Commercial Law FAQs

• the clause to be effective if any money is owed to the seller (i.e. an all monies clause); and
• rights for: the seller to repossess the goods, to prevent the buyer from selling or using the goods and to enter the buyer’s premises in order to repossess the goods.

Registered and unregistered.

Registered trademarks are those registered with the Trade Mark Registry and there is a cost for such registration. You can register yourself https://www.gov.uk/government/organisations/intellectual-property-office or use an advisor (e.g. a trademark attorney). Greater protection for a trade mark is provided by registration and enforcement action is much more straightforward.

Obtaining a patent is a complex, costly and lengthy process.

The core features you will be required to demonstrate in order to show that you have a registrable patent are: a new (must not have been made publicly available anywhere in the world), inventive (it cannot be an obvious change to something that already exists) step consisting of something that can be made and used, a technical process, or a method of doing something.

Our recommendation is to use a patent attorney as they will assess the suitability of your invention (including searching any existing similar inventions) to obtain registration and help you complete the registration process. The registration of a patent is through the Intellectual Property Office (IPO) Intellectual Property Office - GOV.UK (www.gov.uk)

There are different stages that your application will go through: filing the application, the search against the other patents and a substantial examination. The fees for the different stages can be found at Apply for a patent: File your initial application - GOV.UK (www.gov.uk)

A trade mark is used to protect a product brand or service and can consist of a logo, colour, sound or word (or a combination of these).

The core features you will be required to demonstrate in order to show that you have a registrable trade mark are: your trade mark does not infringe another registered mark, is not offensive, does not simply describe the goods or services, is not misleading and is not too common and non-distinctive.

Our recommendation is to use a trade mark attorney as they will assess the suitability of your trade mark (including searching any existing similar marks) to obtain registration and help you complete the registration process. The registration of a trade mark is through the Intellectual Property Office (IPO) Intellectual Property Office - GOV.UK (www.gov.uk)

There are fees and a process for registration and those details can be found at Register a trade mark : Send your application - GOV.UK (www.gov.uk)

You can stop any other parties from carrying out a process that is subject to your patent. However, Intellectual Property litigation is expensive and you would need to ensure that you either have the resources or insurance to carry out any enforcement action. However, most litigation is settled following the sending of a written ‘cease and desist’ demand.

The disadvantage of registering a patent is that the patent becomes a matter of public record and that is why, therefore, some inventors choose not to register their patent.

You can stop any other parties from using your trademark or a mark similar to your trademark. The claim would be by way of trademark infringement. If you do not register the trademark then the claim is reduced to passing off action and that is a more difficult claim to enforce. However, IP litigation is expensive and you would need to ensure that you either have the resources or insurance to carry out any enforcement action. However, most litigation is settled following the sending of a written ‘cease and desist’ demand.

It’s a criminal offence to describe an unregistered trademark ™ as a registered trademark ®.

Internal data protection policies (DDP) should set out the principles and legal conditions that organisations must satisfy when obtaining, handling, processing, transporting or storing personal data in the course of their operations and activities, including customer, supplier and employee data. This should provide a clear guide for employees so they know how to handle and process data in compliance with the law.

The six key privacy principles to be set out in the DPP are as follows: (1) Lawfulness, fairness and transparency - personal data must be processed lawfully, fairly and in a transparent manner in relation to the data subject; (2) Purpose limitation – there must be a specified, explicit and legitimate purpose for which personal data is collected; (3) Data minimisation – only essential personal data which is relevant to the purpose for which the information is processed can be collected and stored; (4) Accuracy - personal data must be accurate and kept up to date. Any incorrect data must be updated or deleted without delay; (5) Storage limitation - personal data which allows an individual to be identified must only be kept for as long as is necessary for the purposes for which the data is processed; and (6) Integrity and confidentiality – measures should be put in place to protect any data held to ensure that it is kept confidential and is not at risk of being seen or used by anyone who is not authorised to process the data.

There is also an accountability principle which should also be covered. This will deal with what data the controller is responsible for and demonstrate how it is in compliance with the data protection principles (e.g. that there is an appointed data protection officer, regular training is to be carried out by employees etc.).

