Law Society comments on proposal for Small Business Commissioner
The Department for Business Innovation and Skills (BIS) has consulted on proposals to help smaller businesses facing contractual disputes with larger companies.
The government is looking to establish a Small Business Commissioner to help small businesses settle disputes quickly and cheaply.
Solicitors act as trusted advisors to businesses of all sizes, and are often central in resolving contract disputes.
The Law Society welcomes proposals to set up a Small Business Commissioner, but noted some concerns to be addressed, including:
Commissioner providing mediation services: The Law Society supports this, but cautions that businesses should be able to retain their right to receive independent legal advice throughout.
Encouraging mediation: The Law Society supports advice and guidance to highlight good practice in dispute resolution, but does not agree with commenting on companies' failure to agree to mediation.
Complaints: The Law Society agrees that the Commissioner should be able to look into complaints, but advises that appeals processes would be needed if sanctions are proposed.
Anonymity: It may not be possible to maintain anonymity where exclusive contracts have been entered into or where businesses are small enough to have complained about each other.
Kathleen O'Reilly of the Law Society company law committee said: "A Small Business Commissioner could provide real value with a new service for small businesses that assists with securing advice and encourages alternative and affordable debt recovery.
"However, when tackling contractual supply chain issues, the objective of changing business culture risks undermining established contractual law principles without parliamentary scrutiny. Further consideration is needed before implementing proposals that could have unintended effects. Praising and shaming parties' positions in disputes may risk disclosure of commercial confidentialities as well as interfere with the right to exercise freedom of choice of and enforcement of contractual rights."
