ContractStore Legal Business Blog

Very many businesses have no proper system for ordering goods and services so we have come up with a set of forms to remedy the problem.

This is to ensure help you keep a proper record of all your orders. This can be useful in many ways, especially to ensure that the key terms are complied with by your supplier.

The order form is prepared with a space for signature by both purchaser and supplier, so you should, ideally, issue two signed copies, one for each signatory.

There are four forms in the new collection:

• Purchase Order for Goods
• Purchase Order for Services
• Acceptance of Order for Goods
• Acceptance of Order for Services.

You can also download the full set and save about 50% of the price - click here.

Like all our documents they are in Word format so you can edit directly before use.

These are a key set of basic documents that are great to have especially if you are starting up.

If you have had a problem with purchase orders or similar agreements we’d like to hear about it.

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The Government’s assault on small business has had a slight reprieve with the latest change of mind concerning capital gains tax. Last autumn, the Chancellor announced the ending of the 10% rate for businesses and the introduction of a new, flat rate of 18%. Since, ostensibly, the change was intended to do something about the massive gains of private equity firms and the people most hit would be owners of small and medium businesses, there was a fully justified outcry.

The latest position – which still has to be confirmed in the Budget next month – now seems to be:

• A flat rate of 18% will be charged on all capital gains from April – this will cover business and non-business gains, so the same rate will apply whether you are selling your business, a painting or a buy-to-let property
• The first £1 million of gain will be at the rate of 10% for certain business assets – this is to be known as ‘entrepreneur’s relief’.
• Indexation allowance and taper relief will no longer apply – i.e. there will be no adjustment to the rate however long you have owned the asset. Gains on assets owned on 31 March 1982 will be calculated by reference to their market value at that date.
• In our view it is time for the Government to introduce a fairer tax system that taxes the mega-profits of the City instead of the hard-earned gains of smaller businesses.

The Chancellor might say he is trying – but his clumsy proposal to impose a £30,000 charge on non-doms is not the cleverest idea to come out of the Treasury. And small businesses have already suffered recently with the removal of the corporation tax exemption for the first £10,000 of profits.

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Every Gulf country has laws governing the appointment of commercial agents, and an agency agreement may have to be registered with the Ministry of Economy or some other government department. Great care is needed in selecting an agent. Amongst the factors that you need to look at is the capability of the agent.

Also check out his standing and reputation. It is not going to be easy to run a Dun and Bradstreet check on prospective agents. Instead, you need to make enquiries - of the British Embassy, Bank, other companies - including other principals of the prospective.

Other considerations include the agent’s facilities, location and whether the prospective agent acting for your competitors.

In terms of the Agency Agreement and legal implications in the UAE, Saudi Arabia, Qatar and Oman, only a national or a company wholly owned by a national can act as commercial agent or distributor within the state. In Bahrain and Kuwait a company with foreign participation can act as an agent provided that 51% of the shares are owned by nationals.

In the UAE and Qatar an agent is entitled to commission on all sales of the principal’s products in the territory, irrespective of whether the sales have been made by the agents. In Bahrain and Saudi Arabia, the situation is slightly different. In Saudi Arabia, for example, principals are free to restrict the agent’s commission only to sales which are actually made by the agents.

The general rule throughout the Gulf is that a registered agency agreement cannot be unilaterally terminated by a principal.

An agent can claim compensation for termination or non-renewal based on the success which the agent has brought to the business with the principal.

As a lawyer, I would strongly recommend that you take legal advice before you finalise an agency agreement.

View the other posts in this 4 part series:

• Doing Business In the Gulf And Middle East (introduction)
• Opening an office in the Gulf
• Free Zones in the Gulf

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If you don’t like the idea of having a local partner or sponsor for your business in the Gulf, especially if your business is going to involve having a distribution centre - or an assembly plant - in the region, then you should consider going to one of the free zones. You don’t need a local partner - in effect the Free Zone authority is your local partner and issues your company with a licence. Your company therefore remains 100% yours and free repatriation of capital and profits are guaranteed for 15 years and in some cases for 50 years. Fujairah has a good free zone – and they have an advantage of having their port outside the Gulf, on the Indian Ocean.

