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Buyer Beware!

By Donal Bannon

Surprising research from the Federation of Small Businesses suggests that 2.8 million small firms have suffered because of unfair contract terms and that 75% of those affected had lost money twice or more in the past three years.

11% of small businesses affected by unfair terms lost £5000 or more dealing with a single problem. 37% lost more than £1000 through an unfair agreement with a supplier.

The research highlighted that suppliers are failing to make auto-rollover clauses clear up front , they are tying businesses into lengthy notice periods as well as charging high early termination fees and are concealing details in small print.

40% of those taking part in the research said they felt powerless to do anything about unfair contract terms because the supplier was too important or powerful to challenge.

National chairman of the FSB, Mike Cherry, said in the press release issued today: “If small firms were better protected when entering a contract with a supplier, they would have more confidence and trust in the market. Suppliers would be more accountable and businesses would spend less time and money dealing with the fallout. Tackling unfair contract terms would lead to a more efficient and competitive economy.”

It is very important for a business to have a solicitor review any agreement or terms of business given to it by a supplier to sign. It is rare for us to review an agreement and find that it cannot be improved upon to protect the buyer.

At the very least unfair terms can be flagged up and buyers can then decide whether they are prepared to take that risk or negotiate amendments.

Fixed fees are charged by us to review commercial agreements and such fees often pay for themselves by improved terms being negotiated with the supplier. Having a solicitor on your side will help level the playing field and secure a better deal.