Local Enterprise Office - Business Law · 2014. 4. 6. · sole trader as our law permits any...

Business Law

South Dublin Enterprise Board – Page 1

Business Law

Contents

Foreword................................................................................................................................ 2

1 Introduction............................................................................................................................ 3

2 ChoosingaBusinessorLegalEntity..................................................................................... 4

3 Registrations.......................................................................................................................... 6

4 Taxation................................................................................................................................11

5 Finance&Security............................................................................................................... 15

6 LegalAgreements&Contracts............................................................................................ 19

7 Premises.............................................................................................................................. 23

8 TradingLaws....................................................................................................................... 27

9 Employees........................................................................................................................... 31

10 OtherLegalConcepts.......................................................................................................... 37

11 FurtherInformation.............................................................................................................. 41

12 GeneralReferences............................................................................................................. 44

Page 2 – South Dublin Enterprise Board

Business Law

ForewordSouthDublinCountyEnterpriseBoardexistsforjustonesimpleclearpurpose;tohelpyoutostartandgrowyourownbusinessinourcounty.

SouthDublinisagreatplacetodobusiness.Wehavealarge,youngpopulationofourown,withimmediateaccesstoamarketof1.5millionpeople.Wehaveaterrificmoderninfrastructureandwehaveworld-classbusinesssupports.

Weunderstandthatthefutureofourlocalcommunitydependsonpeoplewhocaninnovate,whocanmakethingshappen,whoarewillingtotakebusinessrisks—peoplelikeyou.

Thisseriesofguidebooksispartofoursupportforentrepreneursandowner/managerslikeyou.

Theseriesincludestitleson:»» BusinessStart-up»» YourBusinessPlan»» BusinessMarketing»» ManagingBusinessFinances»» YourBusinessandtheLaw

Theyaretheretosummariseandsimplifyeachtopicandcanbeusedontheirownorasapreparationforsomeofourotherservicessuchastrainingormentoring.

Whetheryouarealreadyupandrunning,withambitionstodevelopandgrow,orjustbeginningtoworktowardsstartingyourownbusiness,SouthDublinCountyEnterpriseBoardhaveacomprehensiverangeofsupportscoveringallofthekeyissuesinenterprisedevelopment.Thesesupportsinclude:

»» Informationtohelpyoustartorgrowyourbusiness,intheformofourwebsiteandarangeofpublicationssuchasthisone

»» Trainingcoursesinstartingabusinessandarangeofmanagementskills»» Mentoringsupportforbusinessplanningandspecificmanagementissuesandprojects»» Arangeoffinancialsupports»» Arangeofbusinessdevelopmentnetworks

Contactuson014057073orinfo@sdenterprise.ietodiscussyourneedsandplans.

Loman O’ByrneChief Executive, South Dublin County Enterprise Board


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1 - IntroductionThepurposeofthispublicationistoprovideageneralguidetothelawasitappliestoasmallbusiness.Itmustbeemphasisedthateverybusinesswillhavedifferentlegalobligationsandrequirements,regardlessofthemanysimilaritiescertainbusinessesmayhave.Becauseofthegeneralityofthispublication,itshouldnotberelieduponexclusively–thelawcanbeveryspecificandeventheslightestvariationincircumstancecouldchangethelegalpositionenormously.

Allsmallbusinesseswillneedspecificlegaladvice,ifonlytoconfirmthatyouareoperatingincompliancewiththelaw.Employingasolicitormayseemanunnecessaryexpenseforabusinessthatisonlybeginningwhenyoumayseemtohaveanendlesslistofoutgoings.However,withoutdoubt,itwillbemoneywellspent,asitshouldpreventtheoccurrenceoflegalproblemsinthefuture.Thealternativeoptionmaybedifficultiesthatmightrequireconsiderablelegalservicestoresolve.

Thatbeingsaid,itishopedthatthispublicationwillprovideyouwithmuchneededinformationonthevariouslegalaspectsofrunningabusiness.Inparticular,itishopedthatreadingthispublicationwill:

»» Giveyouanunderstandingofthelawapplyingtosmallbusiness.»» Supplementandgiveyouabetterunderstandingoftheadvicereceivedfromyourprofessionaladvisors

»» Enableyoutogiveclearerinstructiontoyourprofessionaladvisor»» Enableyoutodiscussandunderstandfullythelegalimplicationofalltransactions.»» Ensurethatyoumaximizeyouruseofprofessionaladvisors.»» Equipyouwithinformationonlawingeneralwhichwilldirectyoutothoseareasofparticularrelevancetoyourbusiness.

Pleasenotethatthetaxinformationcontainedwithinrelatesto2008.


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2 - Choosing a Business or Legal Entity Onceyouhavedecidedthatyouhaveaviablebusinessthatyouwishtodevelop,oneofthefirstdecisionsthatshouldbemadeistodecideonthelegalbodyorvehiclethroughwhichyouintendtocarryonthebusiness.

YourOptionsInthisregard,therearethefollowingoptionsforsmallbusiness:

»» Sole trader–Thisisonepersoncarryingonbusinessinhis/herownname,eventhoughtheymaytakeonotherpeoplepurelyasemployees.

»» Partnership / Limited Partnership –Thisiswheretwoormorepersonsarecarryingonabusinessincommonwiththeintentionofmakingaprofit.

»» Limited Company–Thisiswhereaseparatelegalentitywithlimitedliabilityisformedforthepurposeofthebusinesstobecarriedon.Sharesinthebusinesscanbeownedbytwoormore‘directors’.

»» Co-operative–Alsoaseparatelegalentitybutrunondemocraticlinesandconsistingofatleastsevenmembers.Intheory,thosewhoprovidethefundingforacooperativearerewardedwithafixedrateofreturnandthosewhoareemployedtakeallthefinancialrisk,meaningthattheirpayrisesandfallsdependingonhowwelltheco-opistrading.Thecooperativestructureisusuallychosenforideologicalratherthanpurebusinessreasons.

FormsofLimitedLiabilityTherearetwoformsoflimitedliabilitynamely:

»» Wheretheliabilityofmembersislimitedtotheamounttheyhaveinvestedinthesharesplustheamount,ifany,unpaidinthesharesrespectivelyheldbythem,knownasacompanylimitedbyshares,generallyreferredtoasalimitedcompany.

»» Wheretheliabilityofmembersislimitedtotheamount,whichthemembersundertaketocontributeshouldthecompanybewoundup,knownasacompanylimitedbyguarantee,asthelatterformisusuallyonlyusedbynon-profitconcerns,youwillseethattheformerismoreappropriateforaprofitablebusinessventure.

Decidingonwhetheryouoperateasasoletraderorapartnershipiseasy,asthenumberofpersonsinvolvedwillreadilydetermineit.

Thedecisiononwhetheryoushouldincorporateorformalimitedcompanyismoredifficultandshouldbeverycarefullyconsideredbeforereachingafinaldecision.

SoleTraderorLimitedCompany?Thefollowingfactorsshouldbeconsideredinthecontextofyourparticularbusiness:

»» The type of business–Therearesomeprofessions,forexamplesolicitors,whichcanonlyoperateassoletradersorpartnerships.

»» Customers–Thenatureofyourbusinessmayrequireyoutooperateasasoletrader/partnershipinordertomeetyourcustomers’expectations,i.e.,theymaywanttodealwithyoudirectlyratherthanthroughacompany.Clearlythereversecanalsoapply.

»» Risks involved–Ifyourbusinessisahigh-riskventureyoumaywanttolimityourliability.Asoletraderisfullyliableandcanbepersonallybankrupted,losingsomeorallofhis/herprivatepossessions,tomeetdebtsifthebusinessfails.Similarly,partnersgenerallyhaveunlimitedliabilitywithrespecttodebtsincurredwhilebeingamemberofthepartnership.Incontrast,theliabilityofashareholderislimitedtotheamount,ifany,unpaidontheshares.Thisisoftenconsideredthemainadvantageofincorporationasitlimitstheliabilityoftheshareholders.

»» Statutory restrictions and obligations–Whicheverentityyouselect,youwillhavetoadheretoandabidebytheappropriatestatutoryregulations.Thesehavebecomeparticularlyonerousforcompaniesandcanleadtoincreasedriskandadministrationcosts(toincludesuchthingsassecretarialfees,


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auditor’sfees,corporategovernance,etc.).»» Size of the business–Ifitisanticipatedthatownershipofthebusinesswillincreaseinsize,thenacompanymaybethepreferredvehicleasitsstructureeasilyfacilitateswideningoftheownershipbase,whichinturncanpermitthirdpartyinvestment,employeeshareoptionschemesorthepossibilityofraisingBusinessExpansionSchemefinance.

»» Management–Soletradersclearlymanagethebusinessthemselvesandpartnersaregenerallyentitledtotakepartinthemanagementofthepartnership.Incontrast,shareholdersarenotentitledtotakepartinthemanagementofthecompany,unlesstheyaredirectors.Thiswouldnotbeaproblemwhereallshareholdersaredirectorsbutitisimportanttobeawarethat,ifyouarenotadirector,thenyouwillnotbeinvolvedintherunningofthecompany.

»» Tax implications–Atpresent,personaltaxratesgreatlyexceedcorporationtaxrates,makingthelatterappearmoreattractive.However,onthenegativesideofthis,theprofitswouldberetainedbythecompanyand,therefore,toobtaintheprofits,thedirectorwouldhavetotakeasalaryoradividend,bothofwhichwouldbesubjecttoincometax.Theremightalsobetaxationcostsontheincorporationofacompany.Forexample,capitalgainstaxandstampdutycouldariseonthetransferofassetstothecompanyor,ifthebusinessisalreadyagoingconcern,theindividualcouldincuradditionalpersonalincometaxcostsundertherulesforcessationoftrade.Thetaximplicationsarecomplexandwilldifferineverycase,soitisessentialthatprofessionaladviceistakeninallcasestoensurethatyouchoosethemosttaxeffectivevehicleforyourbusiness.

TakeTimetoThinkOnceyouhaveconsideredyourproposedbusinessandallofthesefactors,itmayimmediatelybeclearwhichlegalentityismostappropriate.Moreoften,however,thebusinesscouldsuitseveraloptionsanditwillbeamatterforyoutodecideonbalancewhichismostsuitable.

Itisimportanttotaketimewhenmakingthisdecisionas,whileitislikelythatyouwouldbeabletoreverseyourdecision,todosocouldbecostly(frombothanadministrativeandtaxperspective)andleaveyourbusinessinlimboforatime.


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3 - RegistrationsHavingdecidedonthelegalentitymostsuitedtoyourbusiness,itmustthenbeputinplace.Thefollowingisageneraloutlineoftheproceduresinvolvedineachcase.

SoleTraderThisistheone-personbusinessrunbytheownerusuallyinhisorherownnameandwithhisorherownfunds.Itispossiblythemostcommonbusinessstructureandexamplesofitsuseincludefarmers,shopkeepers,publicans,tradesmenandsmallmanufacturers.Therearefewlegalformalitiesaffectingthesoletraderasourlawpermitsanyindividualtoengageinbusinessactivity.Ifthebusinessmakesaprofit,thisprofit(lesstax)belongstothesoletraderandconversely,ifthebusinessflounders,thenthedebtsandliabilitiesbelongtothesoletradertotheextentofhis/herbusinessandprivateassets.Asoletradercanemployothersbutaslongashe/shealonerunsthebusiness,he/sheremainsasoletrader.

If,however,asoletraderdecidestocarryonhis/herbusinessusinganameotherthanhis/herown,he/shemustregisterthatnameandcertainotherparticularsintheCompaniesRegistrationOfficebycompletingandfilingaformRBNItogetherwiththeappropriatefee.Allcorrespondence,catalogues,etc.,usedintradingwiththebusinessnamemustalsogivethenameoftheowner,anyformernamesandhis/hernationalityifnotIrish.TheCertificateofRegistrationofthebusinessnamemustbedisplayedconspicuouslyintheplaceofbusinessandanychangessubsequentlymustberegistered.FailuretocomplywiththeBusinessNamesRegulationscanleadtotheimpositionofpenalties.However,possiblymoreimportantly,contractsenteredintousingtheunregisteredbusinessnameonlymaynotbeenforceableagainstanotherparty.Similarprovisionsapplytopartnerships,companiesandnewspaperpublishers.

Asoletraderwillalsobesubjecttoanyotherrestrictionsorregulationsthatapplytohis/herparticularbusiness.Forexample,apublicanmustcomplywiththelicensinglaws,apharmacistmusthavethenecessaryqualifications,andlicencesorpermitsareneededformanyactivities,includingbookmaking,moneylending,animalslaughterorstorageofpetrol.

Asoletradershouldalsoregisterwiththetaxoffice(seeSection4Taxation).

Itisalsoadvisablethatasoletraderopensseparatebankaccount(s)forthepurposesofthebusiness.Thisaccountremainsthepersonalpropertyofthesoletrader.

Partnership/LimitedPartnershipsThelegaldefinitionofapartnershipisfoundinSection1ofthePartnershipAct,1890,whichdescribesitas“therelation,whichsubsistsbetweenpersonscarryingonbusinesswithaviewofprofit”.Itiseffectivelyanagreementbytwoormorepeopletogointobusinesstogetherwithaviewtomakingaprofit.

Inthiscontext,wemustalsomentionaspecialtypeofpartnershipknownasa“limitedpartnership”,whichwasintroducedbytheLimitedPartnershipAct,1907.Anoticeablefeatureofsuchpartnershipsisthattheycanhavewhatarecommonlyknowas“sleepingpartners”,whohavenopowertobindthefirmbutcontributeaspecifiedamountinmoneyormoney’sworthandenjoyimmunityfromliabilitybeyondthisamount.However,assuchpartnershipsrarelyariseinpractice,itisnotintendedtogointoanyfurtherdetailhereotherthantosaythatsuchapartnershipmustbeconstitutedinaparticularwayandmustalsoberegistered.

Likeasoletrader,therearenolegalformalitiesfortheformationofapartnershipandalltrades,occupationsorprofessionscancreateone.Apartnershipcanarisewhenthepartiesmakeanexpressagreement(forexample,whentheyexecuteapartnershipagreement),orbyimplicationwheretheirconductindicatestheexistenceofapartnershipagreement.Itisclearlystronglyadvisablethatawrittenpartnershipagreementisputinplacewhichspecifiestherightsandresponsibilitiesofallpartners.AscheduleoftheusualclausesinsuchanagreementisincludedinChapter6ofthispublicationandisausefulreference.Intheabsenceofawrittenagreement,theprovisionsofthePartnershipAct,1890areusedasthebasisforsolvinganydifficultieswhichmightsubsequentlyarise.


