Understanding commercial credit agreements

 

Commercial credit can mean that your business buys the goods its sells on credit from its suppliers, or that your business sells its goods to consumers by offering them credit terms.

If you buy goods from a supplier you will need a commercial credit account with them. They will check your credit history to ensure you have a good history of paying your bills on time. The terms of your commercial credit agreement are usually open to negotiation. Always seek qualified legal advice before signing a commercial credit agreement.

If your business sells goods or service to the public with a credit agreement, your business may need a commercial credit licence. These licences usually only apply if the borrower is a sole trader, individual or a partnership with three or fewer partners.

The consumer-credit regulations can be a complex area of law. It is, therefore, critical that you seek legal advice if you are unsure whether your business needs a commercial credit licence. If you trade using commercial credit without a licence this is a criminal offence. You could be fined, imprisoned or both.

Businesses that sell to other enterprises and consumers should be careful when offering commercial credit terms. The services of a solicitor that has experience of contract law and consumer-credit law will ensure your business meets all of its legal obligations when trading using those commercial credit terms.

If you would like to obtain legal advice about commercial credit, Contact Law can put you in touch with a local specialist business / commercial solicitor free of charge. So, if you have any questions or would like our help in finding local business / commercial solicitors please call us on 0800 1777 162 or complete the web-form above.

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