental Compliance

A car wash will also encounter more unique problems that are in line with local environmental laws and guidelines. For example, there may be limits on water usage at the premises. Moreover, franchisees should ensure they are using energy-efficient equipment, which might be a requirement of the lease. Lastly, looking into waste management and noise pollution can help avoid running into issues with surrounding businesses or residential buildings..

Managing Risk and Liability Without Staff On-Site

1. Monitoring from a Distance

A touchless car wash distinguishes itself from other businesses by being unmanned. While this saves costs in terms of workforce and is often a better return on investment, it can also lead to safety issues for clients. This is why it is essential to ensure there are proper monitoring solutions in place, such as CCTV coverage, which can have a preventive effect.

Real-time alerts can also be very useful and help franchisees stay aware of emergencies. Overall, any monitoring solution should take into account customer privacy, which is in line with data protection regulations such as the GDPR. 

2. Maintenance Requirements

Franchisees should adopt a proactive approach to maintenance to minimise downtime and liability risks. Having regular inspections and rapid response protocols can avoid damage, loss or even injuries. Always maintaining detailed documentation can also prevent legal issues in case of disputes.

3. Insurance and Liability Waivers

To mitigate risks associated with operating an unmanned car wash, franchisors should require franchisees to maintain comprehensive insurance coverage. Additionally, clear signage displaying terms and conditions of use, including liability waivers, should be prominently displayed at each location. 

Key Takeaways

Franchising a touchless car wash business presents unique legal challenges and opportunities. The strategies that can ensure you are complying with your legal obligations include setting up the franchise correctly, having the right criteria for your premises and managing the risks of an unmanned business. As the industry continues to expand, those who prioritise legal compliance and risk management will be best equipped to navigate the complexities of franchise operations and achieve sustainable growth.

If you are starting a touchless car wash, our experienced franchise lawyers can assist you as part of our Right Law Solicitors membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.

Frequently Asked Questions

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What is a Negotiated Agreement?

A negotiated agreement or settlement is an agreement reached by two parties in a commercial dispute. It can occur when the two parties choose negotiation as their alternative dispute resolution method, and this process results in a settlement on how to move forward. 

Negotiations are generally non-binding on the parties. This encourages open communication in the room, so parties can speak freely without fear of being legally bound by their words. However, if you reach a compromise and choose to document it in a settlement agreement, like any valid contract, it will be legally binding. 

What is the Best Alternative to a Negotiated Agreement?

The best alternative to a negotiated agreement (BATNA) is the fallback position of a party to a commercial dispute. Each party to a commercial disagreement decides what their BATNA is, which will be their next best available option to the one they wish for. They may settle for this when they cannot resolve the commercial dispute with their desired outcome. A BATNA for a commercial dispute will, of course, depend on the exact commercial dispute in question. It will also depend on what type of result the parties to the business dispute are looking for. 

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Mediation

Mediation is another form of alternative dispute resolution (ADR) for a commercial dispute. Like negotiation for a negotiated agreement, if successful, it will result in an agreement like a settlement. It also involves confidential negotiations. Again, this is a voluntary process, but the difference is that a third party is present to help facilitate an agreement that the parties make together. Usually, both businesses will choose a mediator and share the costs of this. 

Additionally, mediation allows both parties to understand each other’s views. It usually begins with a joint meeting where the mediator explains the mediation process. However, it differs from negotiation as there is no independent third party present. In mediation, the parties have an opportunity to speak with the mediator alone and freely express any concerns they have that they do not want to share with the other side. All parties will then come together, and a mediator will help facilitate discussion. 

Like negotiation, mediation can be a successful form of ADR and has similar advantages in that it:

• can be speedier the court litigation;
• is usually less stressful than court action;
• usually costs less than commercial litigation; and 
• can address issues, and reach outcomes that the court may not be able to deal with. For instance, mediation might involve an apology by one party and can allow for future business relations.

Key Takeaways

If you are in a commercial dispute with another business, it is important for your company that you resolve it. One form of alternative dispute resolution (ADR) is negotiation. If successful, it will result in a negotiation agreement or settlement. Negotiation is the most informal type of ADR. While your communications with the party in a negotiation are not legally binding, you might decide to enter into a binding settlement agreement.

An alternative to negotiations is to hold a mediation. With an independent mediator, you can discuss your goals and concerns and enter into a binding settlement agreement with the other party. 

If you need help with a business dispute, our experienced disputes and litigation lawyers can assist as part of our Right Law Solicitors membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today on 0808 196 8584 or visit our membership page.

Frequently Asked Questions

The post What is the Best Alternative to a Negotiated Agreement?  appeared first on Right Law Solicitors Ltd.

Ensuring Compliance with Industry Regulations 

Subject to substantial regulation surrounding clinical trials, quality control and manufacturing, it is crucial that your employment agreements provide you with greater flexibility to ensure your workforce is compliant and fit for purpose. This can be achieved by incorporating the following clauses: 

1. compliance training; 
2. reporting obligations;
3. continuous technical and professional learning; and
4. required professional and educational certificates necessary to perform the job.  

It is essential to understand the specific needs and regulations of your industry in order to determine the capacity requirements of your workforce. You should incorporate these regulations into your employment contracts. 