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Itisimportantforpartnerstotrusteachother,aseachpartnercanmaketheotherliableforhis/heracts.Theprocessofnegotiatingandpreparingapartnershipagreementwillensurethatthereisanagreedprocessfordealingwithcontentiousissuesinthefutureandthatallpartiesareclearontheirpositionfromthestart.

Logically,theminimumnumberofpersonswhocanformapartnershipistwo,whilethemaximumnumberforanordinarybusinessintendingtoprofitis20(thereare,however,exceptionsforsolicitors,accountantsandbankers).

Aswithasoletrader,ifthebusinessnamedoesnotrepresenttherealnamesofthepartners,thenitwillbenecessaryforregistrationofthebusinessnameintheCompaniesRegistrationOffice(however,theappropriateformisRBNIAratherthanRBNIasusedbythesoletrader)andthenamesofthepartnersmustalsobesimilarlydisclosedonallcorrespondenceorotherpaperworkissuedbythepartnership.

Thepartnershipshouldregisterfortax(seeSection4–Taxation).Finally,asperthesoletrader,separatebankaccountsshouldbeopenedforthepartnershipbusinessandthebusinesswillalsobesubjecttoanystatutoryrestrictionsorregulationspertinenttotheparticularbusiness.

LimitedCompanyAlimitedcompanyissimilartoapartnershipwithonefundamentaldifference–anincorporatedcompanyisanentitydistinctorseparatefromitsmembers.ItiscreatedbytheactofregisteringitwiththeCompaniesRegistrationOfficeandit‘lives’untilitiswoundupeithervoluntarilybyitsownersorinvoluntarilybyitscreditorswhenitcannolongermeetitsdebts.Asaseparatelegalbody,thelimitedcompanycanownproperty,issuelegalproceedingsandbesued,makecontracts,etc,justlikeanyotherperson.Whateverthecompanyownsisseparatefromthepersonalpropertyofitsmanagementteam.However,becauseanincorporatedcompanyisalegalcreationandlimitedliabilityisavaluableprivilege,itspowersarealsocontrolledandregulatedbylaw.

Astheprivatecompanywithlimitedliabilityisthemostappropriatetomostsmallbusinesses,itistheformationofsuchacompanywhichwillnowbeoutlined.

ThenormalmethodofincorporationisbyregistrationundertheCompaniesActs.Inordertoregisteraprivatelimitedcompany,thefollowingdocumentsmustbepreparedandfiledintheCompaniesRegistrationOffice:

»» MemorandumofAssociation,whichoutlinesthepurpose(s)ofthecompanyanditsproposedactivities.Italsospecifiestheinitialshareholdersandhowmuchtheyhavesubscribed.

»» ArticlesofAssociation,whichspecifiestherulesforgoverninginternalproceduresinthecompanyandtherightsoftheshareholder.

»» FormA1,whichincludesastatementofFirstSecretaryandDirectorsandthesituationoftheregisteredoffice,aDeclarationofComplianceandtheCompaniesCapitalDutyStatement.

»» Bankdraftfortheregistrationfee.

Itisusualforbusinessestoinstructsolicitorsoraccountantstodealwithincorporationandforthemtodosotheywillneedthefollowinginformation:

»» Proposedcompanyname.»» Registeredofficeofthecompany.»» ParticularsofSecretary(includefullname,formername,ifany,andaddress).»» ParticularsofDirectors(asperSecretary,butalsoincludingdateofbirth,nationality,businessoccupationandotherdirectorships).

»» Draftobjectsclause,whichdescribesthepurpose(s)ofthecompanyandallactivities,orworks,whichitintendstogetinvolvedin.

Onreceiptofthisinformation,thesolicitor/accountantwillthenarrangetohaveallthenecessarydocumentsexecutedandfiledintheCompaniesRegistrationOffice.

OncetheapplicationisacceptedbytheCompaniesRegistrationOffice,aCertificateofIncorporationwillbeissued.TheCertificateofIncorporationisanimportantdocumentasitisconclusiveproofofthecompany’s


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existence–itsproductionislikelytoberequiredbybankspriortoopeningaccountsinthenameofthecompanyanditwillalsoberequiredtoregisterpropertyinthenameofthecompany.TheCertificateofIncorporationalsospecifiesthecompanynumber,whichwillbeneededinallfuturecorrespondencewiththeCompaniesRegistrationOffice.

OncetheCertificateofIncorporationisissuedandthefirstmeetingoftheboardofdirectorsisheld,thecompanycanbegintotrade.

Thecompanyisalsoobligedtocomplywithanystatutoryrestrictionsorregulationspertinenttotheparticularbusinessasmentionedpreviouslyinconnectionwithsoletradersandpartnerships(althoughformRBNIBistheappropriateformforregistrationofanybusinessname).

Thecompanyshouldregisterfortax(seeSection4Taxation).

Anumberofcommercialentitiespre-register‘shelfcompanies’whichtheythensellontopeoplewhowishtooperatethem.Thiscanbethequickestandcheapestwayofgettingalimitedliabilitycompanyincorporated.However,itisnotsoeasytochangethenamesothesecompaniestendtoadopt(andregister)atradingname.Also,thememoandarticlesofassociationofthecompany,whichsetoutwhatitcanandcan’tdo,willbeverygeneralandstandardinnature,whichmightnotsuitaparticularpurpose.

Co-operativeAsco-operativesarenotusuallythevehicleforprofitmakingenterprises,itisnotintendedtogointotoomuchdetailontheirformationhere.

Cooperatives,formallyknownas“acooperativesociety”or“anindustrialandprovidentsociety”,canbeformedandregisteredbyanygroupof7ormorecitizensovertheageof18years.CooperativescanberegisteredeitherasacompanyintheCompaniesRegistrationOfficeorasasocietywiththeRegistrarofFriendlySocieties.

Onregistration,theCo-operativeSocietybecomesacorporationwithlimitedliability.Aco-operativeisthereforesimilartoalimitedcompany–however,thereisonemaindifferencewhichrelatestoshareholding.Inacompany,thereisnolimittotheshareholdinginterestwhichamembermayhaveinthecompany,whereasinaco-operativeamember’sshareholdingisrestrictedbystatute.Thisrestrictiontendstokeepco-operativesdemocraticinnatureandtoattractmembersbecausethesocietywillhelpmeetpracticalneedsratherthanbenefittheownersofcapital.

Intellectualproperty“Intellectualproperty”referstotheownershipofknowledgeandideasofanovelanduniquenaturethathaveacommercialvalue.Examplesincludepatentsthatdescribeexactlyhowascientificinventionworks,adesignofaproductorthecontentofapublication.

Theregistrationofabusinessinanyoftheformsabovedoesnotprovideanyprotectionfortheintellectualpropertythatitowns.Businessesnormallycreateintellectualpropertyasaresultoftheiroperation;theydevelopproductsandpublishmarketingmaterialstopromotethem.Sometimes,theirproductsareintellectualinnature,suchasisthecasewithpublishingcompanies,filmproductioncompanies,recordlabels,etc.Allofthisneedstobeprotectedbyregistrationandthetypeofregistrationwilldifferwiththetypeofintellectualpropertyinvolved.Detailsofpatent,designandcopyrightregistrationcanbeobtainedbysearchingwww.basis.ie.However,someintellectualpropertyisnormallygeneratedrightatthecreationofthebusinessandneedstobeprotectedstraightaway.Themostcommonexamplesarethetradingnameandtrademarkorlogoofthebusinessandthesearedealtwithbelow.

RegistrationofaTradingNameAsmentionedabove,onceabusinessbeginstooperateunderanynameotherthanthenamesoftheownersor,inthecaseofacompanyorcooperative,undertheproperlegalnameoftheorganisation,itmustregisterthenameunderwhichitistrading.Aregistrationwillnotbepermittedifitis‘confusinglysimilar’toanexisting


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registerednamebutonceregistered,otherswillbepreventedfromusingthatnameandlogo.

AnapplicationforregistrationmustbesubmittedtotheCROwithinonemonthofthedateofadoptionofthebusinessname.

Theformsforregistrationare:»» RBN1foranindividual»» RBN1Aforapartnership»» RBN1Bforabodycorporate

Applicationscanbefiledelectronicallyathttp://forms.cro.ie/

Youshouldnotethatregistrationofabusinessname»» doesnotgiveprotectionagainstduplicationofthename»» doesnotimply-thatthenamewillnecessarilyproveacceptablesubsequentlyasacompanyname»» doesnotauthorisetheuseofthenameifitsusecouldbeprohibitedforotherreasons.Itshouldnotforinstancebetakenasanindicationthatnorights(e.g.trademarkrights)existinthename

TheCROdoesnotcheckproposedbusinessnamesagainstnamesontheregistersofcompanies,businessnamesortrademarks.Youare,therefore,advisedtoinvestigatethepossibilityofothershavingrightsinthenameyouproposetousebeforeincurringexpenditureinstationery,etc.

Youcanchecktheregisterofcompaniesandregisterofbusinessnamesfreeofchargeathttp://www.cro.ie/search.Thesearchfacilityprovidesroundtheclockaccesstocompany/businessinformation.ItisidenticaltothatavailableintheCROpublicofficeandtheresultsareinstantlydisplayed.Alternatively,youcanvisittheCROpublicoffice.

RegistrationofanInternetDomainNameTheInternethasbecomeanessentialpartofmostbusinessesandtheideaofconductingalloratleastpartofyourbusinessthroughawebsiteisanincreasinglycommonphenomenon.Websitedesignisabusinessinitself–however,allwebsitesmusthaveadistinctanduniquedomainname.

ThedomainnamesystemhelpsuserstofindtheirwayaroundtheInternet.EverycomputerhasauniqueaddressandthegoalofthedomainnamesystemisforanyInternetuser,anyplaceintheworld,toreachaspecificwebsiteaddressbyusingthedomainname.

IfyouintendtousetheInternetinyourbusiness,youwillprobablywanttohaveadomainnamethatrelatestoyourtradingnameandtoprotectit,itmustberegistered.Thiscanbedoneinseveralways.Somebusinessesdealdirectlywithaselecteddomainnameregistry,whileothersusetheirInternetserviceprovidertoregisterthedomainnameonitsbehalf(makingsurethattheregistrationiseffectedinthenameofthebusinessandnotthatoftheInternetserviceprovider).

Ifyouwishyourdomainnametobeassociatedwithaparticularcountry,suchas,forexample,Ireland,itisnecessarytogototheNationalRegistrydesignatedwithresponsibilityforadministeringthedomaininthatregion.InIreland,thisistheIEDomainRegistryLtd(www.domainregistry.ie)Seekadvicefromyourwebdevelopmentservicesprovider.

Inrelationtothechoiceofname,thebasicprincipleof“firstcome,firstserved”applies.However,asthenamewillformanimportantpartoftheimageofyourbusinessanditsaccessibilityontheweb,thevariouspossibilitiesshouldbefullyconsideredbeforemakingafinalchoice.

RegistrationofaTrademarkAtrademarkreferstothenameofacompanyorproductandthewayinwhichitisrepresentedvisually;withalogoforexample.


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Anytraderwhetheranindividual,companyorfirmwhousesorproposestouseaTrademarkcanapplytoregisterthatTrademark.Youcanapplytoregisteryourmarkeitherbeforeyoustarttouseitorafterwards.Generallyspeakingyoushouldapplytoregisteramarkassoonaspossibletoensurenooneelseappliestoregisterthesameorsimilarmarkbeforeyoudo.

Toapplyyoushouldcompletetheofficialform.ThisshouldthenbelodgedatthePatentsOffice.Thefeeforfilinganapplicationmaybepaidatthistimeorwithinonemonthofthatdate.AnapplicantmaypursuehisorherapplicationpersonallyorchoosetoemploytheservicesofaregisteredTrademarkAgent.Ifanapplicationmeetsthecriteriaforregistration,itisregisteredwitheffectfromthedateofapplication.

Whenanapplication(whichcontainstheminimuminformationrequired)isreceived,afilingdateandapplicationnumberisassignedandareceiptisissued.TheMinimumrequirementsforafilingdateare-

»» ArequesttoregistertheMark(completionoftheprescribedapplicationformmeetsthisrequirement)»» Thenameandaddressofthepersonrequestingtheregistration»» Arepresentationofthemark»» Astatementorlistofthegoodsand/orservicesforwhichregistrationofthemarkissought

Theapplicationisthenexaminedastoitsregistrability.Theexaminationprocessincludesasearchofrelevantdatabasestoascertainwhetherthemarkorasimilarmarkhaspreviouslybeenregistered.Ifthisisfoundtobethecase,thentheOfficemayrefusetoregisterthemark.

Theexaminationalsoaddressesotherobstaclestoregistrationsuchas,forexample,whetherthemarkissimplyalaudatorystatementofaproduct’squality(e.g.“TopGrade”)orasignthathasbecomegenericwithinaparticularfieldofcommercialactivity.Theseareamonganumberofgroundsonwhichanapplicationforregistrationmayberefused.

Ifitisproposedtorefuseregistrationinagivencase,theApplicantwillbeinformedofthereasonswhyandwillbeaffordedanopportunitytomakeargumentsinsupportoftheapplication.Beforeanydecisiontorefusebecomesfinal,theApplicantwillhavearighttoattendanoralhearingbeforeaseniorofficialoftheOffice.

Iftheapplicationisacceptedforregistration,detailsofthemarkwillbepublishedintheOfficialJournal.Within3monthsoftheadvertisementofamark,anypersonwhoobjectstoitsregistrationmaysendanoticeofoppositiontotheOfficeandtheOfficewillcopythistotheApplicant.Eachside(theApplicantandtheOpponent)isthengivenanopportunitytofilewrittensubmissionsinsupportofitscaseandthequestionofwhetherthemarkshouldberegisteredisultimatelydecidedbyaseniorofficialoftheOffice.

ATrademarkcanlastforever.Itisinitiallyregisteredfortenyears(fromthedateoffilingoftheapplication).Registrationscansubsequentlyberenewedeverytenyearsonpaymentoftherenewalfee.


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4 - TaxationAllbusinessesmustbecompliantwiththecurrenttaxregime.Toensurecompliance,youmustbeawareoftheprovisionsapplicabletoyouandmakearrangementstoensureyouwillbeinapositiontomeettheserequirements.Thiswillinvolveclearplanninginbothanadministrativeandbudgetarycapacityfromthebeginning.

Thefollowingisageneraloutlineofthevariousmattersthatmightaffectyourbusiness,howevertheadviceofyourprofessionalfinancialadvisorshouldbetakenandfollowedfromthestart.

Registration&TaxNumberAssoonasyouintendtostartyourownbusiness,youshouldadviseyourlocaltaxoffice.Thisisdonebyfilingtheappropriateregistrationform.

Theoptionsare:»» FormTR1–Theregistrationformusedbyanindividual,soletraderorpartnership.»» FormTR2–Theregistrationformusedbyacompany.

