Avoiding Legal Pitfalls

Owning a business can be very stressful at times and mistakes can be expensive.

Following, are some of the common issues, together with the regulations and responsibilities which go with them.

Partnerships

A partnership is legally classed as two or more parties involved in one venture. There does not have to be a formal partnership deed in existence and if there isn't, then the terms of the Partnership Act (1890) will apply. However, it is preferable for a formal deed to be drawn up, which properly reflects the wishes of all parties. In particular, what will happen if one partner wishes to leave or indeed, dies? Can the business continue or must it be sold? Our primary advice is to be always clear about what you are entering into and how it affects you. Always employ a solicitor to draw up the deed.

You can have a limited liability agreement, which ensures debts are kept central to the business so your own private possessions are not put at risk. Above all, choose a partner very carefully. It is true what people say, - 'there are no friends in business'.

Contracts

Contracts of one form or another govern most commercial relationships. They are the foundations of the business and it is essential, therefore, that they are drawn up correctly, taking professional advice where appropriate.

Broadly there are four key elements to a contract, which you need to fully understand.

• Consideration - an action, product or service which will be provided in return for something of value, usually, but not always, money.
• Certainty - the contract must be certain and clearly state what is expected of all parties.
• Legal Purpose - all parties must genuinely intend to enter into a legally binding agreement for a legal purpose.
• Terms - the contract must offer and be accepted on the same terms for all parties.

You should ensure proper legal advice is obtained before drawing up or entering in to a contract you do not fully understand. Contract law can be complex, particularly in retail situations - it is false economy not to take professional advice from the outset.

Employment Law and General Legal Requirements

You must ensure as a business owner you are fully aware of every area of employment law - employee conditions, work permits and visas, discrimination, unfair dismissal, breach of contract and sexual harassment to name just a few. These are complex areas so it is always sensible to be aware of the law and the changes that occur from time to time. It is always wise to seek professional advice.

Health & Safety

There are strict health and safety regulations in place to protect not just employees but employers also.

The penalties for non-compliance are often very high. Civil law suits brought by employees in this area can prove costly to employers. You should ensure you have adequate insurance cover including:

• Professional indemnity cover which will provide you with sufficient financial assurance to cover any claims arising from dispensing errors.
• Product liability cover which will cover claims which arise relating to products sold by you.
• Public liability cover, which will ensure you are fully covered for all members of the public while they are on your premises should any accidents occur.

Data Protection

The Data Protection Act is a relatively new piece of legislation, which protects the rights of consumers. You should be aware that it affects everyone, including pharmacists who generate and store records of consumer details. Therefore, pharmacists should ensure they know whether or not they need to register their business under this legislation. The process is cheap and simple but the lessons of non-compliance can be very costly.

Property Leases

Property leases have always been a complicated area especially in terms of business premises. It is important to make sure you fully understand all the terms and conditions and how these affect you and your business in every way.

There are some particularly common issues to look out for, such as:

• who is liable for repairs and maintenance?
• who is liable if the business remains at the same address but is sold on to another party?
• what is the 'get-out' period and how can you 'get-out' of the lease easily without incurring huge costs or losing money?

To avoid all legal pitfalls it is wise to always read the small print, understand its implications and never sign any legally binding documents until you are 100 per cent sure of the implications. Do seek legal clarification at every opportunity and always be fully sure before committing yourself.