Betty Sparks was on her way to meet the representative of a big retail chain that she was negotiating with to carry her designer jars and kitchen accessories. Her company had really taken off with online sales and now, finally she was ready to look at retail wholesale to grow her business. But she was nervous. She had never negotiated with big retail lawyers or signed a contract with so many pages. But Betty was smiling as well. Last weekend her friend and entrepreneur, Samantha, had taken her to a contract law workshop. At the time Betty thought that this wasn’t the best way to spend a Friday morning but by the time the workshop ended, she wanted to kiss her friend Samantha and the instructor who saved her business without even knowing….
Small business owners often think and feel they have the disadvantage when it comes to negotiating with big players. But if you don’t land big partners, you are bound to stay small. The decision to work with companies bigger than you that can help you grow your business is an exciting and risky one.
An entrepreneur can never miss an opportunity to sign a big client or partner but with them come big lawyers as well. And they know how to create a contract that works in their clients’ favor. Small businesses often feel that if they don’t say “YES” to every contract clause, they will lose that big opportunity.
And contract clauses can be quite harmful in the long run – prices that don’t leave a profit margin, extremely fast turnaround times, long payment periods…All of these can be deadly for a small business that is just trying to stand on its feet.
Your small business needs fair contracts and clauses that will be beneficial for both parties.
More often than not, however, entrepreneurs hungry for that big client sign contracts that are actually slowly killing and not growing their businesses.
But there are good news for small businesses!
Australian Federal Government issued a legislation regarding unfair contract practices to protect small businesses that will come into effect starting 2016. The legislation will also apply to all B2B contracts involving small businesses that are verified after this time even if they have been signed previous to that date.
This legislation covers small business contracts in which the upfront price payable under does not exceed $100,000 or, if the contract has a duration of more than 12 months, $250,000.
Unfair practices are any clauses that are the reason for imbalance of power and responsibility between the two parties; can cause significant detriment to one party; or is not legally needed to protect the interests of the other party.
In short – any clauses that make small businesses feel in the weaker position when negotiating and implementing a contract, are unfair. And even if a business owner signs such unfair contract and realizes that on a later stage, the contract can be deemed invalid by courts.
How Legal Knowledge Helps You Grow Your Business
Having this information brings confidence and determination to many small business owners to negotiate with big partners and clients. It doesn’t have to be the big guys’ game anymore.
However, not being aware of this legislation can get you to fulfill contracts that are hardly beneficial for your business. Many small business owners will happily comply without even looking into how fair a contract is just to land that big client….and end up with less cash and more work than ever.
Saving your business from the roller coaster of unfair contracts is as easy as knowing this one little piece of information (especially if you don’t have a lawyer)!
And this is exactly the kind of valuable knowledge you get first hand when you go to a business legal workshop, and a contract law workshop, more specifically.
Even if you can’t afford a lawyer for your business, a few legal workshops, seminars and books can make you legally savvy enough to run your small business. Business law basics are not difficult to understand for entrepreneurs. The difficulties arise from not understanding them.
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