TheaboveformscanbeusedtoregisterforIncome/CorporationTax,Employer’sPAYE/PRSIVATandasaPrincipalContractor.

Income Tax is payable at the following rates:

20% 41%

Single / Widowed without dependent children €36,400 Balance

Single / Widowed qualifying for One Parent Family Tax Credit

€40,400 Balance

Married Couple - one spouse with income €45,400 Balance

Married Couple - both spouses with income €45,400(withanincreaseof€27,400max),

Balance

Onregistration,youwillbegivenanewtaxnumberifyouwerenotpreviouslyregistered.Ifyouwerepreviouslyregistered,thesametaxnumberwillbeused.Thisnumberisimportant,asitwillbeneededinfilingallreturnsandcorrespondencewiththetaxoffice.

IncomeTaxIncomeTaxispayablebyindividualsontheannualprofitorgainsfromyourbusiness,andonotherincome(forexample,rentalincome).Asaselfemployedperson,youareresponsibleforfilingyourownreturnsthroughtheselfassessmentsystem.

Thetaxyearbeginson1Januaryandendson31Decembereachyear.Ifyourannualaccountsarenotmadeuptotheendofeachcalendaryear,youwillbetaxedontheprofitsofyouraccountingyear.

KeydatesinthepaymentofIncomeTaxare:»» Preliminarytaxmustbepaidby31Octobereachyear.»» Yourtaxreturnmustbefiledaftertheendofthetaxyearbutnotlaterthanthe31Octoberintheyearfollowingthetaxyear.

»» Paymentsofthebalanceoftaxdue,ifany,mustbemadeby31Octoberintheyearfollowingtheendofthetaxyear,providedtherequirementsregardingthepaymentofpreliminarytaxhavebeenmet.


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Failuretofilethereturnbytherequireddatewillresultintheimpositionofsurcharges,whicharecalculatedonthefulltaxpayablefortheyearanddonottakeintoaccountanypaymentsonaccount.Thesurchargeiscalculatedasfollows:

»» 5%ofthetaxdue,subjecttoamaximumof€12,695,wherethereturnisfiledwithin2monthsofthespecifieddate.

»» 10%ofthetaxdue,subjecttoamaximumof€63,458,ifthereturnisnotfiledwithin2monthsofthespecifieddate.

Note,however,thatfornewbusinessesthesurchargeprovisionsapplyfromthesecondfilingdateonly.

CorporationTaxCorporationTaxispayablebyacompanyonitsprofits,whichwillincludebothincomeandcapitalgains.Theselfassessmentsystemalsoappliestocompanies,whichmeansthatthecompanyisresponsibleforfilingitsownreturnsinrespectofeachaccountingperiod.ThisreturnmustbesubmittedtotheRevenueCommissionerswithin9monthsoftheendoftheaccountingperiodtowhichitrelates(butnolaterthanthe21stdayofthatmonth).Acompanymaypostponethepaymentofthefirstyear’spreliminarytaxfor12monthsifthetaxislessthan€150,000.

Ifthereturnisnotfiledintime,surchargeswillbeimposed,asinthecaseofIncomeTax.Inaddition,thecompany’suseofallowancesandlossreliefswillberestricted.

CorporationTaxratesrangefrom12.5%(payableonthetradingincome)to25%(otherincome).Companiespaytheirpreliminarytaxonemonthpriortotheendofanaccountingperiod(butnolaterthanthe21stdayofthatmonth).Anyremainingliabilityshouldbepaidbythecompanywhenthecorporationtaxreturnisfiled.

Onceyouhavesettledonyour“accountingperiod”,youraccountantorfinancialadvisorwilladviseonthekeydatesapplicabletoyou.

Employer’sPAYE&PRSIOnceyouemployapersonandpaythemeither:

»» €8perweek(€36permonth)ormoretoapersonwhohasonlyoneemployment,or»» €2perweek(€9permonth)ormoretoapersonwhohasseveralemployments,thenyoumustregisterforPAYEandPRSI.

Thisisdonewhenyouareregisteringwiththetaxoffice(seepreviouspage).NotethatacompanymustregisterasanemployerandoperatePAYE/PRSIonthepayofdirectorseveniftherearenootheremployees.

OperationofthePAYE(PayAsYouEarn)systemiswheretheemployercalculatesthetaxdueonanemployee’sincomeanddeductsiteachtimeapaymentofwagesisbeingmade.

ThePRSI(PayRelatedSocialInsurance)systemissimilarwherebytheemployerdeductsthePRSIcontributiondueonanemployee’sincomeeachtimeapaymentofwagesismade.

ThetotalPAYEandPRSIdeductionmustbepaidtotheCollectorGeneralwithin14daysfromtheendofthemonthinwhichthedeductionsweremade.AformP30shouldbefiled(evenifthereisnoPAYE/PRSIliabilityforaparticularmonth).Alternatively,youcanarrangetopayyourPAYE/PRSIthroughthedirectdebitschemeandmakeanannualreturnontheformP35fortheyear.

ToassistinthedeductionofPAYEandPRSI,eachemployerisissuedwithaCertificateofTaxCreditsandStandardCut–offPointorTaxDeductionCardforeachemployee.Theemployershouldthenbeabletodeductthecorrectamountoftaxoneachpayday,whichshouldmeettheemployee’sliabilityfortheyear.

Aftertheendofeachtaxyear(31December),theemployermustgiveeachemployeeaformP60,whichcertifiesdetailsofeachemployee’spay,taxandPRSIcontributionsforthetaxyear.Thisshouldbedone


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before15Februaryinthesubsequenttaxyear.Attheendofthetaxyear,theemployermustalsocompleteendofyearP35formswhichwillbesenttothembytheEmployers’P35Unit.Thesemustbecompletedandfiledby15Februaryalso–penaltiesariseonlatereturns.

VATVAT,whichstandsfor“ValueAddedTax”,ischargeableonthesupplyofgoodsandserviceswithinIrelandbyanyindividual/partnership/company,etc.,thatsuppliestaxablegoodsandservices,inexcessofaspecifiedlimit,inthecourseorfurtheranceofbusiness.ItisalsochargeableontheacquisitionofgoodsbyaVATregisteredpersonwithintheEUandgoodsimportedintotheStatefromoutsidetheEU.

Atpresent(2008),thespecifiedlimitperannumis€70,000inrespectofthesupplyofgoodsand€35,000inrespectofthesupplyofservices.Therefore,ifyourannualturnoverexceeds,orislikelytoexceed,eitheroftheselimitsyoumustregisterforVAT.

Exemptedgoodsandservicesincludefinancial,medicalandeducationalactivities–forexample,admissiontosportingeventsandcertainchildcareservices.

Zeroratedgoodsandservicesincludeexports,certainfoodanddrink,oralmedicine,certainbooks(includingatlases)mostclothesandfootwearsuitableforchildrenunder11yearsold.

ReducedratesofVAT,oneofwhichis13.5%andappliestocertainfuels,hotelandholidayaccommodation,buildingsandconstructionservices,someentertainmentadmissions,certainnewspapersandperiodicalsetc.

Again,thisshouldbedonewhenyouareregisteringwiththetaxoffice,asdescribedpreviously.

OnceyouhaveregisteredforVAT,itmustbechargedonyourbillsandyouwillbeallowedcreditagainstthisliabilityfortaxdueonbusinesspurchasesandotherexpensesasvouchedbycorrectlypreparedinvoices.VATmaynotbereclaimedoncertainexpenses.Insomecases,thebusinesshastheoptionofaccountingforbillswhenthecashisreceived,ratherthanwhentheinvoiceisissued.VATispayableatseveralrates.Thestandardrateis21%.YouraccountantorlocaltaxofficewilladviseontheVATrateappropriatetoyourbusiness.OnceyouareregisteredforVAT,aformVAT3mustbefiledevery2monthstogetherwithanyVATdue.Thismustbefiledbythenineteenthdayaftertheendofthe2monthperiodinquestion.EvenifthereisnoVATdue,thereturnmustbereturnedmarkedNil.AswithPAYE/PRSI,thereisprovisionformakinganannualreturnandpaymentoftheVATduebydirectdebit.BusinesseswithanannualVATliabilityoflessthan€3,000mayopttofileVATreturnsonahalfyearlybasisfromJuly2007.

Finally,itshouldbenotedthat,evenifyouarenotobligedtoregisterforVAT(becauseyourturnoverdoesnotexceedthespecifiedlimits),youcanstillchoosetoregisterforVAT,whichcanbebeneficialforcertainbusinesses.

Records,Payments&PenaltiesRecords.Itisimperativeforallbusinessesthatproperrecordsandbooksofaccountarekept.Thenatureoftheserecordswillclearlybedeterminedbythetypeandsizeofthebusiness–however,forallbusinesses,itisessentialthattheyareaccurateandaseasilymanagedaspossible.Youraccountantorprofessionalfinancialadvisorwilladviseonthesystembestsuitedtoyourparticularbusiness,beitamanualorcomputerisedsystem.

Theserecordswillbeessentialindeterminingthevarioustaxliabilities.Theywillalsobeneededifyouwishtoevaluateyourbusinessorconsiderexpansion(mostfinancialinstitutionswillseekatleast3years’accountswhenconsideringanapplicationforfurtherborrowings).Inaddition,allcompanieswillneedproperbooksofaccountwhenpreparingandfilingtheirannualreturnintheCompaniesRegistrationOffice.

Thebusinessbooksandrecordsthatyoukeepshouldvouchandconfirmalloftheinformationgiveninyourtaxreturn.ThesebooksandrecordswillincludeSalesBooks,PurchasesBooks,CashBooks,ChequePaymentBooks,Invoices,BankStatementsandothersupportingrecords,suchasDiaries,TillRolls,Cheque


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Stubs,andReceipts.Youmustthenkeepallofthebooksandrecordsforatleast6years.

PaymentTheRevenueCommissionershaveseveraloptionsforpaymentoftaxinordertosimplifytheprocedureandmakeitasconvenientaspossibleforalltaxpayers.

Theseoptionsinclude:»» DirectDebit–Whereyouauthoriseanagreedmonthlypaymentforcredittoyourtaxaccount.Thiscanbeaneffectivewayofbudgetingforpaymentofthepreliminarytaxdue(ratherthanpayingbyonelumpsum).

»» Post–Whereyousendpaymentintheprepaidenvelopeenclosedwiththetaxform.»» PersonalAttendance–WhereyoucalltotheCollectorGeneral’sofficesatDublinorLimerick.»» BankGiroPayment–Whereyousendpaymentbycredittransferthroughthebank(inthiscase,5workingdaysshouldbeallowedforpaymenttoreachtheCollectorGeneralandbecreditedtoyourtaxaccount).

PenaltiesTherateofinterestonoverduetaxisspecifiedbythetaxauthorities.Thisrateisreviewedperiodicallyinlinewithtrendsinmarketinterestrates.Thecurrentrate(2008)approximatesto1%permonth.InterestonlatepaymentoftaxisnotanallowableexpenseincalculatingtaxableincomeforIncomeTaxorCorporationTaxpurposes.Thecombinationofhighinterestrateandnondeductibility(incomputingtaxableincome)makesthisinterestexpensive.


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5 - Finance & SecurityMoneyisneededtosetupabusiness,whetheritisforequipment,premises,workingcapitaloranincomewhilethebusinessisbeingestablished.Itisvitaltoensurethatadequatefundsareavailablefromthestart,asinsufficientfundswilladverselyaffecttherunningofanybusinessandmayleadtothedemiseofwhatcouldhavebeenaviableventure,ifproperlyfinanced.

Moneycanbelentandcreditmaybegiveninavarietyofdifferentwaysandsubjecttoarangeofterms.Forexample,aspecifiedsummaybelentforafixedtermatastatedrateofinterestwiththeentiresumbeingpayableonafixeddateorbyinstalments.Alternatively,acreditormightallowaborrowertodrawvaryingsumsonacurrentaccountuptoastatedlimit,asonabankoverdraft.Somecreditisforaspecificpurpose–forexample,wherethesupplierofgoodsallowshiscustomerstopayforthembyinstalmentsorwhereabanklendsmoneytoadeveloperinreturnforamortgageonthelands.Inothercases,theremaybenodefinitearrangementastohowthemoneyistobeused,suchaswhereacompanyissuesdebenturestothepublic.Increasingly,thelenderwillrequiresomeformofsecurityandthefollowingisageneraloutlineofsomeofthepossibilities.

GoodsasSecurityWhenacustomerrequiresgoods,theyoftenalsoneedcreditandtherearevariousoptions.Ifthesellerallowspaymenttobedeferredormadebyinstalmentsandmakesnoprovisionforwhenownershipistopass,thecontractisacreditsale.

Ownershippassestothebuyeroncetheyareinpossessionofthegoodsand,ifthebuyerdefaultsonthepaymentsdue,thesellercanonlypursuethebuyerfortheamountoutstandingandcannotrepossessthegoods.

Ifasellerwishestohavetheoptionofrecoveryofthegoodsandtherebygivehimself/herselfsecurityforpayment,he/shecandosobystipulatingthatownershipisnottopasstothebuyeruntilcertainconditionsarefulfilled(usuallyfullpayment).Thisisknownasa“reservationofthetitle”clauseandmeansthatthesellercanrecoverthegoodsuntiltheconditionsaremet.

Alternatively,thesuppliermayallowthecustomertopossessandusethegoodsinreturnforarentalpayment,withanoptionforthecustomertobuythegoodsafteraspecifiednumberofpaymentshavebeenmade.ThisisknownasaHirePurchaseagreement.

AHirePurchaseagreementcanbemadebetweenasupplierandacustomer–however,quiteoften;asupplierwillpreferpaymentimmediatelyandwillhavearrangementsforafinancecompanytoprovidethecredit.Insuchatriangularsituation,thecustomernegotiateswiththesupplierand,ifthecustomerrequirescredit,thesupplierrequireshim/hertocompleteanapplicationformforthefinancecompany.Ifthefinancecompanyissatisfiedwiththecreditworthinessofthecustomer,itthenbuysthegoodsfromthesupplierandleasesthemonHirePurchasetothecustomer(theHirePurchasepricebeinghigherthanthecashprice,thedifferencebeingtheprofitforthefinancecompany).Thecustomerobtainsthegoodsdirectfromthesupplierandthefinancecompanyrarelyseesthem.

Ifsomeonewhoalreadyownsgoodswishestousethemassecurity,therearetwooptions:»» He/shecantransferownershiptothecreditorbutretainpossession,withthecreditorundertakingtore-transferownershiponrepaymentofthemoneysecured.Inpractice,thisformofcreditwillbeinwritingandisknownasabillofsale.Everybillofsalemustbeacknowledgedandregisteredwithin7daysofexecution.

