Newspaper article The Journal (Newcastle, England)

Look out for Some of the Pitfalls in Business; Growing Businesses Are Often Faced with Growing Issues. MARK WHITEHEAD, Partner in the Company and Commercial Team at Ward Hadaway, Looks at How to Cope

Newspaper article The Journal (Newcastle, England)

Look out for Some of the Pitfalls in Business; Growing Businesses Are Often Faced with Growing Issues. MARK WHITEHEAD, Partner in the Company and Commercial Team at Ward Hadaway, Looks at How to Cope

Article excerpt

Byline: MARK WHITEHEAD

COMPANIES that are growing their businesses successfully often find that the issues which they face grow with them.

While getting off the ground is clearly the key priority for a start-up, more mature businesses which have got beyond the initial stages and are beginning to expand their empires have other problems to deal with.

One of the key issues for a growing business is that, in general, as it grows, it tends to take on a larger volume of higher value contracts. This can mean they are exposed to greater legal risks.

What do we mean by that? Well, one common example of a legal risk is if an important contract is not performed properly, a customer could end up sustaining substantial losses which they then try to recover from you.

This could range from damage to physical property, through to financial losses such as their "lost profits".

GROWING Mark Whitehead Some risks, although unlikely to arise, could (if they ever did become a reality) generate losses of a scale that could threaten the very existence of the business, or at least make a serious dent in profits. It is therefore important for a business, as it grows, to properly assess the legal risk to which it is exposed through its trading activities.

Businesses need to consider the extent to which risks can be insured against, and the extent to which some of the risks can be managed through well drafted contracts.

For example a well drafted contract could: ? specify detail of what the scope of contractor's work is, to make it more clear "who is responsible for what"; ? describe what the customer is responsible for providing in order that you can perform the contract properly, so that if a delay occurs through no fault of yours then you can avoid legal liabilities; ? contain exclusions and limits on your liability. …

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