Legal aspects of setting up a business – Holland Condon Solicitors, a Kilkenny based Law Firm

Nov 24, 2011

Here is a copy of a lecture, we gave, some years ago, that may have some validity and interest today =

“LEGAL ASPECTS OF SETTING UP A BUSINESS

1. TYPES OF LEGAL ENTITIES

 Sole Trader – Can start straight away unless you require any licences; unlimited liability for all the debts of the business; the law makes no difference between your personal assets and the business assets; great exposure in the event of being sued for debts; have to protect your personal assets against seizure.

 Partnerships – Need for partnership agreement; partners are joint and severally liable; quite similar to position of sole trader.

 Companies with Limited Liability:
Separate Corporate Personality: Can be sued and sue in its own name; can hold property in its own name; Limited liability and veil of incorporation.
Disadvantages being formalities involved; annual returns, bureaucracy.

 Co-Operatives – Ethos behind them; 1 share 1 vote.
Don’t confuse people who trade with the name ending Company; must see the words Limited at the end of the name of the Company for it to be a proper Limited Liability Company.

2. REGISTERING LEGAL NAME

Limited Liability Companies and Co-Operatives registration requirements with the Companies Registration Office.
Further requirement for all businesses (including Companies) if they trade under a name different than their own e.g. John Murphy trades as Fast Farm Relief Company then registration necessary under the Registration of Business Names Act, 1963.

3. INSURANCE REQUIREMENTS

Limited obligations to have Insurance. A requirement in the case of motor vehicles under the Road Traffics Act, 1963.
Advisable to have Employers, Public Liability, Defective Workmanship and Professional Indemnity insurance.
Watch for excesses on insurance policy.
Discuss the position of using a company as a means of protecting the businessman.
4. LEGAL IMPLICATIONS OF TRADING

Entering into contractual agreements (oral or written) between you and your supplier/You and your customer.
Obligation to pay debts.
Negligence – Your duty of care to others (in particular customers)
Sale of Goods and Supply of Services Act – Goods must be of merchantable quality, fit for purpose required.
Business conditions – recommended; including terms of payment; interest charges; retention of title; Guarantee/Indemnity from a person rather than Company; excluding liability.
Consumer Credit Act, 1995 – doesn’t apply where you give say 90 days credit to somebody and that they are to pay the full sum at a point in time, but where the customer is to repay you by instalments with interest; Customer entitled to copy of agreement, 10 day cooling off period. Restrictions on contacting customer at work and home.
Dealing with debtors who are Limited Liability Companies – need for personal guarantees?
Recovering debts

5. INTELLECTUAL PROPERTY RIGHTS

 Copyright
Covers the like of literary dramatic works, musical works, artistic works, sound recordings, films and broadcast.

 Patents for discoveries.

 Trademark and design rights, i.e. its brand, heading, label, ticket name, signature, work letter, which appears on a good or related to services. Can be registered so as to obtain protection.

 Passing off

6. THE COMPETITION ACT

Attempting to create a level playing field for all competitors; prohibition on price fixing and quota fixing.

7. EMPLOYMENT LEGISLATION

Independent Contractor versus Employees difference.
Need to have Contract of Employment and furnish terms of employment details.
Many rights under the Employment legislation only come into play after the employee has been in the job for one year.
Wages Act; Unfair Dismissals Act; Maternity Leave; Health & Safety; Parental Leave Act, 1998 (14 weeks leave unpaid for either parent in respect of each of their children, 14 weeks until the child is five years) and is for the purpose of taking care of the child.
Holidays Act (4 weeks); Be careful when employing people under 18 years.”

Holland Condon, Lawyers located in Kilkenny, Ireland

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