»» Theborrowercantransferpossessionofthegoodstothelenderwhileretainingownership,thereverseofabillofsalesituation.Thisisknownasapawnorpledge.Thegoodscanberedeemedonrepaymentor,ondefault,canbesoldbythecreditor.

»» Theuseofbillsofsaleorpawns/pledgesisnowalmostobsolete.

Goodscanalsobesubjecttoalien,whichisarighttoholdthepropertyofanotherassecurityforthe


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performanceofanobligation,andinthiscaseistherightofacreditortoretainpossessionuntiladebthasbeendischarged.

Examplesincluderetentionofacarbyagarageuntilthecostoftherepairshasbeenpaid,oradrycleanersretainingacustomer’sclothesuntilthebillispaid.

Personal/BusinessLoansMostbanksandfinancialinstitutionsprovidepersonal/businessloansfortheacquisitionofgoods.

Oncethecreditorhasbeensatisfiedinrelationtotheborrower’screditworthinessandsecurity,themoneyisprovidedtotheborrower/customer,whothenpurchasesthegoodsinaseparatetransaction.

Theagreementnormallyincludesarepaymentschedule,withtheentiredebtbecomingdueifthereisdefaultonanyonepayment.

Usually,theprovisionofcreditbywayofpersonalorbusinessloanswillincludearequirementthattheborrowerprovidesecurityfortherepaymentofthedebt.

Forinstance,thebankcouldrequiretheborrowertofurnishabillofexchange,which,ifthereisdefault,canbenegotiatedandusedasaconvenientmethodofpursuingtheborrowerfortheamountdue.

Moreoften,thelendinginstitutionwillrequireadditionalsecuritysuchasarightagainstproperty,apersonalrightofactionagainst,oranindemnityfrom,anotherpersoninadditiontotheborrower,ortheassignmenttothelenderofalifepolicy.

GuaranteeasSecurityAnothermethodofprovidingsecurityforborrowingsisforthelendertorequiretheborrowertoincludeathirdpartywhowillbecomeliableforthedebtiftheborrowerfailstopay–thisthirdpartywillberequiredtoexecuteaguarantee.

Aguaranteeiswhereapersoncalledeitherthe“guarantor”orthe“surety”givesacollateralpromisetoanswerforthedebt,defaultormiscarriageofanother.Inadebtsituation,theguarantorundertakestopaythedebtiftheoriginalborrowerfailstodoso.

Aswiththeoriginalborrower,beforeacceptingapersonasguarantor,alendinginstitutionwillneedtosatisfyitselfastotheircreditworthinessandsecurity.Thecontractofguaranteemustbeinwritingorbeevidencedinwriting.Onceinplace,itwillnotbeactivatediftheborroweradherestotheagreedrepaymentschedule.If,however,theborrowerdefaults,thelendinginstitutioncancallintheguaranteeandtheguarantorbecomesliable.

Inordertominimisehis/herobligations,theguarantorshould,wherepossible,ensurethattheamountcoveredbytheguaranteeisclearlystated(includingthepossiblecostsandinterest)andthatitisforalimitedtimeperiodonly.

Itshouldalsobenotedthat,ifaguarantordischargesadebtwhenrequiredbythelendertodoso,heisentitledtopursuetheborrowerfortheamountpaidor,iftherewasmorethanoneguarantor,topursuehisfellowguarantors.

LandasSecurityThemostpopularwayofusinglandandbuildingsassecurityisbycreatingwhatisknownasa“mortgage”.Amortgageisthetransferofaninterestinlandorotherpropertytothelenderassecurityforaloan.Theborroweragreestomakeperiodicpaymentstothelenderinrespectoftheloanandinterestand,providedthesepaymentsaremaintained,isallowedtoremaininpossessionoftheproperty.

Theamountoffinancethatcanberaisedbyamortgageofpropertyisdirectlyrelatedtothevalueofthe


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property–however,thelenderwillbeequallyconcernedtoensurethattheborrowerhastheabilitytorepay.

Therearetwoformsofmortgagewhichcanbeusedtosecureloansnamely:»» Alegalmortgage,wheretheborrowertransfersthelegalestateinthepropertytothelender.Todothis,mortgagedeedsareexecuted,stampedandregisteredintheappropriateregistry(LandRegistryorRegistryofDeeds).Thecostsinvolvedwillincluderegistrationfees(€125intheLandRegistryand€44intheRegistryofDeeds).Therewillalsousuallybelegalfees,asthelenderwillrequireeithertheirownlegaldepartmentortheborrower’ssolicitortoinvestigatethetitleandcertifyittobeinorder,withtheborrowerusuallybeingresponsiblefortherespectivelegalfees.

»» Anequitablemortgage,where,inreturnforaloan,thelandowneragreestodepositthetitledeedstothepropertywiththelender.Withoutthetitledeeds,theownerwillfinditvirtuallyimpossibletosellormortgagethepropertytoanotherparty.Thisisalsoknownasanequitabledepositoftitledeeds.Thisformofmortgageislessformalandcheaperasnolegalfeesoroutlayarise–however,lendersarebecomingincreasinglylesslikelytoacceptthisformofsecurityasitcantakelongerandbemoreexpensivetoenforce.

»» Mostpeoplewillalreadybefamiliarwiththelegalmortgage,asthisisthestandardmethodofraisingthenecessaryfinancetopurchaseahouse.Similarproceduresapplywhenmortgagingabusinessproperty,asdescribedabove.

Inaddition,itisnotuncommonforpeopletotakeoutasecondmortgageonapropertytofundeitheranewventureortheexpansionofanexistingbusiness.Thelenderwillapplysimilarcriteriaasinthefirstmortgagewhenassessingsuchanapplication–theborrower’sabilitytorepayandconfirmation(bywayofprofessionalvaluation)thatthevalueofthepropertyexceedsthetotalborrowings.

Eitheramortgageorextensionofamortgageonafamilyhometofundabusinessventure,howeverpositiveitsprospectsshouldbeapproachedwithextremecautionandisgenerallyinadvisableforthesimplereasonthat,ifthebusinessgetsintodifficulties,thenthefamilyhomeisalsojeopardised.

Thereisalsolegislativeprotectionforanon-owningspouse,inthattheFamilyHomeProtectionAct,1976providesthattherecanbenodisposal,includingamortgagebothlegalandequitable,ofafamilyhomewithoutfirstobtainingthepriorconsentinwritingofthenon-owningspouse.

Companies&FinanceAswithsoletradersandpartnerships,alimitedcompanyalsorequiresfundstosetitupinbusiness.Acompanyhastwomainwaysofraisingcapital.

First,incompanieswithasharecapital,moneycanberaisedbyissuingsharesinthecompany.Ashareholdermustpaythecompanyforeachshareallottedtohim/herandthesharesthathavebeenpaidforareknownasthe“issuedcapital”.TheMemorandumofAssociationofthecompanywillspecifythecompany’s“nominalcapital”,whichisthefacevalueofthetotalnumberofshareswhichthecompanyhasauthoriseditselftoissue.Thisdoesnotmeanthatthecompanyhasissuedalloftheseshares,butmeanstheycandosoand,bysodoing,raisefinance.

Thesecondwayacompanycanraisefundsisbyborrowing–however,acompany’scapacitytoborrowisdeterminedbytheobjectsclauseinitsMemorandumofAssociation.Intheabsenceofanexpresspower,atradingcompanyisassumedtohaveanimpliedpowertoborrowforapurposeincidentaltothattrade.TherearealsousuallylimitsorrestrictionsontheamountthedirectorscanborrowwithoutthepriorsanctionofaGeneralMeeting.Asintheprevioussectiononpersonalandbusinessloans,loanstoacompanycanbesecuredorunsecuredand,similarly,lenderswillgenerallyinsistonsecurityforaloanofanysize.Usually,thecompanywillissuea“debenture”,whichisadeedissuedbythecompanyasevidenceofadebtorsecurityforaloanand,whereacompanyintendstousedebentures,anexpresspowertodosoisusuallyincludedintheMemorandumofAssociation.Itisimportanttonotethatadebentureholderisnotamemberofacompanybutmerelyacreditor.

Thecompanyhasgenerallytwooptionsinfurnishingsecurity,eitherafixedcharge,wheretheloanischargedonaspecificassetofthecompany,orafloatingcharge,wheretheloanischargedonsuchproperty


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asthecompanyhasfromtimetotime.

Asafixedchargecantieupanasset(inthatitcannotbedealtwithwithouttheconsentofthedebentureholder),thelatterisusuallythepreferredoption.Whereafloatingchargeisinplace,thecompanycanchangeassets,whichwillstillbecoveredbythecharge,withoutexecutingfurtherdocumentation.Inaddition,assetscanbechargedwhichwouldnotbeacceptableorsuitableforafixedcharge–forexample,debtorsandstock.

Afloatingchargebecomesafixedcharge(thisiscalled“crystallisation”)whenthecompanyiswoundup,areceiverisappointedoralenderinterveneswhenentitledtodoso(forexample,whenthecompanyhasdefaultedonloanrepayments).Untilthen,thechargeremainsdormantor“floats”overtheassets.

Onceachargehasbeenputinplace,particularsofitmustberegisteredintheCompaniesRegistrationOfficewithin21days;otherwiseitwillbevoidasagainsttheliquidatorandanycreditorofthecompany.Normallythisisdonebythelenderor,ifnot,theywillseekconfirmationfromyoursolicitorthattheywillseetoit.Similarly,onceachargehasbeendischargedyoushouldensurethatanentryofsatisfactionisrecordedintheCompaniesRegistrationOffice.Finally,ifthecompanydefaultsontheloan,thedebentureholdercanappointareceiver(ifallowedbythetermsofthedebenture)totakeoverthemanagementofthecompany,tobringanactionforthesaleoftheassetorassetschargedor,insomecircumstances,toapplytohavethecompanywoundup.


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6 - Legal Agreements & Contracts Inthissection,welookathowabindingcontractismadeandconsiderthosetypesofcontractthatfrequentlyariseinthecourseofabusiness.

Insimpleterms,acontractisanagreementwhichthelawwillrecogniseorenforce.However,inorderforanagreementtobeacontract,overtimethelawhaslaiddownthatcertainessentialelementsmustattachtoit.

EssentialElementsInsummary,thecriteriaforestablishingtheexistenceofacontractare:

»» Offer.»» Acceptance.»» Consideration.»» Capacity.»» Legality.»» Legalintent.»» Format.

Offer Acontractmustbeginwithanoffer.Itcanbemadetoonepersonorseveralbutitmustbecommunicated.

Itisveryimportanttodistinguishan“offer”froman“invitationtotreat”,astheformercanbeacceptedwhereasthelattercannot.

Examplesof“invitationstotreat”aregoodsinashopwindoworondisplay,inresponsetowhichcustomerscanmakeanoffer.

AcceptanceAcceptanceofanoffermustbeabsoluteandunqualified.

Ifitisnot,thentheoriginalofferisrejectedandcanonlybereinstatedifmadeafresh.

ConsiderationThisrequirementmeansthateachpartymustgivesomething,ordosomething,fortheother.Itmustbetwowayandmustbeofvalue.

Inbusinesstransactions,theconsiderationfromoneofthepartiesisusuallymoneyinreturnforeithergoodsorservices.

CapacityBothpartiestotheagreementmusthavethelegalentitlementtodoso,thatis,thelawmakessurethatcertainpersonswhomightbedisadvantagedbytheirageormentalconditionarenotnecessarilyboundbycontractsintowhichtheyenter.

LegalityTheagreementmustbelegal–forexample,anagreementtocommitacrimewillnotberecognised.

Legal intent Abindingcontractwillcomeaboutonlyifthepartiesintendtheretobeabindingrelationshipbetweenthem.Thisisnormallypresumedincommercialtransactions.

FormatManycontractsneednotbeinwriting–however,therearesomecontractswhichwillnotberecognisedunlesstheyareinthecorrectform–forexample,aHirePurchaseagreementmustbeinwriting.


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Onceanagreementcontainsalloftheelementslistedabove,itwillbelegallybinding.However,youshouldalsonotethefollowingthreematterswhich,ifpresent,arelikelytoinvalidatethecontract:

»» Mistake–Thiscanoperatetonullifyconsent,butthisconceptofmistakedoesnotincludewhereonepartyhasanerrorofjudgement,orunderestimateshisorherownabilitytoperformunderacontract,orhasageneralmisunderstandingofthelaw.

»» Misrepresentation–Whereonepartytotheagreementmakesastatementoffactwhichisuntrue.»» Duress–Whereonepartytothecontractclaimshe/shewasforcedintoenteringintothecontractorchangingaterminit.

Asyoucanimagine,mostcommercialtransactionswillgiverisetotheexistenceofacontract–anditisimportanttorememberthatmanycontractsareoralanddonotneedtobeinwriting.

However,regardlessofwhetherthecontractisoralorwritten,itisessentialthatyouareonnoticeofallofthetermsofacontract.Wheretheentirecontractiswritten,thismerelyinvolvesacarefulperusalofthedocument–however,inallothercases,thecontractwillcomprisebothexpressterms(thoseonwhichthepartieshavespecificallyagreed)andimpliedterms(thosewhichwillbeimputed,eventhoughthepartieshavenotspecificallyagreedtotheirinclusionorevenconsideredthem).Expresstermsshouldbeobvious–however,youshouldalsoputyourselfonnoticeofimpliedterms.Impliedtermscanbeimpliedthroughtheoperationofstatute(forexampletheSaleofGoodsandSupplyofServicesAct,1980)ortogivethecontractbusinessefficacy.

Types»of»Contract»Youwillnowappreciatethatyouwillbeapartytomanycontractsinthecourseofyourbusiness.Thefollowingisashortoutlineofthevariousformsofcontractthatmostcommonlyariseinbusiness.

ContractforthesaleofgoodsThisisacontractwherethesellertransfers,oragreestotransfer,ownershipofthegoodstothebuyerforamoneyconsiderationcalledtheprice.Itmaybeinwriting,orpartlywrittenandoral,orimpliedfromtheconductoftheparties.Asmentionedearlier,someofthesecontractsmustbeinwritingtobevalid–forexample,acontractforthesaleofaninterestinland.

HirePurchaseagreement»» Afurthercontract,whichisadevelopmentofacontractforthesaleofgoods,isaHirePurchaseagreement.Suchanagreementissubjecttoparticularstatutoryrequirements:

»» Itmustbeinwriting.»» ItmustspecifythecashpriceandtheHirePurchaseprice,theamountofeachinstalmentandthedatepayable.

»» Itmustincludeastatutorynoticeontherightsofthehirertoterminatetheagreementandontherestrictionsontheowner’srighttorecoverthegoods(ConsumerCreditAct,1995).

