Hidden Traps In Agreements

Thinking like a business, not a consumer.

Sole traders or micro businesses are caught between two identities - there is individual you, and business you.

This doesn't usually cause too many problems but there are places where this can really trip you up.

Signing agreements is one of them.

For example, if you sign a contract with a business as an individual, such a phone line rental agreement etc., you are usually automatically covered by consumer protection laws, in particular the right to cancel.

When you sign up as a business, the same laws may not apply to you - and so the terms of your agreement (in particular how you cancel) are extremely important to look at.

I've known of businesses stuck in 3-5 year agreements because the contract was made as a business not as an individual. This costs a lot of money over that period - money that you may not have in startup mode.

The legislation is slowly changing, and now much of the consumer laws will specifically mention micro-businesses as being included.

But not for everything.

When you sign up for anything as a business:

• check the duration of the contract

• check your cancellation terms

• check all terms that specify your obligations under the contract

It is important to get systems and processes in place and I'm all for trying a few things first to see which systems really support the way you want to do business - but just make sure there is no hidden trap to fall into.