Free Zones are not confined to industry – Dubai, currently leading the pack in attracting foreign business to the region has an internet city and has recently set up the DIFC (Dubai International Financial Centre) which has its own legislation, regulatory regime on Western lines and even its own civil court, presided over by an English judge.

View the other posts in this 4 part series:

• Doing Business In the Gulf And Middle East (introduction)
• Opening an office in the Gulf
• Appointing Agents In the Gulf

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There are generally two pre-requisites of setting up an office in one of the Gulf States.

Firstly, unless you are exempt, you need to have a national of that country who is either an individual or a company wholly owned by nationals involved in your Gulf business to a greater or lesser extent. Exemptions are sometimes given to independent professionals.

Secondly, you will need a licence from the concerned authority in the country. In the UAE, for example, his is the Municipality in the Emirate in which your office is established. The licence is very important not only because it is illegal not to have one but also because without a licence, you won’t get your own dedicated phone line electricity supply, and be able to obtain visas etc. for staff.

Before getting the licence you have to establish a business structure.

The Federal Companies law requires that at least 51% of the shares must be held by a UAE national in the emirate. Similar rules apply in the other Gulf States.

It is also possible to have an agreement with the local partner that he takes less than 51% of the profits - i.e. share the profits in a different ratio from the capital.

The Federal law in the UAE provides for several different types of company formation but the limited liability company, not so different from a private company in England, is generally used by foreigners. There are standard forms of Articles of Association to be used when forming the company.

If you do not want to form a local company, you may be able to establish either a branch office or a representative office. Whether you go for a branch or a representative office, you will need a local service agent (“sponsor”) who, in return for an agreed fee, will assist with the formalities, residence permits etc.

View the other posts in this 4 part series:

• Doing Business In the Gulf And Middle East (introduction)
• Free Zones in the Gulf
• Appointing Agents In the Gulf

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When age discrimination was banned a couple of years ago, it was still OK to have a retirement age of 65 for employees but this did not apply to partnerships. So partners and their legal advisers were unclear how to deal with the issue - might it be necessary to let partners stay on till they dropped?

Now an employment tribunal has looked at the problem and decided it can be acceptable to have a compulsory retirement age of 65 for partners – but only if it can be objectively justified.

The case concerned a ten partner law firm whose partnership deed said that partners must retire when they reach 65. When the senior partner reached that age, he claimed this was discriminatory and contrary to the regulations.

The tribunal accepted the firm’s argument that a compulsory retirement age was necessary to enable the firm to develop and grow by bringing associates into the partnership. Also the firm had a policy of avoiding expulsion of a partner for poor performance as this was though to conflict with the supportive culture of the practice – in other words, even if a partner under-performs he will be allowed to stay on , but there is a cut-off date of 65.

The conclusion from this case is – if you have a partnership agreement and you want a compulsory retirement age, work out some good reasons why the rule should apply.

This decision may be subject to an appeal but, unless it is overturned, it should give some comfort to partnerships that are wondering how to deal with the uncertainty created by the Employment Equality (Age) Discrimination Regulations 2006.

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Last week we visited the London Youth Support Trust to deliver 300 CDs donated to LYST, to benefit the young entrepreneurs in the scheme. LYST is strongly supported by the High Sheriff of London Jan Pethick, who attended the presentation, and the Speaker of Hackney, Councillor Faizullah Khan, came by in -between some citizenship ceremonies. He met jeweller Cathrine Bysheim who is one of the young entrepreneurs in LYST’s Hackney centre. We also met several other of the people in the scheme. It was really inspiring to see the work being done there.

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Tony Gimple of Crisis Survivor is a recent ContractStore customer. His business is all about protecting yours from crisis and disaster. He was so pleased with ContractStore’s contracts that he sent us a useful document of his own. You can use it to check how well your business would cope with unforeseen disaster.

Take the Crisis Survivor Ten Minute Assessment and find out how your business would cope in a crisis.

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