»» Acopyoftheagreementmustbefurnishedtothehirerandtheagreementmustprovidefora“coolingoff”period.

Furtherimpliedconditionsandlimitationsarealsospecifiedbystatute.

ContractforservicesAcontractforservicesisacontractwithanindependentcontractor(asopposedtoanemployee)fortheperformanceofaservice.Thelawhasnotlaiddownanyhardandfastrulesforestablishingwhatconstitutesanindependentcontractorbutratherthecircumstancesofeachcasemustbeconsidered.Thedistinctionisimportantfortaxpurposes,andasanemployer’sobligationstoanemployeeissignificantlydifferentfromtheirobligationstoanindependentcontractor.

ContractofemploymentFollowingonfromthisisanotherformofcontract–thecontractofemployment.Thisisacontractofservice


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orofapprenticeshipandmaybecreatedbydeed,inwritingorverbally.Incertainemployments,theemployeemustbegivenawrittenstatementsettingoutthetermsandconditionsunderwhichhe/sheisemployed(TermsofEmployment(Information)Act,1994)–seeChapter9ofthispublication,whichdealswithcontractsofemploymentingreaterdetail

ContractofinsuranceThesearecommonplaceinbothourpersonalandbusinesslivesandareparticularlyimportantinbusiness,giventhatthepotentiallosscanbegreater.Whatthenisacontractofinsurance?Itisacontractwhereoneparty(theinsurer)undertakesinconsiderationofthepaymentofapremiumtopaymoneytoanother(theinsured)onthehappeningofaparticularevent,suchasadeath,afire,atheft,etc.Mostbusinesseswillhaveseveralinsurancecontracts.

Examplesinclude:»» BuildingsInsurance.»» ContractsInsurance.»» ProductLiabilityInsurance.»» ProfessionalIndemnityInsurance.»» PublicLiabilityInsurance.»» KeyManInsurance.»» LifeAssurance.

Theformsofinsurancerequiredbyanyparticularbusinessareclearlydeterminedbythenatureofthebusiness.

Thereis,however,aparticularfeatureofinsurancecontractswhichmustbehighlighted–insurancecontractsaresaidtobe“oftheutmostgoodfaith”,whichmeansthattherehastobefulldisclosureandfranknessbetweentheparties.Whenseekinginsurance,allfactsandcircumstanceswhichmightinfluencetheinsurerindecidingwhethertoaccepttheriskandgrantcovermustbefurnishedtotheinsurers.Thisincludesdisclosureofconvictions,apreviousrefusalbyanotherinsureroranymaterialchangeincircumstancessincethelastrenewal.Ifaninsuredfailstofullydiscloseamaterialfact,theinsurermaybeabletoavoidliabilitywhenaclaimismade.

PartnershipagreementAnotherformofcontractarisinginbusinessisthe“PartnershipAgreement”.Thisagreementincludesallthetermsandconditionsofthepartnershipandwillusuallycovermatterssuchas:

»» Theplaceandnatureofthebusiness.»» Thenameofthefirm.»» Thedateofcommencementandthedurationofthepartnership.»» Thecapitalofthefirmandtheproportionbeingcontributedbyeachmember.»» Thesalary,ifany,tobepaidtoeachpartner.»» Theratioinwhichlossesandprofitsaretobedivided.»» Theaccountingmethodsandpreparationoftheannualprofitandlossaccountandbalancesheet.»» Theamountofdrawingswhicheachpartnermaytakefromthebusiness.»» Thedeath,retirementorbankruptcyofapartner.»» Thedissolutionofthepartnership.»» Theadmissionandexpulsionofpartners.»» Thecalculationofgoodwillintheeventofthedeathorretirementofapartner.»» Thepowersanddutiesofeachpartner.»» Theproceduretobeusedinsolvingdisputes.

Whileapartnershipagreementcanbeacomplexdocument,thetimespentpreparingitusuallyprovesveryworthwhileas,shouldanydifficultiesordisputesariseinthefuture,allpartiescanrefertothisonedocumenttoascertaintheirpositionandconfirmprocedures.

Shareholders’agreement


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Asimilartypeofcontractisusedbytheshareholderinacompanyandiscalleda“Shareholders’Agreement”.

TogetherwiththeArticlesofAssociation,itwillgoverntheproceduresandrulestoapplybetweenthevariousshareholders.


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7 - PremisesVirtuallyallbusinessesrequireapremisesorsomeformofpermanentbase.Manybusinessesmaybeginandsurviveinthespareroomoftheowner’shome–however,manymorerequireaseparateandspecificspace,iftheyaretothriveandmaximisetheirpotential.Inaddition,itcanbepreferabletokeepyourworkinglifeandpersonallifedistinct.

Inanyevent,ifyouareconsideringmovingpremises(andthedecisionastowhetheritisnecessaryforyoutodosoisnotalegalquestionbutratherabusinessand/orpersonaldecision),youshouldtakeintoconsiderationthefollowingmatters.

TitleWhatistitle?Titleisessentiallytherighttoownershipofpropertyorevidencevouchingsuchownership.Therefore,whateveryourtypeofpremises,itwillbenecessaryforyoutohavetitletoit.

Formsoftitlecanlooselybedividedintofreeholdandleaseholdinterests,thelatterbeingalesserinterest.

Unfortunately,manyofthetermsusedtodescribeinterestsinpropertyarearchaicandunfamiliar–however,thefollowingisashortsummaryofthemaintermsandwillgiveyouageneralindicationofthevariousinterestsinvolved.

FreeholdEstatesEssentially,therearethreeformsoffreeholdestate:

»» Thefeesimpleabsolute–Thisisthemostextensiveinterestinlandyoucanhaveandincludesnotonlyrightstothelandsurface,cropsandbuildingsbutalsotheairspaceaboveandmineralsbelow.Themodifiedfeesimpleisaslightlylesserinterestinthatyourinterestmaybesubjecttootherrights,suchasarightofwayorfishingrights.

»» Thefeetailestate–Thiswasdevisedasawayofkeepingpropertyinthefamilybut»» Israrelyfoundnowadays.»» Alifeestate–Thisisafreeholdestatewhichlastsforthelifeoftheholderorsomeothernamedperson–ontheirdeaththeestateends.

Ofthesethree,thefeesimpleisclearlythemostvaluableandappealing–fortunately,itisprobablyalsothemostcommonform.

LeaseholdEstatesAleaseholdinterestis,asthetermimplies,propertyheldonfootofalease.Mostpeoplewillhavecomeacrosstheterm“lease”,whichisagrantofpropertyfromalandlordtoatenantforadefiniteperiod.Thetenantisusuallyrequiredtopayrentand,insomeinstances,aonceoffpremiumoncreationofthelease(oftencalled“keymoney”).

Aleasecanbecreatedorally–however,moreoften,particularlywithbusinesspremises,itisinwritingandtheconditionsonwhichthepropertyisheldbythetenantareclearlyspecified.Providedthetenantcomplieswiththetermsofthelease,heisentitledtopossessionoftheproperty.Forthisreason,itisvitallyimportantthatcarefulconsiderationisgiventoaleaseagreementbeforeexecutingit.

Thetermsofaleasewillvarydependingmainlyonwhetheritisashorttermbusinessletting(usuallyanytermupto5years)oralonglease,thelatterhavingmuchmoreoneroustermsandconditions.

Inconsideringeitherlease,thefollowingmattersshouldbeclear:»» Thetermorlengthofthelease,notingthatyouwillbeliablefortherent,etc.,forthedurationofthelease,regardlessofwhetheryouremaininoccupationofthepremises.

»» Isthereabreakclause–therighttoterminatetheleaseearly?»» And,ifso,whataretheconditionsthatmustbecompliedwithinordertoavailofit?


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»» Istherearenewalclauseandagain,ifso,whatarethetermsthatmustbecompliedwithinordertoavailofit.Thiscanbeparticularlyimportantifyouaremakingaconsiderableinvestmentinordertoadaptthepropertytoyourneeds.

»» Theuserclause,whichoutlinestheusestowhichthepremisesmaybeput,shouldbeexpansiveenoughtocoverallofyourproposedbusiness.

»» Thedescriptionofthepropertyandthemap–itisimportanttoensurethattheycorrespondwithyourunderstandingofthepropertyontheground.

»» Theoutgoingsforwhichyouwillberesponsibleapartfromtherent,suchasrates,waterrates,ESB,servicecharges,insurance,etc.

»» Thepositiononassignmentandsubletting–ofteneitherprohibitedorpermittedonlywiththelandlord’swrittenconsent.

»» Thetermsonwhichanyalterationsmaybecarriedout.»» Whatsignsarepermitted?»» Areanycontentsincluded?»» Theamountofanysecuritydeposit.»» Whatarethetenant’sobligationsinrelationtorepairs?Usuallythelongerthelease,thehigherthelikelihoodthatthetenantwillberesponsibleforbothinternalandexternalrepairs–inshorterleases,thetenantmaybeonlyresponsibleforinternalrepairs.

Inaddition,theleasemayinclude“specialconditions”,whichhavebeeninsertedtospecificallycoverthecircumstancesofthecase.Obviously,theseshouldalsobecarefullyconsidered.

Alloftheconditions,manyofwhichwillbestandard,shouldbeviewedinthecontextoftheproposedbusiness.

AcquiringaPropertyOnceyouhavedecidedthatyouneedapremises,youwillthenneedtositdownanddecidewhatattributesthepropertywillrequiretoideallysuityourbusiness.

Possibleneedswillinclude:»» Sizeandspace.»» Suitability–doesitneedmodificationorcanitbeusedimmediately?»» Accesstoservices.»» Locationandfrontage–doesyourbusinessrequirestreetfrontexposure?

Theseneedswillhavetobebalancedbythepotentialcostandthefundsavailabletoyouforacquisition.

Onceyouhavedeterminedthetypeofpropertyyourequire,youwillthenneedtoconsultalloftheAuctioneersandEstateAgentscoveringtheareatoseewhatpropertiestheyhaveonofferwhichmeetyourcriteria.Occasionally,youmayknowofanidealpremisesnotonthemarketand,ifso,youcanapproachtheownerdirecttodiscussapossiblesaleandyoucouldbelucky.Moreoften,however,itwillbenecessarytoperseverethroughtheAuctioneers.TheAuctioneerwilltakeyoutoviewanypropertiesthathavethepotentialtomeetyourneeds.

Onceyouhavesettledonaproperty,youwillnegotiatewiththeAuctioneertoagreeafinalprice.Thisagreementwillusuallybesubjecttocontract(whichwillnowbeissuedbytheseller’sSolicitortoyoursolicitor)andsurvey,whichmeansthatyouwillnotusuallybelegallybounduntilcontractsaresignedandyouhavereceivedasatisfactorystructuralsurvey.AsurveyisnotobligatorybutwillberecommendedbyyourSolicitorwhenadvisingyouinrelationtothecontracts,asapurchaserisusuallydeemedtoacquirethepropertyasitstandsandwillhavenorecourseagainstthesellerforanydifficultiesthatmayariselater.

Onceyouaresatisfiedwithallthetermsofthecontract,theresultsofthesurveyandhavethenecessaryfinancesinplace,youwillbeinapositiontosigncontracts.Usuallya10%depositispayableatthisstage,withthebalancebeingdueonthedateofcompletion.Onceyousignunconditionalcontracts,youareobligedtocompletethetransaction.


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Onthecompletiondate(whichisspecifiedinthecontract),youwillpayoverthebalanceofthepurchasemoniesand,inreturn,willbeentitledtoreceivethedeedsofthepropertyandtoenterintooccupation.Ifyouaremortgagingtheproperty,thiswillbedonesimultaneouslyandwhileyouwillstillbeentitledtoenterintooccupation,thelendinginstitutionwillbeentitledtothedeedsuntiltheloanhasbeenrepaid.

Otherfactorsthatneedtobeconsideredinthecourseofacquiringpropertyare:»» Costs.»» PlanningPermissionandBuildingRegulations.»» Otherstatutoryrequirements.

CostsInadditiontothepurchaseprice,yourbudgetwillneedtoincludeprovisionfor:

»» Surveyor’sfees.»» Stampduty,payableattheratesshowninthetableonthepurchasepriceorpremiumpayableonthegrantingofaleaseforcommercialproperty.

»» Aleaseisalsosubjecttofurtherstampdutyontherentattherateof1%.»» Legalfeesplusoutlay(registrationfees,searchfees,etc.).

Mortgagecosts.

Rates of Stamp Duty

Up to €10,000 Exempt

€10,001to€20,000 1%

€20,001to€30,000 2%

€30,001to€40,000 3%

€40,001to€70,000 4%

€70,001to€80,000 5%

€80,001to€100,000 6%

€100,001to€120,000 7%

€120,001to€150,000 8%

Over€150,000 9%

PlanningPermission&BuildingRegulationsBeforethecompletionofastraightforwardsale,thesellerwillproduceevidencethatthenecessaryPlanningPermissionsareinplaceandthattheconstruction,asbeingsold,isincompliancewithboththeseandtherelevantBuildingRegulations.Incircumstanceswherethisisnotthecase,thepositionwillhavebeencoveredintheSpecialConditionsinthecontractforsaleanditwillbenecessaryforyoutoregularisetheposition,eitherbyobtainingretentionpermission,carryingoutoutstandingworks,orremovingtheunauthoriseddevelopment.

Inaddition,ifyouintendtochangetheuseoraltertheproperty,itwillbenecessaryforyoutoobtaintheappropriatepermissionsandyoushouldonlysignconditionalcontractsuntilthenecessarypermissionshavebeenissued(whichwillallowyoutowithdrawandgetarefundofyourdeposit,ifyoufailtogettherequiredpermissions).


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OtherstatutoryrequirementsAswithPlanningPermissionandBuildingRegulations,ifyourbusinessrequiresyoutocomplywithotherregulations,suchasenvironmental,healthandsafetyregulations,thenyoushouldensurethatyouwillbeinapositiontoprocurecompliancebeforeproceedingwiththepurchase.Youshouldalsonotethat,ifcompliancerequiresyoutoadaptoraltertheproperty,youmightalsorequirePlanningPermissionasperthepreviousparagraph.


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8 -Trading LawsAswehavealreadyseen,thestructureofyourbusinessmustcomplywiththerelevantlaws.However,theoperationofyourbusinessmustalsobelegallycompliant.

Naturally,theeaseordifficultywithwhichyoucanbecomelegallycompliantwillbedeterminedbythenatureofyourbusiness–somebusinesseswillhavespecificlegalregulationsandcriteriathatmustbemetiftheywishtoremaininbusiness.Otherswillmerelybesubjecttothegenerallaw.

A broad outline of the relevant law is as follows.

