So there is a downturn in the economy. I’m sure you have already noticed one thing: it isn’t affecting every business the same way. Some businesses are on the increase as people change their habits: for example, I hear on the grapevine that there are a lot of men learning to cook: Alison Holst cook book sales are probably booming.
In my line of business it’s a bit different too. People are focussing on protecting what they have. This is a time to have your terms of trade nice and tidy. It’s also a time to brush up your risk management skills: checking all your trading contracts, having a plan B for everything and a worst case scenario in case all else fails.
What will you do if a key supplier fails and you are left with customers wanting warranty service? Are you liable? (That might well depend on whether the product is a consumer product and whether or not you have contracted out of the Consumer Guarantees Act in your terms of trade).
Do you know how to protect your rights in products you have sold but have not yet been paid for? Do your terms of trade give you a security interest and have a repossession clause? Do you know that that will not mean a lot unless you have registered your security interest over the correct customer on the Personal Property Securities Register? Read all about it on www.ppsr.govt.nz — but make sure your contracts will do the job first.
I’ve noticed three trends: First, people are taking the opportunity during the slowdown to invest in staff training: Commerce Act, Fair Trading Act and in particular the Consumer Guarantees Act. They are finding that consumers are getting more demanding. There is also an increase in people wanting “remedies” that they don’t actually have a right to. It pays to know how far you have to go.
Secondly, people are taking more trouble over their own terms of trade. If your terms of trade are not tied down correctly, you could be in real trouble. A client brought in the terms of trade from one of his trade suppliers last week – he had been considering copying them. But they were so careful to avoid misleading domestic customers about rights under the Consumer Guarantees Act, that they completely failed to limit the supplier’s liability to business customers. Sigh. Moral: don’t even think of pinching someone elses’ terms of trade: you never know where they’ve been.
And thirdly, people are taking extra care over their contracts with their suppliers. The other side of this trend is that I’ve also seen a lot of contracts (particularly from overseas suppliers) where the 2009 version is rather more – shall we say – harsh? than earlier versions. “Trust no-one” seems to be the motto.
Do get your trading contracts checked by a lawyer. Get an estimate of costs. It might well be a lot less than you think.
Consider the estimate against how much you would be in for if any one contract went bad on you. And do it. I’ve seen some extraordinary stuff out there. It’s a tough old world and you need all the armour plating you can get. You be careful out there!
Rae Nield is a solicitor specialising in marketing law. This article is intended for general information, and should not be relied on as specific legal advice. You should consult a lawyer for advice relating to your own specific legal problems. Rae Nield can be contacted at firstname.lastname@example.org.