The grounds for processing data should also be covered in the DPP. There are six grounds for which data can be lawfully processed (1) consent from the data subject, (2) that it is necessary in connection with a contract; (3) it is necessary to comply with legal obligation to which the controller is subject, (4) to protect the vital interests of the data subject or another person, (5) the processing is necessary for the performance of a task carried out in the public interest or in the exercise of official authority vested in the controller, or (6) the processing is necessary for the purposes of the legitimate interests pursued by the controller. The policy should set out what is required to satisfy the relevant grounds which the company is seeking to rely on and ensure this process is followed in order to reduce the risk of there being any data protection breaches.

There will be certain things which you will be able to deal with internally such as compliance on a day to day basis with your data protection policies. However, this is an area of law for which it would always be best practice to get an opinion or to take advice on any matters which you are unsure or concerned about. Please note, that the Information Commissioners Office (ICO- ico.org.uk) has a very useful information service and although they do provide a “policing” function as the UK data protection authority they are very concerned about prevention. Consequently, they are very approachable.

When it comes to matters such as subject access requests (SAR) you need to seek legal advice as soon as possible. There is a strict time limit of one month of receipt in which the request must be dealt with and there are penalties for non-compliance within this time period. However, even more importantly, you could be investigated by the ICO. Most businesses run into problems with respect to SARs because they simply ignore them.

If you are not a public authority or body, do you monitor individuals on a large scale (eg tracking an individual’s behaviour on the internet or on CCTV), do you not process as your core activities “special categories” of personal data (eg racial or ethnic origin) or criminal convictions or offences data then you don’t need to appoint a DPO. You can do that voluntarily but you must register the individual with the Information Commissioner’s Office (ICO) and the DPO does have to take on a high level of responsibility. Having said that, you should have somebody in the organisation that is responsible for data protection.

Do access the ICO’s website(ico.org.uk) for a variety of very helpful information including guidance for DPOs.

• Lawfulness, fairness and transparency
• Purpose limitation
• Data minimisation
• Accuracy
• Storage limitation
• Integrity and confidentiality (security)
• Accountability

A distributor purchases goods from manufacturers or other suppliers and resells them to others in the supply chain, such as resellers and consumers also known as end-users.

Distributors also often provide services for the manufacturer, such as product marketing and post-sale support services. In other words, the distributor facilitates and often acts as a ‘middle man’ for a manufacturer to sell their goods to retailers. The Retailer then sells the goods to consumers for profit.

The restrictions on terminating a distribution agreement will depend on the terms of the agreement. You should consider if there is a termination process set out in the agreement which must be followed and be cautious of the governing law of the agreement. As many distribution agreements deal with territories in different countries you could find that the jurisdiction governing the agreement takes a more favourable view of the distributor and affords protections to them even if the supplier has otherwise complied with the terms of the agreement.

Depending on the type of distribution agreement, there will often be a provision which allows a supplier to terminate the agreement if a minimum sales quota has not been reached. This is particularly important when an exclusive or sole distribution agreement has been used as it creates flexibility for the supplier to terminate the contract and appoint a new distributor in order to maximise the selling potential. This can also be linked to the status of the distributor rather than the termination of the agreement (i.e. a distributor will lose their exclusive or sole rights meaning the supplier can appoint other distributors where they could not before).

When looking to terminate any contract you need to make sure that the terms of the agreement have been followed. Normally this will include a notice period of a number of months which must be given by a party, or the contract could be terminated immediately if one of the matters specified in the agreement takes place. This usually includes things like a material breach of the contract, non-payment, one of the companies going into liquidation etc. It is important to satisfy yourself when entering into a distribution agreement what the termination provisions are so you are clear how and when the agreement can be terminated.

There are three types of distribution agreement: (1) sole; (2) exclusive and (3) non-exclusive.

Sole – this is where a supplier appoints a single distributor for a specific territory with the supplier reserving the right to sell directly to customers in that territory. This allows the supplier to continue to take advantage of any potential sales directly with customers whilst providing a level of exclusivity to the distributor.

Exclusive – this is where a supplier agrees to sell products to one distributor only within a set territory and agrees not to sell to any other distributor, or to any customers directly in that territory.

Non - exclusive – this arrangement allows a supplier to sell products to any number of distributors within a set territory and they can also sell directly to customers. This type of distribution arrangement is less onerous on the distributor as they will be competing with other distributors appointed in the territory and with the supplier.