CommonLawPositionThisisthelawashandeddownbythecourts(incontrasttostatutelaw,whichisprescribedbythelegislature).Commonlawrulesaremadebythejudgesandcanbechangedinaccordancewiththecurrentpoliciesofthecourts.

Therearetwoareasofcommonlawwhichareofprimaryimportanceintheworldofbusiness:»» Contractlaw.»» Lawoftort.

ContractlawAswehaveseeninChapter6ofthispublication,acontractisanagreementwhichthelawwillenforce.Clearly,therefore,ifeitherpartytoacontractisinbreachorfailstoperforminaccordancewiththecontract,theotherpartywillhaveacauseofactionthroughthecourts.

LawoftortA“tort”isacivil,asopposedtoacriminal,wrong,independentofcontract,forwhichtheinjuredpartywillhaveacauseofactionthroughthecourtsfordamages.Commontortsincludenegligence,nuisance,trespass,libelandslander.

Ingeneralterms,tobesuccessfulinsuchaclaim,theplaintiffmustprovethatthedefendanthasinfringedarightoftheirsrecognisedbylawand,further,thatsomedamagewascausedtotheplaintiffasaresultofthedefendant’saction.

Asthetortofnegligenceistheonethatmostfrequentlyarisesinbusiness,wewilllookatitinalittlemoredetail.Inlegalterms,negligenceisthebreachofalegaldutyofcare,whichcauseslossorinjurytothepersontowhomthedutyisowed.Itcanariseinvariouscircumstances–forexample,byamanufacturertotheconsumersofhis/herproduct,orbyanemployertohis/heremployees.

Tosucceedinsuchaclaim,theinjuredpartymustprove:»» Thattheotherpartyowedthemalegaldutyofcare–thisonlyariseswheretheotherpartywouldreasonablyforeseethattheinjuredpartywouldbeaffectedbytheiractsoromissions.

»» Thattheotherpartyhasbreachedthatduty–proven,ifitcanbeshownthattheydidnotdoallthatareasonablepersonwouldhavedone.

»» Thattheysufferedinjury,lossordamageasaresult.

Iftheinjuredpartyissuccessfulintheirclaim,theywillbeentitledtoeitherdamages(asumofmoneytocompensatethemforthedamagecausedortorestorethemtotheiroriginalposition)oraninjunction(whichisanorderofthecourteitherrequiringapersontodosomethingortorefrainfromdoingsomething).

Iftheinjuredpartycontributedinsomewaytothecauseoftheharm–i.e.,wasalsonegligentthemselves–itmaybeacaseofcontributory negligenceandtheirclaimwillbereducedaccordingly(unlessitisacasewhere“strictliability”applies–forinstance,theescapeofanonnaturalagentfromthedefendant’slands,suchaswater,gasorfire).


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Inthiscontext,employers,inparticular,shouldalsobeawareofanotherconceptknownas“vicariousliability”,whereonepersonmaybeheldliablefortheactsofanother.

Examplesincludeanemployerbeingliablefortheactionsofanemployeeoragentcommittedinthecourseoftheiremployment.However,anemployeeoragentwillbepersonallyliableforhis/herownnegligentactions.

StatutoryInterventionAswithotherareasoflaw,variousActshavebeenpassedbytheGovernmentwhichregulateandgoverntheareaofbusiness.Manyoftheseareparticularandrelatetoaspecifiedareaonly,anditwillbenecessaryforyoutomakeyourownenquiriesastowhetherthereareanyspecificlawsaffectingtheoperationofyourparticularbusiness.

ThefollowingActs,whoseprovisionswillbeoutlinedingeneralterms,willhoweveraffectmanysmallbusinessesandmanufacturersandforthatreasonwillbeincludedhere.

SaleofGoodsandSupplyofServicesAct,1980Asitstitlesuggests,thisActappliestoboththesaleofgoodsandthesupplyofservices.

TheprimaryaimoftheActistoimplycertaintermsintoallrelevantcontracts.Thismeansthatthefollowingtermswillbeimpliedintomostcontractsforthesaleofgoodsorsupplyofservices:

»» Salebydescription–Thegoodsorservicesmustcorrespondtothedescription.Thisisaquestionoffactandcanbehardtodeterminewhengoodsorservicesarenotasdescribed.Thepurchasermustalsorelyonthedescriptionforliabilitytoarise.

»» MerchantableQuality–Thegoodsmustbefitforthepurposesforwhichtheyareintendedandasdurableascanbereasonablyexpected,unlessadefectisspecificallydrawntotheattentionofapurchaserorthepurchaserexaminesthegoodsandthedefectwasapparentpriortopurchase.

»» Salebysample–Whereasampleisusedtorepresentthebulk,thenthebulkmustcorrespondtothesample–thesamplemustberepresentativeofthebulk.

»» Saleofmotorvehicles–Thevehiclemustbefreeofanydefects,whichwouldrenderthevehicleunsafeordangeroustoitsoccupants,toroadusersortothepublicingeneral.

TheActdoesprovidethattheseimpliedtermscouldbeexcludedbyagreementbetweentheparties,butonlyinlimitedcircumstances.Ifthepurchaserisaconsumer(itisaprivate,ratherthanabusiness,transaction),thetermsoftheActcannotbeexcluded.

If,however,thepurchaserdealsasanonconsumer,thetermsoftheActcanbeexcludedbyagreementwhereitis“fairandreasonable”andtheActspecifiessomereasons,whichwouldbeacceptable,suchasthegoodsbeingmadetospecialorderforthecustomer.

LiabilityforDefectiveProductsAct,1991ThislegislationwasenactedasaresultofourmembershipoftheEUandtheECProductsLiabilityDirective(85/574).

Inessence,itprovidesthat“aproducerofaproductisliabletopaycompensationfordeathorpersonalinjuriescausedbyadefectinhisproduct”(Section2).Compensationmayalsobeclaimedinrespectofloss,damageordestructionofpropertyusedforprivateuseorconsumption.

Raisingandansweringafewsimplequestionswillquicklyillustratethebroadscopeofthislegislation.

WhatisadefectiveProduct?Section5statesthataproductisdefectiveifitfailstoprovideforsafetywhichapersonisentitledtoexpect,takingallcircumstancesintoaccount,including:

»» Thepresentationoftheproduct.


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»» Theusetowhichitcouldreasonablybeexpectedthattheproductwouldbeput.»» Thetimewhentheproductwasputintocirculation.

Itappears,thereforethataproductwillnotbeconsidereddefectivejustbecauseasuperiorproductissubsequentlyputintocirculation.Itdoes,howeverplacearesponsibilityontheproducertoensurecompliancewiththeappropriatesafetystandardsatthetimetheproductisproduced.

Doesthetermproducerincludeallthepartiesinvolvedinthedistributionprocess?

ThisisdealtwithinSection2andessentiallyincludesallpersonsinvolvedinthedistributionchain,suchas:»» Themanufacturer.»» Themanufacturerofacomponentpartorrawmaterial»» Thepersonwhocarriedouttheinitialprocessingofproductsfromthesoil,stockfarming,fisheriesorgame.

»» Anypersonwhoputshis/hername,trademarkorotherdistinguishingfeatureontheproductandassuchidentifieshim/herselfasitsproducer.

»» TheimporterofgoodsintotheEU.»» Wheretheproducerofaproductcannotbeidentified,thesupplierwillbetreatedastheproducer.

Asyoucansee,Section2iscomprehensiveandattemptstoincludeallpossiblepersonsinvolvedinthedistributionchain.

Thenwhatisaproduct?Again,thedefinitionisbroadandincludesallmovables,withtheexceptionofprimaryagriculturalproductswhichhavenotundergoneinitialprocessing–farmerswillnotcomewithinthetermsofthelegislationunlesstheirproducehasundergonesomeformofinitialprocessing.

Asboththedefinitionof“producer”and“product”arebroad,itcanbeseenthatmostmanufacturersandsuppliersofgoodswillcomewithinthetermsofthislegislation.

Itis,therefore,imperativethatallsuchmanufacturersandsupplierstakeallnecessarystepsandprecautionstoensuretheirproductsarenotdefective

Occupier’sLiabilityAct,1995Asthemajorityofbusinesseswilloperatefrompremises,thisActisrelevantasitspecifiestheresponsibilitiesoftheoccupier(note,notowners)ofapremisestoentrantstothatpremises.

TheActdistinguishesbetweendifferenttypesofentrant–namely,visitors,recreationalusersandtrespassers.

Thehighestlevelofcareisduetovisitorsandtheoccupiermustensurethattheirvisitorsdonotsufferinjuryordamageasaresultofanydangerexistingonthepremises.

Theoccupier’sliabilitytorecreationalusersandtrespassersislesser,inthattheoccupiercannotinjurethemintentionallyoractwithrecklessdisregardforthemandtheirproperty.

However,theActdoesprovidethatoccupierscanreducetheirdutyofcaretovisitorsbyexpressagreementornotice,butnotbelowtheminimumthresholdsetfortrespassers.Inaddition,Section5oftheActprovidesthat,inallcases,warningsfromoccupiersmaybesufficienttoabsolvethemfromliability.

OtherrelevantstatutesThesearejustafewexamplesofstatutoryinterventions,whichmayberelevanttoyourbusiness.Asstatedearlier,theremaybeotherpiecesoflegislationdirectedeitherparticularlyorgenerallyatyourbusiness.Youshouldensurethatyouareawareofalllegislationthatmightaffectyourbusinesssothatyoucaninturnensurecompliance.


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Finally,itisalsoveryimportanttounderstandthatthelegislationdoesnotreplaceyourobligationsunderboththelawofcontractandtort.Ifapotentialclaimarises,thecustomer/clientmayhave:

»» Acauseofactiononfootofthecontract.»» Aclaimpursuanttotherelevantlegislation.»» Aclaimfornegligence(thelawoftort)–allthreepossiblyarisingfromthesameincident.


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9 - EmployeesTheemploymentrelationshipariseswhenoneperson(theemployee)providesskillandlabourtoanother(theemployer)inreturnforpayment.

Therelationshipbetweenanemployeeandtheiremployerisavoluntaryonearisingfromnegotiationandagreement,andisknownasacontractofemployment.Assuch,itisgovernedbythelawofcontract(seeChapter6ofthispublication).

However,unlikeothercontracts,legislation(particularlysinceIrelandhasbeenamemberoftheEU)hasimposednumerousstipulationsandrestrictionsonthefreedomoftheemployerandemployeetonegotiatetermsofemploymentandhasrequiredmanyprovisionstobeimpliedintoacontractofemployment.

Anotheraspectofanemploymentcontractworthnotingisthatitiswhatcanbecalled“dynamic”(asopposedtofixed);asthepartiescanregularlyalteritoritcanbealteredbylegislation.

Employment»ContractsFormationThereisnorequirementthatanemploymentcontractisinwriting–itcanbeinwriting,maybeoral,orpartlywrittenandpartlyoral.Aswithothercontracts,theprovisionsoftheemploymentcontractwillconsistofexpresstermsandimpliedterms(whichcanbeimpliedbystatute,bycustomandpractice,bycommonlawortheincorporationoftermsfromcollectiveagreements,suchasonemadebetweenthetradeunionsandanemployer).

Theusualformsofcontractwhichareinwritingare:»» Formalcontractofemployment.»» Letterofappointment.

Whileacontractofemploymentneednotbeinwriting,however,itshouldbenotedthat,pursuanttotheMinimumNoticeandTermsofEmploymentActs,19731994,anemployerisobligedtofurnishanewemployee,withintwomonthsoftakingupemployment,withawrittenstatementofthefollowingparticularsofthetermsofemployment:

»» Fullnameoftheemployerandemployee.»» Addressoftheemployee.»» Placeofwork.»» Jobtitleornatureofthework.»» Dateofcommencementofemployment.»» Detailsofpay,includingovertime,commissionandbonuses,andthemethodsofcalculatingthem.»» Whetherpayistobeweekly,monthlyorotherwise.»» Detailsofhoursofworkandovertime.»» Holidayentitlements.»» Sickpayentitlementsandpensionschemes,ifany.»» Periodofnoticeofterminationtobegivenbyeachparty.»» Expirydateofcontract,ifemploymentisforafixedperiodoftime.

Clearly,ifthereisawrittencontract,allofthesemattersshouldbecoveredinit.Alternatively,thestatementissuedtotheemployeecandirecttheemployeetoaneasilyaccessibledocumentwhereallofthisinformationcanbefound.

TermsAsindicatedabove,anemploymentcontractwillconsistofexpressandimpliedterms.

Theexpresstermsarethosewhichareagreedorallyorinwritingbetweentheemployerandemployee.Theexpresstermswillusuallycoverthosematterslistedabove,asrequiredbythelegislation,butwilloftenalso


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includeprovisionsdealingwith:»» Preconditions–forexample,subjecttoreceiptofsatisfactoryreferencesora»» Medicalexamination.»» Probationaryperiod.»» Expenses.»» Miscellaneousbenefits,suchasacompanycar.»» Maternityleave.»» Grievanceprocedure.»» Disciplinaryprocedure.»» Tradeunionmembership.»» Arbitrationintheeventofadispute.»» Resignationandretirement.

Theremayalsobeadditionalprovisions,whicharerelevanttotheparticularbusinessinvolved,suchasaconfidentialityclauseorclarificationofthepositioninrelationtoinventions,copyrightsorpatents.

Therewillalsobeimpliedterms,whichwillinclude:»» Termsimpliedbystatute,suchastherighttominimumnoticeortherighttofairprocedures,ortherighttoholidaysandpublicholidays.

»» Termsimpliedbycollectiveagreements.»» Termsimpliedbycustomandpracticeinthetrade,industryorlocality,providedthosetermsiswell-knownandreasonable.

»» Termsimpliedbycommonlaw(thoserecognisedthroughcaselaw),whichincludeemployeeshavingadutytogivepersonalservice,toactingoodfaithtomaintainsecrecyandtoexercisereasonablecareandskill.Commonlawhasalsoimposeddutiesonemployers,includingthedutytopaywagesandtoprovideforthesafetyofemployees.

Ultimately,itisalwaysadvisableforboththeemployerandemployeethatawrittencontractisinplacewhichdealswithallmattersrelevanttotheparticularemployment.Suchacontractdoesnotneedtobelong,complicatedorlegalisticbutitshouldbeclearandsuccinctsothatbothpartiesareclearontheirposition.

ItisworthnotingthattheDepartmentofEnterprise,TradeandEmploymentpublishesabooklet,Terms and Conditions of Employment,whichyoumightfinduseful–alternatively,youcanconsulttheDepartment’swebsiteatwww.entemp.ieforfurtherinformation.Whilethecontractisprobablythemostimportantissuetobecoveredinthecontextofemployees,asanemployeryoushouldalsobeawareofthefollowingmatters.

