Those businesses with a more formal approach who ensure their standard terms and conditions are communicated to the other party at key times can also get into contractual difficulty, if the other party is equally as diligent.
Where both parties bombard each other with their standard terms and conditions during pre-contract communication (known as 'the battle of the forms'), the outcome can lead to their being no contract at all as neither party is willing to contract on the other's terms.
Businesses contracting for the first time with each other should be more vigilant in minimising the risk of a contractual dispute arising.
Where a relationship is new, there may not be the rapport between those involved, which can sometimes work to resolve a dispute before it gets expensive.
What can a business do pre-contract to minimise the risk of a contractual dispute later on (in a B2B situation)?
Get to know the other party
It is always good practice to research the other party before beginning a contractual relationship.
Check the business' own website for information on who they say they are and what they do. If they are a company (or LLP), find out the company's registered information at Companies House.
This will show you who the company officers are, who owns the company, how long the company has been going, and its statutory accounts.
If the business is within a regulated sector, check them out on the regulator's website. Similarly, if the business belongs to a trade association. All of this information is free to access.
It is also sensible, depending on the value of the proposed transaction, to obtain a credit report on the business from one of the UK's credit reporting agencies.
This will have a cost, but many of the agencies have a subscription service. Such a report will give an insight into the business' financial position and standing and potentially whether it can be relied on to meet financial obligations.
Importantly, it will also show if there are any court judgments registered against the business.
All of this information can be used to decide if you want to enter into the contract at all, or whether appropriate safeguards need to be put into place in the contract.
Understand how and when a contract is formed
It is important to understand at which point a binding legal contract comes into existence. This is to avoid unknowingly entering into a contract and being bound by its potentially unwanted terms.