The essential difference is that a distributor contracts with its customers in it’s own right and an agent contracts with customers on behalf of the individual or organisation that has appointed it (ie the principal). That means that the distributor is responsible to it’s customers for the products/services it sells whereas the principal is responsible to customers for the products/services the agent markets or sells.

The distributor should at all times be independent of the business whose products/services it is distributing whereas an agent is part of the principal’s business to the extent that the concern of the principal is to limit the authority of the agent.

A distributor’s relationship is governed by the terms of its distributor agreement (and there should always be an agreement in writing) and contract law (NB exclusive distributor legislation and distribution competition law). The agent’s relationship is governed by the terms of its agency agreement (and there should always be an agreement in writing) and agency law (NB Commercial Agents Regulations).

An agency agreement would normally be for marketing or sales or for both. That is to say the agent either simply markets the product/services or sells the product/services on behalf of the principal or both markets and sells the products/services on behalf of the principal.

The agreement can be exclusive or non-exclusive for specific territories and/or markets. An agent that assumes the most responsibility for sales (and usually receives the highest commission) is a del credere agent. They assume the credit risk for sales (i.e., they guarantee to the principal the debts of the customers the agent sells to).

1. Business of the Company – this is an overview of the company and the nature of the business that shareholders are required to promote and develop.
2. Transfer of Shares – Limits may be placed on selling shares in the company. This may include: sales of shares only being allowed by way of a specified process, shares having to be offered to the existing shareholders (pre-emption rights), drag-along and tag-along provisions on the sale of shares which protect the majority shareholders and minority shareholders respectively. There should also be a mechanism for valuing shares prior to their sale.
3. Issue of Further Shares – In order to prevent the potential dilution of shares held by the shareholders, there is usually a restriction to prevent the issue of further shares.
4. Management Decisions – The SHA will normally confirm which business decisions have to be taken by all the shareholders (unanimous voting) and which can be decided by majority voting and what percentage that majority should be (e.g., usually 75%).
5. Dividend Policy – Shareholders derive a return from their shares by way of dividends (income) or from their sale (capital). Unless there is a dividend policy stipulated in the SHA then declaring a dividend will be at the absolute discretion of the directors.
6. Restrictions on the shareholders – To prevent a shareholder from setting up in competition with their own company there are usually restrictions imposed on the shareholders dealing with joining competitors, and poaching staff and customers/clients.

Articles of Association (“Articles”) are a statutory requirement for all companies. In summary, it is the company’s constitutional document and can take the form of Model Articles (as set out in the Companies Act 2006), amended Model Articles or can be bespoke. The Articles are a public document and must be registered at Companies House when the company is incorporated. The Articles are a contractual agreement between all the shareholders of the company and regulate the way in which the company is managed e.g., setting out formalities for director and shareholder meetings.

A shareholder agreement (“SHA”) is a private agreement between the shareholders and usually act as additional obligations, over and above the Articles to regulate the relationship between the shareholders. As this is a private agreement, there is no requirement to register this at Companies House. The SHA takes priority over the Articles.

Unlike the Articles of Association (“Articles”) which is a public agreement between the shareholders of a company, a shareholder’s agreement (“SHA”) is a private agreement between the shareholders and is not filed at Companies House. The SHA overrides the Articles.

Consequently, the main reasons for entering into a SHA are to keep the arrangement private and to allow the shareholders to decide what terms they want to govern their relationship.

• An innocent party can terminate or confirm the contract. You can recover damages from the innocent party in relation to any loss you suffer as a result of your injury.
• A court can order performance of a contract or breach clause. When an innocent party can seek an injunction to prevent imminent injury.

• The first way to terminate a shareholder agreement is by mutual consent. This is when all shareholders decide they don't want to honour the deal for various reasons. The reason could be the dissolution of the company, the sale of the company's shares or the company itself, or the decision to leave the company. A properly designed shareholder agreement should include these clauses.
• Secondly, the partnership agreement can be terminated automatically if one of the shareholders breaches the agreement. In such cases, the shareholder agreement will terminate unless the agreement contains a clause providing for some form of arbitration.
• Third, if one of the shareholders wishes to leave the company, the partnership agreement can be terminated. If so, there will be specific provisions in the shareholder agreement to specify what should happen in this scenario.