Recruitment&EqualityAnemployercannotdiscriminateagainstanyemployeeorprospectiveemployee–thatis,he/shecannottreatonepersonlessfavourablythananother.

TheEmploymentEqualityAct,1998providesforninegroundsofdiscrimination,toincludegender,maritalstatus,familystatus,sexualorientation,disability,race,age,religionandmembershipofthetravellingcommunity.

TheActalsohascertainexclusions–forexample,thereshallnotbediscriminationonthegroundsofageifthepersonisunder18orover65years.

Itisimportantfortheemployertoensurethatequaltreatmentprevailsinallphasesoftherecruitmentprocess,includingdecidingontheformofrecruitment(whetheritshouldbeinternallywithinthebusinessorbeyond),advertising,specifyingthejobtitle,preparationoftheapplicationforms,interviewsandfinallyofferingthejobtoasuccessfulapplicant.

Health&SafetyintheWorkplaceTheprimarypieceoflegislationinthisareaistheSafety,HealthandWelfareatWorkAct,1989andsubsequentregulations.PriortothisAct,therewerenumerousotherActsthatrelatedgenerallytoindustry


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andthusallemploymentswerenotcovered.

The1989ActchangedthisandclearlyreinforcedthecommonlawpositionforallemploymentsbystatinginSection6(1)that“itshallbethedutyofeveryemployertoensure,sofarasisreasonablypracticable,thesafety,healthandwelfareatworkofallhisemployees”.

TheActgoesontostatethattheemployer’sdutywillextendtocover:»» Theplaceofwork.»» Accesstoandegressfromtheplaceofwork.»» Plantandmachinery.»» Provisionofsystemsofwork.»» Provisionofinstructionandtraining.»» Provisionofprotectiveclothingandequipment.»» Preparationandrevisionofemergencyplans.»» Preventionofriskfromanyarticleorsubstance.»» Provisionoffacilitiesforemployees’welfare.»» Theuseofacompetentperson,ifnecessary,toensureprovisionofallofthesematters,allofwhichshouldensurethehealthandsafetyatworkofhis/heremployees.

Thereisalsoageneraldutyonemployers(andtheself-employed)towardspersonswhoarenotemployees(visitorsorindependentcontractors,forinstance)toensurethattheyarenotexposedtoriskstotheirhealthandsafety.

Inaddition,allemployershaveageneralobligationtoprovideasafetystatement,whichisthemanagement’swrittenprogrammeforsafeguardinghealthandsafetyintheworkplace.Thisstatementshouldincludetheemployer’sassessmentofallpotentialhazardstoworkplacehealthandsafetyandshoulddetailtheappropriatesafetymeasureswhichhavebeenputinplace.

Employeesalsohavearoletoplayinensuringthehealthandsafetyoftheirworkplace–theyareobligedtotakereasonablecareforthehealthandsafetyoftheirfellowemployeesandothers,bymakingproperuseofmachinery,toolsandanypersonalprotectiveequipmentsuppliedfortheirsafety.

ResponsibilityforenforcementofthehealthandsafetylawsandregulationslieswiththeNationalAuthorityforOccupationalSafetyandHealth(theHealthandSafetyAuthority).TheAuthorityhasconsiderablepowersofenforcementanditsinspectorsmayenterpremisesandinspectalldocumentsandtheactualworkplaceitself.Breachofthestatutoryprovisionscangiverisetoacriminalprosecutionbutnotacivilaction,whichstillreliesonthecommonlawposition(albeittheprovisionsoftheActmaybeusedasagoodsummaryofthegeneraldutiesofcare).

ThenewSafety,HealthandWelfareatWorkBill2004waspublishedinJune2004.Itwillrepealtheaforementioned1989Actandsubsequentregulationsandincludesimportantnewadditionaldutiesonemployersandemployees.Italsofeaturesnewprovisionsrelatingtofinesandpenalties,riskassessment,etc.However,allcurrentlegislationremainsinforceuntilthenewBillpassesthroughallstagesoftheOireachtasandissignedbythePresident.

TradeUnionsAtradeunionislegallydefinedintheTradeUnionAct,1913.However,itcanlooselybedescribedasanassociationofpersonswhosemainobjectiveistheregulationoftherelationshipbetweenemployerandemployee.Atradeunioncanberegistered,unregistered,certifiedorauthorised.However,onlyanauthorisedtradeunioncanholda“negotiationlicence”,whichpermitsittonegotiateonwagesandotherconditionsofemployment.Inaddition,onlyanauthorisedtradeunionbenefitsfromtheprotectionandimmunitiesconferredbytheIndustrialRelationsAct,1990.

Anemployeehastheconstitutionalrighttojoinatradeunion(Article40.4.1oftheConstitution).Butthereisnodutyplacedonanemployertonegotiatewithatradeunion.


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However,collectivebargaininganditsvoluntarynaturehasbeenacornerstoneofIrishindustrialrelations.Thecollectivebargainingprocessgenerallyresultsinacollectiveagreement,whichcanberegisteredwiththeLabourCourt,makingitlegallybindingontheparties.

TransferofaBusinessBefore1980,anemployeehadnorightsonthetransferofabusiness.Whenabusinesswassold(transferredtoanewemployer),thecontractofemploymentwiththeemployeewasterminated.However,legislation,particularlythatarisingasaresultofIreland’smembershipoftheEU,nowattemptstoprotectandpreservetheemployee’srights,arisingfrombothstatuteandcontract,ifthebusinessistransferred.

Inbrief,thelegislation(originallytheECSafeguardingofEmployees’RightsonTransferofUndertakingsRegulations,1980:SINo.306of1980,repealedin2003bytheECProtectionofEmployeesonTransferofUndertakings(Amendment)Regulations,2003:SINo.131of2003)providesthatalloftherightsandobligationsattachingtothesellingcompanyarisingfromcontractsofemployment(includinganyobligationsarisingfromcollectiveagreementsorunionmanagementagreements)whichareinexistenceonthedateofthetransfershallbetransferredandattachedtothepurchaser.

Therefore,iftheemployeeisemployedonthedateofthetransfer,hisemploymentwillcontinueonexactlythesametermsandconditionsaspreviously–therewillbenobreakintheemployee’sserviceorincontinuityofserviceandalloftheemployee’sentitlements,bothundercontractandstatute,areautomaticallytransferred.Thiswouldincludenotonlywages/salarybutalsoservice,asrequiredbythevariouspiecesoflegislation,andmatterssuchasseniority.

Theemployerandprospectiveemployer(purchaser)haveadutytoinformtheemployeesofthereasonsforthetransfer,thelegal,economicandsocialimplicationsofthetransferfortheemployees,andthemeasuresenvisagedinrelationtoemployees.Usually,theinformationfurnishedinthisregardisverygeneral.Thisinformationisrequiredtobegiventotheemployeeswithin30daysoftheproposedtransfer.

Itisveryimportantforemployerstobeawareoftheseprovisions,whichwillapplyiftheyareeitherdisposingofaportionoralloftheirbusiness,orexpandingbytheacquisitionofanotheroreventransferringabusinessfromonelocationtoanother.

Maternity&ParentalLeaveWhilebothofthesemattersshouldbespecificallycoveredinthecontractofemployment,moreoftenthestatutoryprovisionsapplywhich,ingeneral,areasfollows.

MaternityleaveIfyoustartmaternityleaveonorafter1stMarch2007,youareentitledto26weeks’maternityleave,togetherwith16weeks’additionalunpaidmaternityleave.Ifyourmaternityleavestartedbefore1stMarch2007youareentitledto22weeks’maternityleave.Ifyoustartedtheadditionalunpaidmaternityleavebefore1stMarch2007youareonlyentitledtotakeanadditional12weeks’unpaidmaternityleave.

TheentitlementtomaternityleavefromemploymentextendstoallfemaleemployeesinIreland(includingcasualworkers),regardlessofhowlongyouhavebeenworkingfortheorganisationorthenumberofhoursworkedperweek.

PaymentduringmaternityleaveisnormallyprovidedthroughMaternityBenefit,whichisaDepartmentofSocialandFamilyAffairspayment.Someemploymentcontractsallowforadditionalpaymentrightsduringtheleaveperiod,forexample,thattheemployeewillreceivefullpay,lesstheamountofMaternityBenefitpayable.

Youarealsoentitledtotakeuptoafurther12weeksmaternityleave,butthisperiodisnotcoveredbymaternitybenefit,norisyouremployerobliged,unlessotherwiseagreed,tomakeanypaymentduringthisperiod


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ParentalleaveTheParentalLeaveAct1998,asamendedbytheParentalLeave(Amendment)Act2006,allowsparentsinIrelandtotakeparentalleavefromemploymentinrespectofcertainchildren.Parentalleaveisavailableforeachchildandamountsto14weeksperchild.Leaveislimitedto14weeksper12monthperiodwhereanindividualhasmorethanonechildbutcanbelongeriftheemployeragrees.

The14weeksperchildmaybetakeninonecontinuousperiodorinseparateblocksofaminimumofsixweeks.Ifyouremployeragreesyoucanseparateyourleaveintoperiodsofdaysorevenhours.

Apersonactinginlocoparentiswithrespecttoaneligiblechildisalsoeligible.Leavecanbetakeninrespectofchildrenuptoeightyearsofage.Theupperagelimitcanbeextendedincircumstanceswhereanadoptedchildisinvolved.Inthecaseofachildwithadisabilityleavemaybetakenupto16yearsofage.Inadditionanextensionmayalsobeallowedwhereillnessorotherincapacitypreventedtheemployeetakingtheleavewithinthenormalperiod.

DismissalUnfortunately,despiteeventhemostscrupulousrecruitmentprocedures,sometimesitmightbenecessarytoterminateanemployee’semploymentcontract.

Ifanemployeriscontemplatingdismissinganemployee,whetheritisbecauseofcompetence,qualification,conductorothersubstantialgrounds,theemployershouldbeawarethat:Theemployerisobligedtowarntheemployeethatdismissalisbeingcontemplatedandwhy.Theemployeeisentitledtoknowthathis/herjobisinjeopardy.

If,withinareasonabletime,theemployeefailstoremedythesituationinresponsetothewarningsgiven,theemployermayopttoproceedwiththedismissal.

Indoingso,however,theemployeemaybeentitledtoaspecifiedminimumorreasonableperiodofnotice.Ifthecontractofemploymentspecifiesanoticeperiod,thismightapply.If,however,theemployeehascontinuousserviceof13weeksormore,theMinimumNoticeandTermsofEmploymentAct,1973providesforthefollowingbasicnoticeperiods,basedonlengthofservice,whichanemployermustgive:

»» 13weeks’to2years’service=1week.»» 2to5years’service=2weeks.»» 5to10years’service=4weeks.»» 10to15years’service=6weeks.»» 15years’serviceormore=8weeks.

Ifthereisacontractofemployment,theemployeeisentitledtothelongerofthecontractualnoticeorthestatutoryminimumnotice.

ItisworthnotingthattheActalsopermitsanemployeeof13weeksormorecontinuousservicetoterminatethecontractby1week’snotice,unlesstheemploymentcontractprovidesotherwise–anothergoodreasonfortheemployertoensureaformalemploymentcontractisinplace.

Summarydismissal(whichiswithoutnotice)maybejustifiedincertaincircumstances–forexample,misconductbytheemployeeisonecauseofdismissalwhichneednotbeprefacedbyaseriesofwarnings.

Examplesofmisconductincludeactsofviolenceintheworkplace,thefts,orabuseofsickleave.Inthesecases,theemployerisprimarilyconcernedtoestablishthatthemisconducthasoccurred.Iftheemploymentcontractclearlyspecifiesmattersofmisconductleadingtosummarydismissal,itcanhelptheemployerindealingwithsuchasituation.

Inanydismissal,itisessentialthattheemployerfollowsthecorrectprocedureandalsoappliestheprinciplesof“naturaljustice”(whichessentiallyrequiretheemployertoheartheemployeeonthematterandtomakeanimpartialjudgement).


Business Law

Iftheemployerfailstodothis,theemployeemayhaveredresseitherunderthecontractofemploymentorarisingfromthelegislation,whichcouldresultinreinstatement,orcompensationbeingpaidtotheemployee.


Business Law

10 - Other Legal ConceptsAgencyThisistherelationshipwhichariseswhenoneperson,calledtheagent,hasauthoritytoactonbehalfofanotherperson,calledtheprincipal.Iteffectivelymeansthattheagentcanenterintoagreementsonbehalfoftheprincipal,whereagreementswillbebindingontheprincipalbutnotontheagent.Agencyarrangementsconsistoftwocontracts,thatbetweentheagentandtheprincipalandthatbetweentheprincipalandanotherindependentparty.AcommonexampleiswhenanAuctioneerisinstructedtosellahouse.TheAuctioneerisactingastheseller’sagentandtherewillbeacontractbetweentheminthisregard.WhentheAuctioneerfindsabuyer,therewillthenbeasecondcontractbetweenthesellerandthebuyer(butnotinvolvingtheAuctioneer/Agent).Numerousotherexamplesofagencywillariseinbusiness.

Ifyouaredealingwithanagent,itisimportanttoensurethattheyareactingwithintheauthoritygiventothemsothatanyagreementreachedwillbebindingontheirprincipal.Similarly,ifyouhaveemployedagentstoactonyourbehalf,itisimportantthattheextentoftheirpowerstobindyouisclearlyspecified.

Cross-BorderTradeWhiletheremaybemanysimilaritiesbetweenthelegalsystemintheRepublicofIrelandandotherEuropeancountries(particularlythoseintheEuropeanUnion),therearealsomanydifferencesandanybusinessesinvolvedincross-bordertradeshouldensuretheyhavefullandcomprehensiveinformation.Inparticular,whereEUcountriesareconcerned,theyshouldbeawareofanyvariationintheimplementationofEUlaw.

Thebusinessshouldbeclearonthetax(particularlyVAT)andlegalposition(forinstance,whetheritisIrishlaworthelawoftheotherjurisdictionwhichwillapplyinanydispute).

MicroTrade(www.microtrade.org)isaprogrammethathelpssmallbusinessesbuildcontacts,marketsandpartnershipsacrosstheislandofIreland.TheprogrammeisaninitiativeoftheCounty&CityEnterpriseBoardsoftheRepublicofIreland,EnterpriseNorthernIrelandandInterTradeIreland.Theyofferarangeofsupportsincludingnetworkingevents,fundingandtraining.

DebtCollectionUnfortunately,inallbusinessestherewillbecustomerswhofailtopay,oratleastdonotvolunteerpaymentwithoutstrenuousprompting.Often,whenthedebtremainsoutstandingdespiterepeatedreminders,youmayhavelittleoptionbuttopursuethematterthroughthecourts.Thefollowingisageneraloutlineofthelegaldebtcollectionprocedure.

