No one wants to find themselves embroiled in a legal dispute much less find themselves questioning who they are actually in dispute with. While, knowing who you entered into a contract with should be clear, often you will find this this is not the case. Many sole traders, partnerships and limited companies make use of trading styles and depending on the formality of the contract this can cause a great deal of uncertainty as to whom the contract is with. For example, you may believe that you are contracting with “Bob the Builder” when this is actually a trading style and that you do not actually know the name of the person or company you were contracting with. Mistakes such as this can have a real impact on the prospects of recovering money in a dispute as a company is a distinct legal “person” from the directors and shareholders who run and own it, and while you may assume that the party you contracted with has sufficient funds to cover losses this is not necessarily the case.
As such, you should ask before entering the contract if the person you are talking to is acting on their own behalf as a sole trader or acting on behalf of a company or partnership. You should also confirm with whom the contract would be and get it in writing. If they are acting as a sole trader or in an informal partnership it is sensible to get their address(es) and consider whether they would have the means to cover losses should something go wrong. If it is a company, then have a look on Companies’ house as to whether the Company is in good financial health and bear in mind that small and newly incorporated companies are generally at a much higher risk of “going bust” than large established ones. If there is an option to pay by credit card this can also often be beneficial.
While, the taking the steps laid out above doesn’t remove the risk of things going awry it helps to know who to blame if they do. As is often the case better the devil you know than the devil you don’t.