Ensuring Compliance with Data Privacy 

Given the extensive amount of personal data employers within the pharmaceutical industry and medical technology industry control and process, your employment contracts should therefore include strict requirements around:

1. compliance with data protection legislation; and
2. compliance with policies and procedures for handling data and associated security measures. 

2025 Key UK Employment Law Changes Factsheet

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Intellectual Property 

The products you manufacture, as well as your inventions and formulas, are all valuable assets that must be protected. Incorporating robust intellectual property clauses that not only cover employees but also contractors, consultants, and other workers will ensure your intellectual property is carefully protected and broadly enforceable. 

A carefully drafted intellectual property clause serves to clearly identify who owns newly created intellectual property, as well as that created before the employment relationship began. As such, having a carefully drafted intellectual property clause within your employment agreements is essential to reduce the risk of potential costly litigation. 

Confidentiality and Disclosure 

Confidentiality and non-disclosure clauses should be carefully incorporated into your employment agreements to prevent company information from leaking. This clause can protect data relating to:

• clinical trials; 
• patients; 
• research and development; 
• project proposals; and 
• other proprietary information. 

In particular, restrictions should be extended beyond the employment relationship in order to protect post-termination disclosure of confidential information, which could ultimately lead to significant disruption or loss of a first-mover and competitive advantage in the marketplace. 

Post-Termination Clauses 

At the core of your business’ success will be your talented workforce and, ultimately, your customers and clients. Ensuring these assets are protected can be achieved through carefully drafted non-solicitation clauses. 

Additionally, you may wish to consider restricting members of your workforce from entering into direct competition with your business through non-compete clauses. 

Key Takeaways 

Drafting effective employment agreements involves bespoke tailoring to suit your business needs. A carefully drafted employment agreement will ensure your business is: 

1. compliant with industry regulation; 
2. compliant with data privacy requirements;
3. protected against disclosure of confidential information; 
4. protected against poaching and direct competition from current and former members of your workforce; and
5. competitive within the industry. 

If your pharma or medtech business needs help with hiring employees, our experienced employment lawyers can assist as part of our Right Law Solicitors membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. So call us today on 0808 196 8584 or visit our membership page.

Frequently Asked Questions

The post Tailoring Employment Agreements for Pharma and Medtech Industries appeared first on Right Law Solicitors Ltd.

Contractual and Statutory Obligations 

Reviewing the employee’s contract of employment, applicable policies and associated agreements carefully should be the starting point for navigating employee termination. These crucial documents outline the contractual rights and obligations that fall on you and will dictate:

• termination provisions;
• notice periods;
• severance requirements; 
• disciplinary and grievance procedures; and
• post-termination rights and obligations such as non-compete and non-solicitation clauses.

Beyond contractual obligations, you should be aware of statutory obligations such as: 

• ensuring any accrued but untaken holiday is paid on termination of employment;
• outstanding statutory sick pay and leave entitlements;
• redundancy pay;
• unfair dismissal; and
• discrimination. 

Careful planning and liaising with your accountant or accounts department to ensure accurate payments are issued on termination of employment is critical. You will also need to ensure you follow a fair procedure in accordance with your internal company procedures, law and ACAS guidelines. 

Reducing the Risk of Potential Litigation 

Where an employment relationship has continued for 2 years or more, failure to follow a fair procedure and provide a statutory fair reason for dismissal could result in a finding of unfair dismissal. It is therefore important to set out clear reasons for termination in writing and ensure your reason falls within one of the following five statutory fair reasons:

• capability and qualifications; 
• conduct;
• statutory illegality;
• redundancy; and  
• some other substantial reason. 

Whether a decision to dismiss an employee on the above-mentioned grounds is a question that an employment tribunal will consider, given the resources and evidence available to an employer. As such, the ultimate test is whether the decision is within the range of reasonable responses.

New Employee or Recent Hire

The above considerations mainly apply to employees with two years or more of continuous service. However, just because an employee has less than two years of continuous service does not mean there are no legal risks. You could still be subject to the following claims:  

• discrimination;
• wrongful dismissal; and 
• breach of contract. 

As such, assessing your reason for termination in both contexts and ensuring you follow a fair procedure is crucial to protecting your interests and reducing the level of disruption to your business. 

Consider Post-Termination Rights and Obligations

To minimise potential disruption to your clients, ongoing projects, and your existing workforce, reminding terminated members of their contractual obligations that persist beyond the employment relationship is crucial. 

Carefully review your existing employment agreements to determine whether you are protected by the following restrictive ‘covenants’ or clauses:

• non-compete;
• non-solicitation; 
• non-poaching; and
• confidentiality. 

As a consulting firm, whose business and bottom line heavily depend on reputation, referrals and repeat business, the highlighted restrictive clauses can be particularly useful towards ensuring your valuable contacts, clients and employees are protected. Likewise, ensuring you have a robust confidentiality provision ensures the protection of sensitive company data.

Key Takeaways

Navigating employee termination as a consulting firm requires careful planning in order to reduce the risk of potential litigation and reputational damage. To reduce risk ensure you: 

1. carefully consider the applicable contractual and statutory obligations; 
2. follow a fair procedure; and 
3. consider protecting your interests post-termination. 

If your consulting firm is terminating employees, our experienced employment lawyers can assist as part of our Right Law Solicitors membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. So call us today on 0808 196 8584 or visit our membership page.

Frequently Asked Questions 

The post Navigating Employee Termination for Consulting Firms appeared first on Right Law Solicitors Ltd.