Onreceiptofinstructions,thesolicitorwillusuallywriteagaintothedebtorseekingpayment.Theremayeitherbenoresponseoranunsatisfactoryresponseandthenextstepistoissuecourtproceedings.Theappropriatecourtwillbedeterminedbytheamountofthedebtdue.Theseproceedingswillthenbeservedonthedebtor,whohasanopportunitytoreply.Ifhefailstodoso,judgmentmaybeobtainedindefault.Ifthedebtorconteststhematter,itwillbeheardbyajudgewhowilldeterminewhetherthedebtisdueand,ifso,theamountofthedebt.

Oncejudgmentisobtained,therearevariousoptionsofenforcement:»» SendingittotheCountySheriffforexecution(whowillcalltothedebtorandseizeanygoodsinpaymentofthedebt).

»» ObtaininganExamination,InstalmentandultimatelyaCommittalOrder,ifthereiscontinueddefault,intheDistrictCourt.

»» Publication.»» Registrationasajudgmentmortgageonanypropertyownedbythedebtor.

Obviouslywhetheritispracticaltoproceedwithcollectionofthedebtthroughthecourtswillbedeterminedbythesizeofthedebt,thelikelihoodthatpaymentcanbegotandthecostsinvolved.


Business Law

FranchisingAfranchiseextendsfromtherighttotradeunderthenameofanothertoapackageofrights,includingtrademarks,tradenames,shopsigns,copyrights,patents,insideknowledgeandinformation,etc.,allofwhicharetobeusedforthesaleforgoodsorsupplyofservices.

Franchisingiscommonlyusedinbusinessforthelargescaledistributionofgoodsorservices.Insteadofthesuppliersellingthegoodstoadistributorwhosellsthemoninwhatevermannerhe/shechooses,thesuppliernotonlysellsthegoodsbutalsoprovidesthedistributorwithastandardisedandhighlydetailedframeworkwhichmustbefollowed.Inthisway,thesuppliercanensurethathisgoodsaredistributedinauniformmannerofhischoosingbyallfranchisees.

Fast-foodchainsoftenoperatebyfranchiseagreements,whichensurethatthereislittledifferencebetweenthemanyoutlets.

IndemnityThisariseswhereonepersonmakesgoodalosswhichanotherpersonhassufferedasaresultoftheactordefaultofanother.Apopularexampleisacontractofinsurance,wheretheinsurancecompanyindemnifiestheinsuredagainstlosswhichmightariseontheoccurrenceofaspecificevent.

Theemployer-employeerelationshipalsogivesrisetoaformofindemnity,asnormallytheemployerwillindemnifytheemployeeagainstalllossesincurredbytheemployeeincarryingouthis/heremployment.

Intellectual»Property»Rights»

CopyrightCopyrightisapropertyright,whichisnowgovernedbytheCopyrightandRelatedRightsAct,2000.Section17ofthisActprovidesthatcopyrightsubsistsin:

»» Originalliterary,dramatic,musicalorartisticworks,includingcomputerprogrammes.»» Soundrecordings,films,broadcastsorcableprogrammes.»» Thetypographicalarrangementsofpublishededitions.»» Originaldatabases.

Copyrightisessentiallyanegativerighttopreventthecopyingofphysicalmaterial.Section37oftheActconfirmsthattheactsrestrictedbycopyrightarethecopyingofthework,themakingoftheworkavailabletothepublicandthemakingofanadaptationofthework.

Theauthorofaworkisthefirstownerofthecopyright.However,thereareexceptions–forexample,wheretheworkisdonebyanemployeeinthecourseofemployment.

Copyrightlastsfortheauthor’slifeplus70years(exceptforsoundrecordingsandtypographicalarrangements,wherethecopyrightlastsfor50yearsfromthedatethattheworkwaslawfullymadeavailabletothepublic).

PatentsApatentisanotherpropertyrightandisgovernedbythePatentsAct,1992.Apatentcanbegrantedinrespectofanyinventionandconfersontheholderthesoleandexclusiverighttomake,useandselltheinventioninthiscountry.

The1992Actprovidesthatanyinventionshallbepatentableifitissusceptibleofindustrialapplication,isnewandinvolvesaninventivestep.Italsospecifiesmatterswhichwillnotberegardedasaninvention–includingadiscovery,ascientifictheoryoramathematicalmethod,anaestheticcreation,aprogrammeforacomputerorthepresentationofinformation.

TheareaofpatentsisverycomplexanditisusualtoinstructaRegisteredPatentAgent(whospecialisesin


Business Law

thisarea)todealwithanyapplicationforapatent(whichismadetotheControllerofPatents,DesignsandTradeMarks).

Thenormallengthofapatentis20years.However,theActalsoprovidesforshort-termpatentswithalifeof10years–moreappropriateforinventionswithashortlifespan.

TrademarkAtrademarkisafurtherpropertyrightwhichisregulatedbytheTradeMarksAct,1966.Thepurposeofatrademarkistoindicatetheoriginofgoodsorservicesonwhichitisused.TheActdefinesaTradeMarkasanysigncapableofbeingrepresentedgraphically,whichiscapableofdistinguishinggoodsorservicesofoneundertakingfromthoseofanotherundertaking.Itusuallyconsistsofwords,designs,letters,numbers,ortheshapeofgoodsortheirpackaging.

Aswithcopyrightsandpatents,atrademarkcanberegisteredand,onceregistered,hastherightsandremediesspecifiedintheAct(incontrastanunregisteredtrademark,ifinfringed,onlyhasacommonlawcauseofactionasitisnotapropertyright).

Registrationofatrademarklastsfor10yearsandisrenewableforsubsequentperiodsof10years.Asitisanothercomplexarea,itisusualtoemployaprofessionaltrademarkagentwhenmakinganyapplicationforregistrationofatrademark.

IndustrialdesignAdesignisanewideaoraconceptionoftheexternalappearanceintendedtobeassumedbyanyarticlethroughtheuseofartificialmeans.Untilrecently,thelegaldefinitionwasfoundinSection3oftheIndustrialandCommercialProperty(Protection)Act,1927.However,in2001,newlegislationwaspassed(theIndustrialDesignsAct,2001)whichredefinedtheword“design”insimplertermsas“theappearanceofthewholeorapartofaproductresultingfromthefeaturesof,inparticular,thelines,contour,colour,shape,textureormaterialsoftheproductitselforitsornamentation”.

InSection11ofthe2001Act,thereisprovisionforregistrationofdesignswiththeControllerofPatents,DesignsandTradeMarksbytheproprietorofthedesign,providedthedesignisnewandhasindividualcharacter.Registrationconfersacopyrightinthedesignfor5yearsfromthedateofregistration,whichcanbeextendedforfourfurtherperiods,eachof5years.

Copyrightinthiscontextmeanstheexclusiverighttoapplythedesigntoanyarticleinanyclassinwhichthedesignisregistered.Thenewlegislation,theIndustrialDesignsAct,2001,alsoconfirmedthataregistereddesignisapropertyright.

LetterofCreditInbusiness,aletterofcreditisaletter,usuallygivenbyabank,undertakingtopay,ifnecessary,acertainsumofmoneytothepersontowhomtheletterisaddressed.Thesaleofgoodsworldwideisnormallyarrangedbywayoflettersofcredit.Forexample,thebuyercaninstructhis/herbanktoopenacreditinfavouroftheseller,whichisapromisebythebanktopaymoneytotheselleroncompliancewithspecifiedconditions,suchasreceiptofshippingdocuments.

LicenseAlicenseisanauthorityorpermissiontodosomethingwhichwouldotherwisebeillegalorwrong.Therearearangeoflicensesandexamplesinclude:

»» Alandownerpermittinganothertocrosshis/herland.»» Anintoxicatingliquorlicense,whichisrequiredifyouwishtosellalcohol.»» Thelicensebetweenanoilcompanyandanoperatorofoneofitspetrolstations.»» Ashort-termoccupationofabusinesspremiseswhereitisnotintendedthataformallandlordandtenantrelationshipiscreated.

»» AnAuctioneerorBookmakercannotoperateassuchwithouttheappropriatelicense.


Business Law

Giventhewidevarietyoflicensesitisnotproposedtogointoanyfurtherdetailhereotherthantosaythatitisessentialforanybusinesstoensurethattheyobtainandmaintaintherequiredlicenseesfortheoperationoftheirbusiness.Failuretodosocouldshutdownthebusiness.


Business Law

11 - FurtherInformationProfessional Advisors Theimportanceofprofessionaladvisors,forexample,solicitorsandaccountants,cannotbeoverstated.Mostprofessionaladvisorshaveimmenseexperienceinboththeformationandrunningofabusinessand,asaresult,willbeaninvaluablesourceofinformationandguidance–theirexperiencecanhelpsteeryouclearoftheusualpitfallsencounteredbyanewbusiness.However,itisuptoyoutoensurethatyoubenefitfullyfromtheexperienceofyourprofessionaladvisors–askquestionsandbesurethatyouunderstandfullyanyadvicereceived.

Government Agencies Mostofthegovernmentagenciesprovideawealthofinformationthatisnotalwayswellused.Obviously,youcanmakecontactwiththevariousofficesandobtaininformationandadvicebycalling.However,manyoftheGovernmentAgenciespublishinformationwhichcanbeaccessedbyphoneoronlineifyoucannotcalltotheappropriateoffice.Usefulcontactsinthisregardforanewbusinessinclude:

Revenue Commissioners WebSite:www.revenue.ie

BusinesseslocatedinSouthDublinCountyshouldcontact:PlazaComplex,BelgardRoad,TallaghtDublin24LoCallforPAYEcustomers1890-333425NonPAYECustomers01-6470700Email:[email protected]

Revenue Forms & Leaflets Service InspectorofTaxes,WarehouseUnit,ShanowenRoad,Santry,Dublin9.Phone:018780100Website:www.revenue.ie

Companies Registration Office ParnellHouse,14ParnellSquare,Dublin1.Phone:LoCall1890220226Website:www.cro.ie

Department of Enterprise, Trade & Employment 23KildareStreet,Dublin2.Phone:LoCall1890220222Phone:+353-1-6312827Website:www.entemp.ie

TheDepartment’spublicationsincludebookletson:»» TermsandConditionsofEmployment.»» HealthandSafety.»» Anti-DiscriminationLaws.»» DisabledWorkers.»» Redundancy.»» Insolvency.»» Transferofbusiness–rightsofemployees.

Afurtherusefulwebsite,BusinessAccesstoStateInformation&Services(www.basis.ie),isrunbytheDepartmentofEnterprise,Trade&EmploymentwiththeaimofprovidingbusinesswithasingleaccesspointtoGovernmentinformationandservices.


Business Law

South Dublin County Enterprise BoardCountyHallBelgardSquareNorthTallaghtDublin24Phone:(01)4057073Website: www.sdenterprise.ie

Office of the Director of Consumer Affairs Citizens Information4–5HarcourtRoad,Dublin2.Phone:LoCall1890432432Phone:01-4025501Website: www.consumerconnect.ie

InterTradeIreland: Trade & Business Development BodyTheOldGasworksBusinessPark,KilmoreyStreet,Newry,Co.DownBT342DEPhone:04830834151Website:www.intertradeireland.com

The Equality Authority2ClonmelStreet(offHarcourtStreet),Dublin2.Phone:LoCall1890245545Website:www.equality.ie

The Food Safety Authority143LowerDrumcondraRoadDublin9.Phone:017979836Website:www.safehands.ie

Health and Safety Authority Regional BranchesGreenogueIndustrialEstateRathcooleCoDublinPhone:+353(0)18385595Website:www.hssireland.ie

Patents Office GovernmentBuildings,HebronRoad,Kilkenny.Phone:353567720111Website:www.patentsoffice.ie

Office of the Director of Corporate Enforcement 16ParnellSquare,Dublin1.Phone:LoCall1890315015Website:www.odce.ie

Competition Authority ParnellHouse,14ParnellSquare,Dublin1.Phone:LoCall1890220224


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Website:www.tca.ie

Trade&OtherOrganisationsTradeorganisationsorprofessionalbodiescanbeanexcellentsourceofinformationonlegalmattersthatareparticularlypertinenttoyourareaofbusiness.

Examplesinclude:»» IrishSoftwareAssociation»» IrishPrintingFederation»» RestaurantsAssociationofIreland»» RECI(RegisterofElectricalContactorsinIreland)»» PublicRelationsConsultantsAssociationofIreland.

Itisnotpossibletolistallsuchorganisations;howeveryouareprobablyawareofthosethatareinvolvedinyourownbusinessarea.


Business Law

12 - GeneralReferencesCallanan, G. (2003). An Introduction to Irish Company Laws, 2ndedition,Dublin:Gill&Macmillan.

Clark, R. (1998). Contract Law in Ireland, Dublin:RoundHallSweet&Maxwell.

Doolan, B. (1989). A Casebook on Irish Business Law, Dublin:Gill&Macmillan.

Ellis, H. (1998). Irish Company Law for Business, Bristol:JordanPublishing.

Friel, R.J. (2000). The Law of Contract, Dublin:RoundHallSweet&Maxwell.

Keenan, A. (1997). Essentials of Irish Business Law, 2ndedition,Dublin:Gill&Macmillan.

Lawson, R. and Smith, D. (1997). Business Law for Business and Marketing Students, 3rdedition,Oxford:ButterworthHeinemann.

Light, H.R. (1967). The Legal Aspects of Business and General Principles of Law, 6thedition,London:SirIsaacPitman&Sons.

Marsh, S.B. and Soulsby, J. (1985). Business Law, 3rdedition,London:McGraw-Hill.

Meenan, F. (1999). Working Within the Law: A Practical Guide For Employers and Employees, 2ndedition,Dublin:OakTreePress.

Murdoch, H. (2000). Murdoch’s Dictionary of Irish Law, Dublin:TopazPublications

Murphy, E. (2000). Irish Legal Framework for Business Students, 2ndedition,Dublin:Gill&Macmillan.

O’Kane, B. (2003). Starting a Business in Ireland, 5thedition,Cork:OakTreePress.

O’Malley, L. (1982). Business Law, London:Sweet&Maxwell.

Price, T. (1989). Mastering Business Law, London:Macmillan.

Schmitthof, C.M. and Sarse, D.A.G. (1984). Mercantile Law, London:Stevens&Sons.

Ussher, P. (1986). Company Law in Ireland,London:Sweet&Maxwell.

County & City Enterprise Boards are funded by the Irish Government and part-financed by the European Union under the National Development Plan, 2007 2013

South Dublin County Enterprise Board Ltd. County Hall, Belgard Square North, TallaghtDublin 24, Ireland

T 01 4057073F 01 4517477E [email protected] www.sedenterprise.ie

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